Attorney General James Takes Action to Immediately Stop Donald Trump and the Trump Organization from Continuing Financial Fraud
Motion for Preliminary Injunction Seeks to Stop Ongoing Fraud, Prevent Trump from Moving Assets to Evade Liability, and Appoint a Monitor to Oversee Financial Disclosures
NEW YORK – New York Attorney General Letitia James took action today to stop Donald Trump and the Trump Organization from continuing to engage in the significant fraudulent and illegal business activity outlined in Attorney General James’ September 2022 lawsuit pending trial. In a motion for a preliminary injunction filed today, Attorney General James is seeking several measures to stop Mr. Trump and the Trump Organization’s ongoing fraudulent scheme and ensure funds are available to satisfy any disgorgement award, including prohibiting the Trump Organization from transferring any material assets to another entity without court approval, requiring that any new financial disclosures to banks and insurers contain all supporting and relevant material, and asking for the appointment of an independent monitor to oversee compliance with these measures. Attorney General James is also seeking the court’s permission to serve Mr. Trump and Eric Trump electronically, as both defendants and their counsels have refused to accept service of the complaints for almost a month.
“Our investigation uncovered the fact that Donald Trump and the Trump Organization engaged in significant fraud to inflate his personal net worth by billions of dollars to illegally enrich himself and cheat the system,” said Attorney General James. “Since we filed this sweeping lawsuit last month, Donald Trump and the Trump Organization have continued those same fraudulent practices and taken measures to evade responsibility. Today, we are seeking an immediate stop to these actions because Mr. Trump should not get to play by different rules.”
Since Mr. Trump and the Trump Organization became aware of the Office of the Attorney General's (OAG) investigation, they have continued to use many practices they knew to be improper or fraudulent, including on Mr. Trump’s 2021 Statement of Financial Condition.
Beyond the continuation of that fraud, the Trump Organization appears to be taking steps to restructure its business to evade the reaches of OAG’s lawsuit. On September 21, 2022, the same day OAG filed its lawsuit, the Trump Organization registered a new entity with the New York Secretary of State: “Trump Organization II LLC.” That entity is a foreign corporation that was incorporated in Delaware. The Trump Organization has since refused to provide any assurance that it will not seek to move assets out of New York to evade legal accountability.
Specifically, OAG is seeking an order that would prohibit the Trump Organization from submitting a statement of financial condition or other asset disclosure for Mr. Trump to lenders and insurers, either to satisfy existing obligations or to obtain new financing and insurance, that fails to adequately disclose the assumptions and techniques used for valuing his assets, as outlined in the complaint. The order would also prohibit the Trump Organization from transferring any material asset to a non-party affiliate or otherwise disposing of a material asset without court approval.
In order to oversee these requests, the motion seeks the appointment of an independent monitor until trial that would oversee the submission of financial disclosure information to any accounting firm compiling the 2022 Statement of Financial Condition; financial disclosures to lenders and insurers required by continuing obligations or to obtain new financing and insurance; and any corporate disposition of significant assets.
In September 2022, Attorney General James filed a lawsuit against Mr. Trump, the Trump Organization, senior management, and involved entities for engaging in years of financial fraud to obtain a host of economic benefits. The lawsuit alleges that Mr. Trump, with the help of his children Donald Trump, Jr., Ivanka Trump, and Eric Trump, and other senior executives at the Trump Organization, falsely inflated his net worth by billions of dollars to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to satisfy continuing loan covenants, to induce insurers to provide insurance coverage for higher limits and at lower premiums, and to gain tax benefits, among other things. From 2011 to 2021, Mr. Trump and the Trump Organization knowingly and intentionally created more than 200 false and misleading valuations of assets on his annual Statements of Financial Condition to defraud financial institutions.
This investigation and subsequent legal action have been conducted by Senior Enforcement Counsel Kevin Wallace, Special Counsel Andrew Amer, Assistant Attorney General Colleen K. Faherty, Assistant Attorney General Alex Finkelstein, Assistant Attorney General Wil Handley, Assistant Attorney General Stephanie Torre, Special Counsel to the Solicitor General Eric R. Haren, Enforcement Section Chief Louis M. Solomon and Legal Support Analyst Samantha Stern. Additional support was provided by Assistant Attorney Generals Sherief Gaber and Matthew Conrad, Data Analyst Anushua Choudhury, Senior Data Analyst Akram Hasanov, Data Scientist Chansoo Song, Deputy Director of Research and Analytics Megan Thorsfeldt, and Director of Research and Analytics Jonathan Werberg; as well as Information Technology Specialist Hewson Chen, Information Technology Specialist Paige Podolny, and Information Technology Specialist John Roach. Appellate support was provided by Deputy Solicitor General Judith Vale and Assistant Solicitor General Eric Del Pozo. The investigation and legal action are overseen by First Deputy Attorney General Jennifer Levy.
A memorandum of law and affirmation were filed in this matter.
To access the exhibits: