A New York State Supreme Court judge issued a ruling Tuesday that, if upheld, would have major consequences for Donald J. Trump.
The ruling came as part of the New York attorney general’s civil case against Mr. Trump. Attorney General Letitia James has accused the former president of fraudulently overstating the value of his assets on annual accounts by as much as $2.2 billion a year to receive favorable terms on loans and benefits.
In the ruling, the judge, Arthur F. Engoron, agreed that Mr. Trump committed fraud when he sent those statements to banks and insurance companies. A trial in the case could start as early as Monday; If Trump fails to overturn the ruling before then, the proceedings will largely focus on the size of the sentence against him. Ms. James is seeking a $250 million fine.
The financial statements are deceptive, Judge Engoron wrote, punctuating his order with harsh criticism of the legal strategies of Mr. Trump’s lawyers, fining each of them $7,500 for using arguments he had already rejected.
Mr. Trump, a Republican, has denied any wrongdoing and accused Ms. James, a Democrat, of political persecution. He noted in a post on his social media platform Truth Social on Tuesday that Judge Engoron was also a Democrat.
One of his lawyers, Christopher M. Kise, indicated he might appeal the ruling, which he called “outrageous” and “completely disconnected from the facts and applicable law.”
Here are some takeaways from Judge Engoron’s decision.
The decision dealt a major blow to Mr Trump.
Mr. Trump’s lawyers were preparing to challenge Ms. James’ accusation that he fraudulently inflated his wealth by billions of dollars, but Judge Engoron short-circuited that aspect of the trial. Judge Engoron essentially ruled that no trial was necessary to establish that Mr. Trump’s financial statements were fraudulent.
In his ruling, Judge Engoron wrote that the statements Mr. Trump submitted to banks and insurance companies “clearly contained fraudulent valuations that Defendants used in business.”
Mr. Trump’s lawyers planned to argue that the banks that lent Mr. Trump money were hardly victims — they profited from their dealings with the Trump Organization — and that valuing property can be subjective.
The consequences for his business could be serious.
Ms. James had tried to ban Mr. Trump from doing business in New York, in part by revoking certificates that allowed him to operate his properties there. Judge Engoron awarded that sentence, which could have enormous consequences for the Trump Organization.
For example, Mr. Trump could lose control of several properties, including Trump Tower in Midtown Manhattan and a flagship commercial building at 40 Wall Street. His hold on his golf club in Westchester County is also under threat. At one point in his order, Judge Engoron referred to the limited liability companies he had formed as “the canceled LLCs.”
Mr Trump’s own family business has not been dissolved. Although it is colloquially known as the Trump Organization, it is actually made up of hundreds of entities, many of which have not been named as defendants in the lawsuit. But the decision could still have a far-reaching impact, with the potential to shutter an entity that employs hundreds of people who work for Mr. Trump in New York.
The ruling is a victory for New York’s attorney general.
Ms. James’ investigation into Mr. Trump began in 2019 and intensified after he left the White House. Mr. Trump was impeached twice: initially, he avoided answering questions by invoking his Fifth Amendment rights; secondly, he answered questions and claimed that as president he had helped the world prevent a nuclear holocaust.
Nevertheless, Ms James sued him in September 2022, accusing him of ‘mind-boggling’ fraud. She has said in legal papers that the undisputed facts show that Mr. Trump overvalued his assets by as much as $2.2 billion each year.
On Tuesday, Ms James said in a statement: “We look forward to presenting the remainder of our case at trial.”
Criminal cases against Mr. Trump are not affected.
Ms. James’ case is civil. She does not have the authority to indict Mr. Trump.
Yet the former president has been charged in four other cases, two brought by a federal special prosecutor and one by local prosecutors in Manhattan and Georgia. These matters are separate from Ms. James’ lawsuit and will not be directly affected by Judge Engoron’s ruling.
The first of the criminal cases, which relate to Trump’s bid to stay in power after losing the 2020 election, is expected to go to trial in March.
The judge was tough on Mr. Trump’s lawyers.
There is little love lost between Judge Engoron and Mr. Trump’s lawyers, who tried to move the case to another judge and more recently sued the judge himself.
He has often expressed his impatience towards them. During an appearance last week, he seemed to grow tired of some of Mr. Kise’s arguments and, pounding on the couch, said: “You can’t make false statements and use them in business.”
In his order Tuesday, he took the unusual step of fining each of Trump’s lawyers $7,500, writing that their continued assertion of arguments he had previously rejected was “indefensible.”
That amount was more than what Ms James demanded when she asked the judge to sanction them.
At one point, he criticized Trump’s lawyers’ arguments as straining credulity, including the idea that an apartment’s square footage could be subjective.
“That’s a fantasy world, not the real world,” he wrote.
Trump is out of options.
Mr. Trump has at least two routes left to challenge Judge Engoron. He could appeal the ruling and request an emergency stay of the trial, a move Trump’s lawyers have indicated they could pursue.
Even if that doesn’t work, Mr. Trump is waiting for an appeals court decision on the lawsuit he filed against Judge Engoron. In it, Mr. Trump argued that the judge had ignored an earlier appeals court ruling that raised the prospect that some evidence against the former president was too dated to be used at trial.
The appeals court is expected to rule on Thursday.