Judge’s fraud ruling against Donald Trump cripples real estate empire

Donald Trump’s rise to the White House was built on lies worth hundreds of millions of dollars, a judge has found. Here’s what it means for the former president’s future.

Donald Trump committed fraud by misrepresenting the value of his real estate empire that catapulted him to fame and the presidency, according to a judge who has moved to shut down parts of his family business.

New York Judge Arthur Engoron blasted Mr Trump for relying on “bogus” and “preposterous” arguments in a civil case brought by state Attorney-General Letitia James, who is seeking a whopping $US250m fine in a trial set to begin next week.

The scathing ruling declared the former president, his adult sons and their conglomerate inflated their net worth by hundreds of millions of dollars for years in financial statements that “clearly contain fraudulent valuations”.

Donald Trump outside Trump Tower in New York earlier this year. Picture: AFP

In Mr Trump’s world, Mr Engoron said, “rent regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air … and square footage subjective”.

“That is a fantasy world, not the real world,” he concluded.

The judge ordered the cancellation of business certificates that allow parts of Mr Trump’s empire to operate in New York, and while the full consequences of the ruling remain unclear, it could strip him of control of his signature properties including Manhattan’s Trump Tower.

It is another legal blow against the leading Republican candidate for next year’s presidential election, who is also facing four sets of criminal charges that could put him behind bars.

In a series of all-caps social media posts, Mr Trump unleashed on the “deranged, Trump-hating judge”, accusing him of “assigning insanely low values to properties despite overwhelming evidence”.

He argued he was “worth much more than the numbers show”, particularly because the value of his brand was not included on his financial statements, and that “there were no victims” because he never defaulted on payments to banks.

“It is a great company that has been slandered and maligned by this politically motivated witch hunt,” Mr Trump said.

Trump Tower in New York City. Picture: AFP

But Mr Engoron rejected those arguments and even slapped the former president’s lawyers with fines of $US7500 because it was “indefensible” for them to repeat their frivolous claims.

A key piece of evidence against Mr Trump was his claim that his Trump Tower triplex apartment, where he lived for decades, was 30,000 square feet when it was in fact 10,996 square feet. Mr Engoron said this led to an overvaluation of up to $US207m.

“Good-faith measurements could vary by as much as 10-20 per cent, not 200 per cent,” he said.

Donald Trump's Mar-a-Lago estate in Palm Beach, Florida. Picture: Chandan Khanna (AFP)

The ruling also noted that the Palm Beach County Assessor appraised the market value of Mr Trump’s prized Mar-a-Lago estate at between $US18m and $US27m, while the former president filed legal documents that put its worth at up to $US612m.

On social media, Mr Trump said his Florida home was “the most spectacular property in Palm Beach” and was possibly worth “100 times” the figure accepted by Mr Engoron.

In a brief statement, Ms James’s spokeswoman said: “A judge ruled in our favour and found that Donald Trump and the Trump Organization engaged in years of financial fraud. We look forward to presenting the rest of our case at trial.”

Questions about Mr Trump’s wealth have persisted for years. In 2007, as part of an unsuccessful lawsuit he launched over a book that suggested he was not a billionaire, Mr Trump testified that his net worth “goes up and down with markets and with attitudes and with feelings, even my own feelings”.

Originally published as Judge’s fraud ruling against Donald Trump cripples real estate empire