(Bloomberg) — Donald Trump rode down the escalator at Trump Tower to announce he was running for president in 2015. The Fifth Avenue skyscraper had long served as the backdrop to his business success story, which in turn became the foundation for his rise in politics.
(Bloomberg) — Donald Trump rode down the escalator at Trump Tower to announce he was running for president in 2015. The Fifth Avenue skyscraper had long served as the backdrop to his business success story, which in turn became the foundation for his rise in politics.
Now his control over that property and others could be in jeopardy.
The New York judge who ruled on Tuesday that the former president committed fraud by inflating the value of many of his assets also authorized state Attorney General Letitia James to cancel certificates for companies that hold those assets. Judge Arthur Engoron said James, who sued Trump last year, could seek an order as well barring him and his companies from continuing to conduct business in New York.
At a Wednesday hearing, Engoron gave Trump and James 30 days to recommend the names of potential independent receivers to oversee the dissolution of those companies. The Trump Organization is comprised of some 500 different entities, and the scope of Engoron’s order remains unclear. Christopher Kise, a lawyer for Trump, asked the judge if all of the Trump entities face dissolution.
Engoron said the parties and the receiver would “work it out.” Kise suggested that Barbara Jones, a retired federal judge who was previously appointed as an independent monitor in the case, could serve as receiver, and lawyers from the attorney general’s office expressed openness to the idea.
Read More: Trump Found Liable for Fraud in NY Attorney General’s Case
Kise on Tuesday called Engoron’s order “outrageous”and said an appeal was forthcoming.
“While the full impact of the decision remains unclear, what is clear is that President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice,” Kise said.
Losing certificates would mean Trump could no longer do business in New York as he had before, said Janet Sabel, a former chief deputy at the state attorney general’s office. “But exactly how that plays out and what happens to his assets remains to be decided,” she said.
A number of properties whose value Trump inflated are located outside New York, including his Mar-a-Lago club in Palm Beach, Florida, and his Aberdeen golf course in Scotland, raising the possibility that they could be transferred to non-New York entities. But many of his most valuable assets remain in the state where he was born and where he first rose to fame, including Trump Tower, the office building at 40 Wall Street and the Seven Springs estate in Westchester County.
Here are some of the properties cited in Engoron’s order:
Trump Tower “Triplex”
The judge said Trump engaged in fraud by repeatedly claiming that his 10,996 square foot penthouse apartment in Manhattan was nearly three times bigger than that in reality, even after the Trump Organization was put on notice by a magazine reporter that the value was inflated. Trump’s annual statements of financial condition used the false square footage to inflate his net worth by as much as $207 million. In 2012, when Trump valued the penthouse at a “staggering” $180 million, no apartment sold in New York City had “ever approached” that price, the judge said.
“A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Engoron said.
Seven Springs Estate
Trump received market-value appraisals for the 200-acre New York property in 2000, 2006, 2012 and 2014 valuing it at $30 million or less. Even so, Trump’s 2011 statements of financial condition reported the value to be $261 million and reached as high as $291 million in 2014. An outside firm increased its valuation to $56.6 million in 2015 due to planned developments, but the judge said that didn’t explain Trump’s exaggerations.
“Even giving defendants the benefit of the $56.6 million figure as of December 1, 2015, the value submitted on Donald Trump’s 2014 SFC was inflated by over 400%,” Engoron wrote.
Mar-a-Lago
The judge found that Trump valued the Palm Beach property as if it could be completely redeveloped as residential property, without accounting for numerous restrictions that preclude him from using it as anything but a private social club. Trump testified that he bought the property for $8 million in 1985 and that his expert witnesses would say it’s now worth $1.5 billion. Palm Beach County assessed Mar-a-Lago from 2011 to 2021 for tax purposes to be worth $18 million to $27.6 million.
Engoron noted that Trump’s expert had said he could “dream up” some wealthy people, like Elon Musk and Bill Gates, who might buy Mar-a-Lago for more $1.5 billion. “Obviously this court cannot consider an ‘expert affidavit’ that is based on unexplained and unsubstantiated ‘dream[s],’” the judge wrote.
40 Wall Street
The flagship commercial property which Trump owns in Lower Manhattan was appraised by a real estate company at being worth $200 million in 2011 and as much as $220 million in 2012. Despite these appraisals, Trump’s financial statements claimed the property was worth $524.7 million in 2011 and $527.2 million in 2012, which Engoron called an “overvaluation of more than $300 million each year.”
Trump Park Avenue
Trump valued a residential building located on Manhattan’s Upper East Side without taking into account 12 unsold rent-stabilized condominium units valued at a total of $750,000, or $65,000 per unit. A 2020 appraisal valued six of the units to be worth around $23 million, or $3.8 million per unit.
Trump had argued the units weren’t overvalued because “the rent-stabilized units have the potential at some point in the future to be converted into unencumbered by rent stabilization units.” In his ruling, Engoron noted that rent regulated units may be passed on from one generation to the next in perpetuity and that the financial statements “are required to state ‘current’ values, not ‘someday, maybe’ values.”
(Updates with discussion of possible receiver in the fifth paragraph. A previous version of this story corrected the name of a Trump property in ninth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.