- NY AG Letitia James is about to sue Donald Trump and his real estate and golf resort business.
- Experts predict she will allege a longstanding — and tricky to prove — pattern of financial fraud.
- The lawsuit will take years to resolve, two former assistant attorney generals tell Insider.
It’s been one month since Donald Trump’s motorcade carried him to a Manhattan skyscraper, a block north of Wall Street, for his court-ordered deposition before Letitia James, New York’s attorney general.
“You save the subject [of your investigation] for last,” notes former Assistant NY Attorney General Armen Morian.
Whatever James has up her sleeve after three long years of investigating the Trump Organization, it is now about to be revealed.
Here — based on expert interviews and a review of two years of court filings — is our best guess on what’s about to happen.
Q: Best guess, then: what is Letitia James about to do to Donald Trump?
A: James will sue the Trump Organization and Trump himself, the company’s sole owner and beneficiary.
She has signaled the suit will allege that for at least a decade, Trump has routinely fudged the dollar values of his towers, hotels and golf resorts on annual financial statements, tax submissions and other official documents.
And she will allege these intentional misstatements helped Trump reap hundreds of millions in undeserved tax breaks, bank loans and deals on insurance.
Q: So … a lawsuit? That’s all? After a three-year investigation?
A: Yes, a lawsuit, filed on behalf of the people of New York, to be hashed out in state court in Manhattan, likely over the course of still more years to come.
Q: Well, that’s a letdown.
A: Sorry about that.
Q: Pretty much nothing happens, then, for a couple more years?
A: Pretty much. Though there is a chance James could also make a move with more immediate impact against Trump and his company. New York law lets her seek a temporary restraining order and a preliminary injunction.
Q: A what and a what?
A: That’s just legalese for two ways she can ask a Manhattan judge to immediately order the Trump Organization to stop engaging in specific, ongoing fraud. She can likewise ask that his business be put in receivership, and that Trump be immediately forced to pay back whatever she alleges he fraudulently pocketed.
And if she’s really feeling lucky, she can further seek to immediately revoke his corporate charter — the certificate of incorporation that allows him to operate his New York-incorporated business.
It would be like pulling the plug on his company, leaving him owning a couple billion dollars in skyscrapers, hotels and golf resorts that he can’t legally sell or draw revenue from.
TROs and preliminary injunctions are decided after an evidentiary hearing by a judge alone — not by a jury — and sometimes in a matter of weeks or months.
Q: So why not just skip the lawsuit and seek this snappy relief, then?
A: Not so fast, former prosecutors from the AG’s office told Insider.
There’s a high bar of proof, particularly for the so-called corporate death penalty, noted attorney Kenneth Foard McCallion, a former assistant state AG and federal prosecutor.
The AG would have to convince a judge that any fraud she has uncovered is still going on — and that it urgently needs to be halted, said McCallion, who heads McCallion & Associates and is the author of Profiles in Cowardice in the Trump Era.
So far, James has given no indication that she has found real-time, ongoing fraudulent financial dealings. Scores of legal filings by James over the past two years have alleged fuzzy math going back a decade, but nothing similar for the year 2022.
Although now that we think of it, there might be something … fresher … she could seek to hang a quick TRO on.
A: She could allege that Trump’s “intransigence” and “subterfuge” — her words for how he has fought her probe — count as the latest examples of an ongoing pattern of fraud and deceit.
AG senior enforcement counsel Kevin Wallace has hinted as much.
Q: Isn’t Trump allowed to fight this probe?
A: He’s allowed to fight fairly.
But Wallace and his fellow investigators have complained repeatedly that Trump has turned over only 542 pages of personal business documents, much of it irrelevant to the probe.
That’s far less paperwork than what the head of a three-billion-dollar business would be expected to generate over the past decade. It’s a fraction of the 6 million pages of Trump Org evidence James has otherwise collected through subpoenas and court orders.
Scores of Trump employees have testified or sworn affidavits over the past two years; Wallace and others in James’ office have hinted that some of these employees described Trump documents that should have been preserved and turned over, and which instead have vanished.
“I’ll be frank,” Wallace warned, during an April hearing in Manhattan, after defense lawyer Alina Habba said Trump simply had nothing else to turn over.
“If that’s all there is, it raises a bunch of other issues.”
Q: What are the real odds, though, of James convincing a judge to do something right now?
A: Long indeed, say former AG prosecutors.
James would have to convince a judge that Trump’s company is “such a present danger” to the people of New York “that it must be stopped,” explained McCallion, a former prosecutor who handled complex litigation in the Department of Justice and NY AG’s office.
“You’d have to show — and by clear and convincing evidence — that irreparable injury is at stake, that immediate harm is about to happen,” said Morian, founder of Morian Law, and whose AG financial fraud cases included the 13-year prosecution of insurance giant AIG head Maurice “Hank” Greenberg.
Besides, James has already sought, and won, court orders and a costly contempt citation against Trump over his failure to fully comply with her document subpoenas, noted Morian, an assistant AG in New York from 2006 to 2019.
“She’s already fired all her bullets under any theory relating to his compliance with a subpoena,” Morian said.
Q: OK, so we’re back to just a slow-pokey lawsuit, then?
A: Yes, if James can’t or won’t go the TRO/preliminary injunction route. But scoff not. Or scoff in moderation.
A lawsuit would slowly seek the same remedies, including pulling his charter — the so-called corporate death penalty.
That menu of remedies also includes James asking a judge to place the Trump Organization under court-monitored receivership, where an independent manager would monitor for fraud.
And it includes asking the judge to require that Trump repay hundreds of millions in tax, insurance and loan breaks that she can allege the former president pocketed based on fugazi math.
Morian predicted James’ lawsuit will closely mirror the allegations in a 115-page memorandum she filed in January.
Q: Fugazi math?
A: Fugazi as in Trump allegedly lowballed the value of his properties to lower his property taxes, and highballed valuations when trying to win better terms from lenders and insurance brokers.
Sometimes, James has alleged, Trump signed off on property values that skyrocketed over time for no apparent reason, Other times, she’s said, the same property received widely different valuations at nearly the same time.
Q: Aren’t real estate valuations pretty … subjective?
A: That’s sure to be major part of the defense.
“You are not required to use the same methodology for each valuation, as long as the valuation is based on some rationale,” Morian told Insider.
“It’s not a slam dunk to say it’s fraud because by one methodology a property was worth X, and by another methodology it was worth Y,” he said. “Businesses do that all the time.”
Q: What about that “corporate death penalty” thing?
A: The New York-incorporated Trump Organization is an umbrella for some 500 other entities, many of them Delaware-registered LLCs.
James could seek to bar all of them from doing business in New York, including the three massive Manhattan skyscrapers — Trump Tower, 1290 Avenue of the Americas and 40 Wall Street — from whose office and retail space Trump draws a significant chunk of income, as Forbes has reported.
Q: Could James’ lawsuit come after anyone else besides Donald Trump?
A. Morian predicted that James will name multiple Trump LLCs, partnerships and holding companies as defendants, just to cover the waterfront.
The lawsuit will likely also name as a defendant Eric Trump, who has been running the company day to day since his father took office in January 2017, and who was heavily involved in some of its development projects over the years.
Q: By the way, who’s been paying for all this probing and litigating?
A: The taxpayers of New York have been paying for the work on the AG’s side. Down the road, those costs could be charged to Trump as part of a settlement, or as part of a judge’s order or jury verdict.
Trump’s hefty legal bills, meanwhile, have been footed by the RNC.
Q: What?! It’s not costing him a penny?
A: Right. But that free ride will end, and he’ll have to pay his own legal way, if and when he declares he is running for president.
Q: What’s Trump have to say about all this?
A: Trump and his lawyers have consistently denied wrongdoing. Trump himself has repeatedly called James’ investigation a “Witch Hunt,” a “Radical Witch Hunt,” a “racist” witch hunt, and a “politically-motivated Witch Hunt supported by lawyers, prosecutors and the Fake News Media.“
Q: One last thing. Who wins?
A: In Trumpian fashion, we’re going to have to plead the Fifth on that one.