Topline
A New York judge ordered the dissolution of businesses owned by former President Donald Trump and his associates in a ruling Tuesday that found the ex-president and his company committed fraud—a decision that could have a devastating impact on Trump’s company and its operations in New York, though the full scope of the order still remains to be seen.
Key Facts
Judge Arthur Engoron, in a ruling that found Trump and his company fraudulently misstated the value of their assets, canceled any certificates for businesses named in the lawsuit, as well as any other entity owned or controlled by Trump, Eric Trump, Donald Trump Jr., former CFO Allen Weisselberg (convicted on fraud charges in 2022) or Trump Organization executive Jeffrey McConney.
The limited liability companies named in the lawsuit include companies for the Trump Organization more broadly and specific properties like 40 Wall Street in New York City and the Trumps’ Seven Springs estate in Westchester County, New York.
Engoron ordered a receiver to be appointed that would oversee the companies and sell off assets in the case, though legal experts told Insider Trump would continue to own his buildings.
Former financial crimes prosecutor Diana Florence told Insider the situation is akin to a company going bankrupt, and likened losing a business license to losing a driver’s license—meaning the person could still own the car, but they wouldn’t be able to do anything with it without the license to drive it.
The receiver will sell off assets and continue to take steps like paying the company’s bills until those assets are sold off, Florence said, and Trump would then receive any money that’s left over after paying the company’s debts as the Trump Organization’s beneficiary.
Engoron’s order doesn’t totally dissolve the Trump Organization overall, the New York Times noted, because the company is really a collection of smaller LLCs, and would primarily affect its operations in New York, where the case was brought.
What We Don’t Know
A lot about how the dissolution process will play out remains unclear, with Insider noting a company dissolution on this scale has only ever really been attempted before when New York Attorney General Letitia James—who brought the Trump Organization suit—unsuccessfully tried to shut down the National Rifle Association. There are still a lot of unknowns as part of the order, such as how it will impact Trump properties outside of New York and those that weren’t directly named as defendants in the lawsuit, such as Trump Tower. Ultimately, the issue is likely to take years to play out in court, and Trump and his family have already vowed to appeal Engoron’s ruling.
Crucial Quote
“This is such an across-the-board loss . . . that I’m sure there will be appeals, but it’s hard to see how this doesn’t spell the end of Donald Trump the businessman in New York,” former assistant U.S. attorney Glenn Kirschner said on MSNBC Tuesday.
Chief Critic
Christopher Kise, who represented Trump in the case, said in a statement Tuesday the ruling was “outrageous” and “completely disconnected from the facts and governing law.” “The decision seeks to nationalize one of the most successful corporate empires in the United States and seize control of private property,” Kise said.
What To Watch For
The trial in the Trump Organization case is scheduled to start on Monday. While Engoron has already ruled that Trump and his company committed fraud, there are still other allegations in the lawsuit—like insurance fraud and falsifying business records—that still have to play out at trial, as well as determining other damages in the case. Trump and his associates could still face more penalties in the case, with James asking the court to impose a $250 million fine and bar Trump and his children from leading any New York-based companies for the next five years, among other punishments. But the trial could still be delayed: An appeals court still has to rule on a lawsuit that Trump brought against Engoron as part of the case. If the appeals court rules against Trump before Monday, the trial is expected to begin as scheduled.
Key Background
James sued Trump, his business associates and company in November 2022, alleging the ex-president and his company had made more than 200 false statements that misstated the value of his assets to get more favorable business deals and inflate his own net worth. The New York AG alleged Trump’s fraudulent valuations exaggerated his net worth by as much as $3.6 billion, with such false statements as claiming Mar-A-Lago was a private residence, rather than a social club that was valued lower, and overstating the size of his penthouse in Trump Tower. In his ruling Tuesday, Engoron sided with James and ruled Trump and his associates’ depiction of the valuations—claiming that they were correct and the amounts were just subjective—was “a fantasy world, not the real world.” The judge found a number of Trump’s properties had overstated valuations, such as inflating the value of rental units by as much as 700% and the value of Mar-A-Lago by at least 2,300%, and called Trump’s argument that the square footage of his penthouse apartment—which he overstated by 200%—was a “subjective” calculation “absurd.” “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 wrote.
Further Reading
Trump Committed Fraud By Inflating His Assets, Judge Rules (Forbes)
Checks & Imbalances: A Forbes Look At The Trump Fraud Lawsuit (Forbes)
Exclusive Recording, Documents Bolster Trump Fraud Lawsuit (Forbes)