On Thursday, the court overseeing a large civil fraud complaint against former President Donald Trump, his businesses, and three of his adult children appointed a monitor with broad authority to oversee all Trump-related company operations.
Acting as a Manhattan SC Justice Arthur Engoron issued the order after hearing arguments from the New York Attorney General’s Office, which filed the lawsuit and sought the arrangement, and a lawyer for Trump, who claimed the Attorney General lacked the authority and legal standing to seek the preliminary injunction and pursue the lawsuit.
Trump’s legal team
“Defendants are incorrect,” wrote Engoron, whom Trump’s legal team unsuccessfully attempted to have removed from the case.
Engoron’s order prohibits the Trump companies from selling, transferring, or disposing of non-cash assets without first informing the Attorney General’s office and the court with 14 days’ written notice. It also directs the appointment of a monitor to ensure that the order is followed.
The state trial court judge ordered that Trump businesses provide the monitor with financial statements, statements of financial condition, and “full and accurate descriptions of the structure and liquid and illiquid holdings and investments for the Trump Organization” and its associates and companions.
Any proposed reorganization or restructuring of the Trump Organization must be communicated to the monitor at least 30 days in advance. Engoron set a Nov. 10 deadline for state authorities and Trump attorneys to submit up to three monitor candidates apiece.
“Defendants have failed to produce one iota of evidence or an affidavit from anyone with firsthand knowledge rebutting” the attorney general’s “complete proof of repeated deception,” according to his judgment.
Trump will almost certainly appeal the judgment. In the absence of a successful appeal, the verdict represents a significant loss for Trump and a preliminary triumph for the state in the September case launched by New York Attorney General Letitia James, a Democrat who has repeatedly fought with Trump.
Trump’s team responses
“Today’s conclusion assures that Donald Trump and his enterprises will be incapable to carry on the vast fraud that we unearthed,” James stated. “No number of lawsuits, delay tactics, or threats will deter us from seeking justice.”
In an email statement, an attorney for the Trump business commodities, Christopher Kise said, “This exceptional order effectively seizes control of the financial affairs of one of the biggest private corporate empires based on nothing more than a gross exaggeration of standard valuation differences common in complex commercial real estate financing dealings.”
He also said that James “exceeded the confines of her jurisdiction to establish a very hazardous precedent” that will damage other firms.
Trump dubbed the verdict “Communism coming to our shores” in a statement issued on his Save America political action committee.
According to the complaint, Trump was part of a 10-year scam that “grossly inflated” his own net worth by billions of dollars, and then utilized the higher values to “induce banks to lend money to the Trump Organization on more advantageous terms than would otherwise be available.”
According to the lawsuit, the alleged activities broke New York regulations and likely saved Trump, his business, and his family more than $150 million between 2011 and 2021.
James’ agency is requesting $250 million in fines as well as an injunction prohibiting Trump and his children from taking senior positions in any New York enterprises.
The Trumps’ lawyers claim there was no wrongdoing.
During an at-times tense session before Engoron on Thursday, attorneys for both sides argued their cases for about three hours.
Kevin Wallace, a key lawyer in James’ office, claimed that a monitor and other procedures were required to stop the Trump Organization’s alleged “ongoing fraudulent activity.”
He said that the recent formation of the Trump Organization II necessitated the imposition of a legal stumbling block blocking the new organization or other companies from receiving money transfers from Trump’s long-standing enterprises. Any such transactions, according to Wallace, might jeopardize efforts to impose the $250 million in fines sought in the complaint.
Wallace also mentioned allegations of a large asset sale after James launched the civil complaint. According to Wallace, the Trump Organization is attempting to sell its rights to the Trump International Hotel in Washington, D.C.
And he mentioned a lawsuit Trump’s attorneys filed against James on Wednesday in a Florida state court. The brief, which was filled with criticism of James, contended that her agency lacked the authority to demand internal data from a Florida-based trust that holds all of Trump’s businesses on his behalf. Trump already lost a federal court lawsuit to get James’ inquiry terminated.
According to Wallace, Trump’s latest lawsuit seeks to “prevent any sight” into the trust’s decisions and transactions, making it harder for James’ office to discover potential continuing or future crimes.
A court-appointed monitor would settle possible financial issues regarding Trump’s businesses, according to Wallace, who also stated that the monitor would not “inhibit the day-to-day activities of the Trump Organization.”
Kise, a Florida-based attorney, said that appointing a monitor was an unprecedented action that was not supported by any evidence.
He said that James lacked legal standing to be appointed, especially as no court hearings had been taken on the accuracy and merits of the civil fraud charges.
According to Kise, no steps have been made to avoid the fines that will be imposed if James wins the lawsuit. Two of Trump’s Manhattan real estate buildings, including Trump Tower, are worth more than $250 million and, he claims, “aren’t going away.”
Kise pointed out that big banks and insurance firms participating in Trump-related real estate development projects never complained about or lost money on loan arrangements struck with the Trump Organization.
He further claimed that James’ office misapplied the intricacies and complexity of the loan agreements, which he claimed were “negotiated by professionals on both sides.”
“This is an intimate conflict, and the private groups have determined not to complain,” Kise stated.
If a monitor is chosen, “any business in New York should be very concerned” about comparable “nationalization of a private enterprise,” according to Kise.
Engoron is the judge who issued a contempt judgment against Trump and penalized him more than $100,000 for failing to cooperate with subpoenas for James’ probe.
Engoron denied Trump’s attorneys’ plea late Wednesday to transfer the civil complaint to the court’s Commercial Division, which generally handles complicated business disputes. Engoron stated that a prior decision by a New York supervisory court to deny such a transfer was final and could not be challenged.
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