New York is trying to crush Trump’s business empire

Trump Organization Criminal Case New York

Former U.S. President Donald Trump looks on during a campaign event at Minden-Tahoe Airport October 08, 2022 in Minden, Nevada. (Photo by Justin Sullivan/Getty Images)

Former President Donald Trump has always described himself as the ultimate New York businessman – cheeky, outspoken, and all about flash and money.

New York is trying to shatter this image.

State officials have launched both a criminal case and a full-scale civil lawsuit against Trump’s business for fraud that could soon erode his status as a New York businessman. Victory would crush Trump’s golf and real estate empire as it currently exists, leave him (and his children) disqualified from ever running a business in New York again, and brand his eponymous company, the Trump Organization, as a criminal enterprise.

“The civil and criminal lawsuits in New York are like a double-barrelled shotgun on the financial infrastructure of Trump’s corporations,” said Gene Rossi, a former federal attorney for the Eastern District of Virginia. “The brand, assets and ability to generate future revenue are at serious risk if both cases are successful. What remains may require resuscitation at the end.”

“The civil and criminal trials in New York are like a double-barrelled shotgun on the financial infrastructure of Trump’s corporations.”

In the criminal proceedings, prosecutors accuse Trump’s company of paying employees in an unusual scheme to avoid taxes. The trial begins this week after the court selected a jury last week. The civil case, unveiled in September and now in court, alleges that Trump lied to his company and adult children to banks and insurance providers about the value of Trump’s assets to gain financial gain.

Both cases threaten to isolate the Trump Organization by making other companies, banks and the government reluctant to cooperate with Trump’s businesses.

They’re just part of the tsunami of legal dangers looming over Trump, which include a Georgia criminal probe into his attempts to reverse his 2020 election defeat and a Justice Department-led investigation into whether he broke the Espionage Act by he was sensitive to secret documents at his resort in Palm Beach.

But unlike these other investigations, New York’s legal attack gets to the heart of the brand Trump spent a lifetime building: the emergence of wealth and success in the New York real estate game.

Trump’s company has pleaded not guilty to the criminal case and has vowed to fight the civil suit. Both James and Manhattan District Attorney Alvin Bragg are elected Democrats, and Trump has dismissed the cases they brought as part of a wide-ranging witch hunt.

Real Crimes

The criminal proceedings are about alleged “off the books” benefits to employees.

And this is where the prosecution’s expected key witness comes into play: Trump’s longtime chief financial officer, Allen Weisselberg.

In August, 75-year-old Weisselberg pleaded guilty to 15 felonies and admitted to evading taxes on $1.76 million of his earnings while the company paid rent on a Manhattan apartment, lease payments on several Mercedes-Benzes and the paid private school fees for his grandchildren.

Weisselberg refused to fully cooperate in the wide-ranging investigation into Trump. But he agreed to testify at the trial in exchange for a greatly reduced sentence of just five months. The judge has warned him he could face up to 15 years if he fails to live up to his end of the bargain and testify truthfully in court – and Weisselberg will not be formally convicted until after the company’s trial is over.

The company is preparing to argue that Weisselberg is lying, a lawyer for the Trump Organization said at a hearing last week, according to a transcript seen by Reuters.

“Weisselberg will testify that he believed everything he did was wrong,” Trump Org attorney Susan Necheles said during a video conference call. “We think he’s lying and we want to show that.”

The trial could now depend on whether the jury believes Weisselberg or the company’s lawyers.

If found guilty, the company faces a maximum fine of just $1.6 million — which would be peanuts for a company that says it made hundreds of millions a year during Trump’s presidency.

But the longer-term consequences of a criminal conviction could be far more damaging: after that, the government and other vendors could refuse to do business with the company.

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The Trump International Hotel is seen on February 15, 2022 in Washington, DC. (Photo by MANDEL NGAN/AFP via Getty Images)

To cite just one example, a conviction could upend the lucrative intelligence contracts Trump’s hotels have enjoyed for years.

A congressional investigation found that Trump charged Secret Service agents protecting him “exorbitant” rates, including $1,185 a night at the Trump International Hotel in Washington, DC

American taxpayers paid at least $1.4 million to house Secret Service agents on Trump property while protecting Trump and his family, the report said.

However, federal regulations require that public spending be undertaken with an “impeccable standard of conduct.”

Banks may also be reluctant to lend to a company with an official criminal record.

And all this criminal drama isn’t even the most dangerous legal threat facing Trump’s firm.

Civilian sledgehammer

The New York Attorney General’s office is pursuing a sweeping $250 million lawsuit that is now being fought in the same court complex as the criminal case.

The lawsuit alleges that Trump and his company included more than 200 false or misleading statements about the value of his real estate in 11 financial statements over a period of a decade. These statements were submitted to banks and insurance companies for benefits such as lower interest rates and premiums.

“The number of grossly inflated assets is staggering and affects most, if not all, real estate holdings in any given year,” the lawsuit states.

“The number of severely inflated assets is staggering and affects most, if not all, real estate holdings in any given year.”

In just one of many examples, the lawsuit states that Trump claimed his Trump Tower penthouse was worth $327 million in 2015 based on its size of over 30,000 square feet. “In reality, the apartment was only 10,996 square feet,” the lawsuit states.

The case resulted from a three-year investigation into Trump’s business practices, during which Trump was personally dragged into affidavit and forced to invoke his Fifth Amendment right against self-incrimination hundreds of times — a move he once said he did only for guilty people and the mob.

The civil litigation could also further isolate the company, said Daniel J. Horwitz, who was an assistant district attorney in the Manhattan DA’s office investigating fraud before becoming a partner at the New York law firm McLaughlin and Stern.

“Anytime a company gets sued by a regulator over core aspects of their business, that’s really not a good thing,” Horwitz said. “Obviously there are reputation issues for the brand, but more importantly, lenders and insurance companies may be very reluctant to do business with you.”

The lawsuit seeks to permanently bar Trump and his adult children, Don Jr., Eric and Ivanka, from serving as an officer or director of a New York state registered or licensed company. The lawsuit would ban Trump and the Trump Organization from acquiring real estate in New York for five years and seeks to recover an estimated $250 million, which the AG office said was the approximate amount of financial gains obtained through fraud.

Earlier this month, James’ office asked a judge to stop Trump and his company from transferring assets without court approval to protect the funds she says would be needed for the verdict if she wins her lawsuit.

She noted that Trump’s company registered a new company called “Trump Organization II LLC” on the same day in September that her lawsuit was announced.

“The Trump Organization has since refused to give any assurance that it will not attempt to move assets out of New York to avoid legal liability,” James’ office wrote in a press release.

James asked the judge to appoint an independent observer to oversee the company’s financial disclosures.

A response filed by Trump’s attorney, Alina Habba, called the idea of ​​a monitor “grossly punitive, unjust, and entirely unnecessary.”

But if the company loses the case, such “punitive action” is only a first step.

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