Donald Trump, family members, and the Trump Organization were found liable for defrauding insurance companies and other financial institutions by misstating the actual value of properties they controlled, a New York judge ruled.
Manhattan Supreme Court Justice Arthur Engoron’s ruling found Trump and his business partners had a “propensity to engage in persistent fraud” by submitting false statements of financial condition to obtain loans and insurance coverage with favorable terms.
Trump and his associates, including two of his children, are not legally protected by arguing their accountants provided statements they could not state were accurate because the records were not audited, the judge said.
Engoron also canceled New York business certificates for Trump and the other defendants and gave them 10 days to “recommend the names of no more than three potential independent receivers to manage the dissolution of the canceled LLCs.”
The ruling hammered Trump’s legal defenses, with Engoron saying they were “patently false,” “simply untrue” and “bogus.”
Further, he sanctioned four Trump attorneys $7,500 each for ignoring court warnings and repeatedly filing motions that lacked merit.
While the civil complaint filed by New York Attorney General Letitia James focused largely on the organization misstating the value of properties for loans and tax relief — including Trump Tower, his Mar-a-Lago resort and golf clubs — it also showed several instances of insurers allegedly being defrauded.
A filing in New York state court alleges the Trump Organization made false statements and misrepresentations when it purchased surety bonds from Zurich Insurance Group for its high-end properties (BestWire, Jan. 20, 2022).
The complaint said Zurich North America provided surety bonds for liquor licenses for golf resorts and lien releases on construction projects. The Trump Organization’s Chief Financial Officer Allen Weisselberg told a Zurich official the property valuations in the company’s statement of financial condition were prepared by a professional appraiser, when they were prepared by Trump staff, it said.
“Had Zurich’s underwriter discovered during the renewal process that Weisselberg had misrepresented to her how the valuations were prepared, it would have caused her to doubt the veracity of the rest of the information disclosed by the Trump Organization during the renewal and would have called into serious question whether Zurich should continue its insurance relationship with the Trump Organization, or renew on terms less favorable to the Trump Organization,” it said.
The complaint also said Trump officials did not disclose to Tokio Marine HCC and excess carriers Starpoint, Argo, Swiss Re and Allianz, which provided directors and officers coverage, investigations of them by federal officials during renewal discussions.
Zurich declined to comment and attempts to obtain comment from Tokio Marine were not immediately successful.
Engoron’s ruling leaves a few matters for lawyers to battle over, but the main issue going forward in James’ lawsuit is how much Trump will owe in penalties.
An attempt to obtain comment from Trump lawyer Christopher Kise was unsuccessful. He issued a statement to the media Sept. 26 saying he would likely appeal the decision, which he called “outrageous” and “completely disconnected from the facts and governing law.”