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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, everyone. New York State Attorney General Letitia James made a major announcement just a few minutes ago.
Attorney General Letitia James: "Mr. Trump and the Trump Organization repeatedly and persistently manipulated the value of assets to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to pay lower taxes, to satisfy continuing loan agreements, and to induce insurance companies to provide insurance coverage for higher limits and at lower premiums.
This conduct was all in violation of Executive Law Section 63(12), which gives the attorney general broad and special powers to go after persistent and repeated fraud and illegality. As part of demonstrating illegality under that section of Law 63(12), we show that they violated several state criminal laws including falsifying business records, issuing false financial statements, insurance fraud, and engaging in a conspiracy to commit each of these state law violations."
Brian Lehrer: Letitia James, New York State Attorney General, just a few minutes ago. We're joined now by Jon Campbell, state politics reporter for WNYC and Gothamist, who's going to explain to us what we just heard. Hi, Jon. What exactly was that?
Jon: This is the culmination of a more than three-year investigation into the Trump Organization, Donald Trump, his children, some of the top Trump Organization executives. It looked at essentially whether Donald Trump was inflating his assets, intentionally inflating the value of his assets, to get better terms on loans, to get tax breaks, bigger conservation easements, things like that. Things that inflated his net worth essentially to get more favorable terms to him, to his family, to his company.
This has been in the works since Michael Cohen testified in front of Congress in 2019. That's what triggered this investigation. There's been lots of legal back and forth about subpoenas and depositions and whether this is a political witch hunt from Trump's perspective. It all culminated with this today. This really extraordinary 200-plus page lawsuit that we are just rifling through as we speak right now.
Brian Lehrer: You say lawsuit. To be clear, this is a civil case, not a criminal case. Correct?
Jon: It is a civil case but the penalties could be significant. We're talking upwards of $250 million that the Attorney General's Office is seeking. That's the estimate of the amount of fraud that they are alleging here. There's also a footnote in this lawsuit where the attorney general makes clear that she is referring these findings to the US Attorney's Office in Manhattan. She claims that there are violations of federal law, bank fraud, insurance fraud, things of that nature, and she's asking federal prosecutors to look into it.
Brian Lehrer: Do you happen to know-- and I know this just came out and you said how long it is and you're still going through it, but I want to read the copy from the beginning of that announcement that we played and ask you a question about it. She said, "Mr. Trump and the Trump Organization repeatedly and persistently manipulated the value of assets to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise be available to the company."
There's another half of it that I've heard chatted about - tell me if it's in here - and that is that to the banks, they inflated, allegedly, the value of their real estate so they could get bigger loans and on more favorable terms like that says. To the IRS, they deflated the value of their assets so they could pay lower taxes. Do you know if the IRS portion of this comes into it, or did that not make it into the actual civil suit?
Jon: Literally as we speak, Letitia James, the attorney general, is having a press conference going through this. The lawsuit just came out, so we're still digesting here. But it does use the example of 40 Wall Street. That's a Donald Trump-owned property; a Trump Organization-owned property. In that example, they look at bank appraisals that happened in 2010 and 2012. They valued that property around $200 million to $220 million. The bank-ordered appraisal, I should say.
The entire alleged fraudulent activity focuses on the company's balance sheets. On the balance sheets, at the same time the bank-ordered appraisal was saying $200 to $220 million, the Trump Organization on its balance sheets were listing 40 Wall Street at $524 to $527 million. I mean, more than doubling its worth. It has big implications in terms of loan rates and things of that nature.
The tax stuff comes into play in part because of conservation easements. He was under investigation for his Seven Springs property in Westchester County. I'm still trying to figure out exactly what is in the lawsuit in regards to that, but the big example--
Brian Lehrer: In terms of what-- and because we're out of time I'm going to have to jump in. Now throw in one more fact. She's seeking, if she wins this suit, making the Trump Organization pay $250 million, banning the Trumps from running New York businesses for good, and banning Trump personally and the Trump Organization from buying commercial real estate in New York for five years. That's in addition to the criminal referral to the US Justice Department to investigate this as a criminal matter. Obviously more details to come. Our Albany reporter Jon Campbell. Thanks for filling us in on the breaking news.
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