Explainer-What New York’s lawsuit means for Trump and his family company

By Luc Cohen

NEW YORK (Reuters) – Donald Trump, three of his adult children and their family company were sued by New York state Attorney General Letitia James on Wednesday following a civil investigation into the former U.S. president and his business practices.

Here is an explanation of the case and what it means for Trump.

WHAT IS THE CASE ABOUT?

James accused Trump and the Trump Organization of fraudulently misstating the values of numerous properties to obtain favorable loans and tax benefits. The company manages hotels, golf courses and other real estate around the world.

In one example, James said the Trump Organization valued its Seven Springs estate in New York’s Westchester County at up to $291 million based on the claim that the company had won approvals to build seven mansions on the property. James called that claim a “fiction,” noting that local authorities limited how the property could be developed.

The investigation focused on the company’s activities before Trump became president in 2017.

WHAT COULD THE CONSEQUENCES BE FOR TRUMP?

The lawsuit seeks to have Trump and the other defendants give up $250 million that James said was obtained through fraud. James is also seeking to bar Trump and three of his children – sons Donald Trump Jr. and Eric Trump and daughter Ivanka Trump – from serving as directors of companies registered in New York, and prevent them and their company from buying commercial real estate or getting bank loans in New York state for five years.

James is also seeking to appoint an independent monitor at the Trump Organization to oversee valuations and disclosures to lenders, among other aspects of its business, for five years.

The attorney general acknowledged at a news conference that Trump, who now lives in Florida, could try to move his company or borrow elsewhere.

The company’s portfolio in New York state includes 14 residential properties, three commercial properties and two golf courses as well as Seven Springs, according to its website.

Trump, who is considering running again for president in 2024, is certain to contest the litigation.

WHAT HAS TRUMP SAID ABOUT THE CASE?

Following a news conference by James on Wednesday, Trump in a social media post called the lawsuit “another Witch Hunt” and launched a personal attack on her integrity.    

“She is a fraud who campaigned on a ‘get Trump’ platform, despite the fact that the city is one of the crime and murder disasters of the world under her watch!” Trump wrote.

Trump appeared for an August deposition in the investigation and declined to answer more than 400 questions, citing his protection against self-incrimination under the U.S. Constitution’s Fifth Amendment. If the case goes to trial, jurors can take his refusal to answer questions into account.

A lawyer for Trump on Thursday called the allegations “meritless.”

WILL TRUMP FACE CRIMINAL PENALTIES IN THIS CASE?

James cannot bring criminal charges against Trump in this investigation because her probe was a civil one, not a criminal one. But James said she was referring allegations of criminal fraud to federal prosecutors in Manhattan as well as the Internal Revenue Service for investigation.

The Trump Organization has separately been charged with criminal tax fraud by the Manhattan District Attorney’s office and is preparing for a scheduled Oct. 24 trial. nL1N30J1LQ]

Its former longtime chief financial officer Allen Weisselberg pleaded guilty and is expected to testify against the company, but is not cooperating with the investigation. Trump himself has not been charged in that case.

James is assisting in that criminal investigation. A criminal case requires proof beyond a reasonable doubt, while civil cases require a lower standard of proof.

WHAT ABOUT TRUMP’S OTHER LEGAL WOES?

Trump faces federal investigations into his handling of government records after leaving office and his efforts to overturn the 2020 presidential election he lost to Democrat Joe Biden. Trump also faces a state grand jury investigation in Georgia over efforts to overturn that state’s election results.

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