Former Federal Prosecutor Breaks Down ‘Fraudulent Scheme’ That Could Ruin Trump’s Empire: ‘No Way’ to Spin This
Donald Trump suffered a serious legal blow this week after a New York judge found him and his adult sons liable for fraud by inflating the value of their properties on financial statements.
Unlike the criminal cases Trump faces, this is a civil case being brought by New York Attorney General Letitia James, who is seeking $250 million. So while the former president doesn’t face jail time, the real estate empire that catapulted him to global fame is under serious threat.
To figure out what this case means for Trump, Mediaite spoke with Renato Mariotti, a former federal prosecutor who served in the Securities and Commodities Fraud Section of the United States Attorney’s Office. He broke down the case and laid out the consequences for Trump.
“Essentially, the allegations are that the Trump Organization would inflate the evaluation of assets for certain purposes, let’s say for lenders, and would potentially have a different evaluation than would be given to tax authorities, so there’s a fraudulent scheme there,” Mariotti explained.
The judge in the case, Mariotti said, ruled against Trump on summary judgment. There are outstanding claims that will be ruled on at trial – as well as the $250 million James is seeking.
“He has found that the Trump Organization has committed fraud, and a number of individuals including Trump, the former president, Eric Trump, and others committed fraud and the judge has ordered a number of substantial remedies against the Trump organization and various companies,” Mariotti said. “The judge has dissolved some of the companies that were formed under New York law. He has appointed a former judge to oversee the Trump organization and has also essentially prevented the Trump organization from doing certain types of business in New York state.”
As far as the fallout for Trump and his organization, the threat is serious, Mariotti said.
“I would expect that the Trumps are going to face accusations from lenders, and potential litigation from lenders,” he explained. “I wouldn’t be surprised if lenders ultimately decide that there’s a breach of various covenants that were made in their loan documents, in the loans that they have and ultimately and determine that they are going to take an action to essentially pull those loans, and potentially end the lines of credit that are necessary for a real estate developer to stay in business.”
“So, I think, there will be very significant potential financial considerations for the Trump organization,” he added.
One of those considerations for the Trump Organization is whether the company will be able to hold onto some of its prized assets, including Trump Tower in New York and Mar-a-Lago in Florida. The judge ordered on Tuesday that the licenses for some of Trump’s businesses be rescinded over the fraud, which could make it impossible for the organization to function in New York.
“I think what will happen is the Trump Organization is going to sell assets,” Mariotti said. “It’s going to reform potentially in another state but it’s going to take a very significant hit. The Trump Organization is based in New York. It’s a New York company. It is composed of and affiliated with many other New York companies, and not being able to conduct business the way it would like to in New York and having, for example, a monitor watching its activity is going to constrain its activities.”
“There’s no way in which anyone could spin this as being good for Donald Trump’s business,” he concluded.
Watch above.
