Donald Trump could be at risk of losing his grasp on his New York business empire — a collection of properties that has defined his image as a successful real estate tycoon — after a judge found that the former president and his company had “repeatedly” violated state fraud laws.
As part of his ruling in the civil case, New York Supreme Court Justice Arthur Engoron on Tuesday also ordered that the business certificates for his New York companies be “canceled” and that three potential independent receivers be appointed within 10 days to “to manage the dissolution of the canceled” limited liability companies associated with Trump and the Trump Organization.
If not successfully appealed, the order could strip Trump of his authority to make strategic and financial decisions over some of his key properties in the state, ranging from his flagship Manhattan commercial property at 40 Wall Street to his Westchester County estate Seven Springs, according to legal experts.
If Engeron’s decision holds, Trump and his family also would no longer have legal authority to operate the businesses, said Melissa M. Cintron, a partner at Harrington Ocko & Monk, noting that the the ruling is “substantially damaging” to Trump’s business interests. Instead, the court-appointed receiver would manage the properties “until the assets are disposed of,” she noted.
Not only could the businesses be placed under the control of a receiver, but “the receiver will sell off the assets of the businesses and wind up affairs,” such as paying creditors, Cintron added.
Alina Habba, legal spokesperson for Trump’s Save America PAC, said the judge’s ruling is “fundamentally flawed at every level” and said they would “immediately appeal.”
The businesses named in the ruling include The Trump Organization, DJT Holdings LLC, 40 Wall Street LLC and Seven Springs LLC, among others.
In his ruling, Engoron concurred with New York Attorney General Letitia James, who sued Trump and the Trump Organization a year ago, that it is beyond dispute that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion.
According to Engoron’s ruling, Trump and his company overstated the valuations of many properties by hundreds of millions of dollars. For instance, the Palm Beach Assessor valued Trump’s Mar-a-Lago club as little as $18 million between 2011 and 2021 — a valuation that his local property taxes were based on. During those years, however, Trump valued the same property as high as $714 million on his annual statements of financial conditions.
Independent monitor will decide what is sold
Still, there appear to be plenty of details to be hammered out, with Trump lawyer Christopher Kise arguing in a hearing on Wednesday that Engoron’s ruling raises questions that would be difficult to parse, such as exactly which properties or businesses the Trump Organization might be forced to sell or dissolve.
“Certain of the entities are entities that own physical assets — like 40 Wall Street — is it the court’s interpretation that those assets are now going to be sold, or are they just going to be managed by the monitor?” Kise asked.
Engoron huddled with his law clerk Allison Greenfield, whispering for several minutes, before replying that he doesn’t yet have an answer. “But we will take that up in various contexts, I’m sure,” Engoron said.
Later, Kise questioned if Engoron had instructions as to which of Trump’s more than 400 companies were subject to the order.
“Which of the entities are actually covered here? You have New York entities that own just a house, like a townhouse or something, like Eric’s or Don Jr.’s residence,” Kise said, referring to Trump’s sons, Donald Trump, Jr. and Eric Trump.
Engoron indicated that would be for the independent monitor to decide. As part of his ruling, the judge noted that Barbara S. Jones, a former U.S. District Court judge, would continue in her role as independent monitor of the Trump Organization. It is unclear if Jones also will be assigned to oversee the dissolution of Trump’s business entities.
Canceled business certificates
Judge Engoron ruled that certain business certificates filed by Trump or his sons are canceled. The order also encompasses business certificates filed by Allen Weisselberg, Trump’s former chief financial officer, or Jeffrey McConney, controller at the Trump Organization.
Business certificates, once approved by a state, legally authorize an entity to do business within that state, Cintron noted.
“Without a corporate charter, you can’t operate as a corporation. You can’t get loans, you can’t apply for a government contract,” financial crimes prosecutor Diana Florence told Insider. “It’s comparable to once a person dies. A dead person can’t sell property. Only the executor of the estate can do that — or in this case, the receiver.”
Outside the court Wednesday, Trump spokeswoman Habba, called Engoron’s ruling “outrageously overreaching and frankly nonsensical.”
Habba said Trump’s legal team is still assessing the full consequences of the ruling.
“Nobody even knows the scope,” she said. “We weren’t sure when we came in today whether it was summarily decided on all counts or not,” Habba said.
SOURCE: CBS news