A judge in New York has ruled that Trump and his sons inflated his net worth by providing false financial statements for a decade. This civil case brought by New York’s AG was about to go to trial on the facts but now the judge has decided there’s no doubt Trump is liable for fraud in his business dealings.

In his 35-page ruling, Judge Arthur Engoron said Trump continually lied on his financial statements and was able to get favorable loan terms and lower insurance premiums as a result. Trump’s legal arguments defending the statements are based in “a fantasy world, not the real world,” Engoron wrote.

The judge went on to say that the case was essentially a “documents case,” and “the documents here clearly contain fraudulent valuations that defendants used in business, satisfying [the attorney general’s] burden to establish liability as a matter of law against defendants. Defendants’ respond that: the documents do not say what they say; that there is no such thing as ‘objective; value; and that, essentially, the Court should not believe its own eyes.”

“The defenses Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact,” Engoron added.

Specifically, in his own defense Trump tried to claim that valuations offered to banks were not necessarily accurate and included a “worthless” clause, i.e. a disclaimer saying the valuations might not be accurate. The judge quotes from Trump’s deposition in which he said a couple times that the “worthless” made the valuations of no real value to anyone. The judge lets him have it.

…defendants’ reliance on these “worthless” disclaimers is worthless. The clause does not use the words “worthless” or “useless” or “ignore” or “disregard” or any similar words. It does not say, “the values herein are what I think the properties will be worth in ten or more years.” Indeed, the quoted language uses the word “current” no less than five times, and the word “future” zero times…

Thus, the “worthless clause” does not say what defendants say it says, does not rise to the level of an enforceable disclaimer, and cannot be used to insulate fraud as to facts peculiarly within defendants’ knowledge, even vis-a-vis sophisticated recipients.

After ruling that Trump submitted false values on these forms, the judge points to a bunch of specific examples like this one involving his New York apartment:

This Court takes judicial notice that the Trump Tower apartment in which Donald Trump resided for decades (the “Triplex”) is l 0,996 square feet. Between 2012- 2016, Donald Trump submitted SFCs falsely claiming that the Triplex was 30,000 square feet, resulting in an overvaluation of between $114-207 million dollars…The misrepresentation continued even after defendants received written notification from Forbes that Donald Trump had been overestimating the square footage of the Triplex by a factor of three.

In opposition, defendants absurdly suggest that “the calculation of square footage is a subjective process that could lead to differing results or opinions based on the method employed to conduct the calculation.12″… Well yes, perhaps, if the area is rounded or oddly shaped, it is possible measurements of square footage could come to slightly differing results due to user error. Good-faith measurements could vary by as much as 10-20%, not 200%…

A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud.

The judge found he did the same thing with regard to Mar-a-Lago:

From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a-Lago at between $18 million and $27.6 million…

Notwithstanding, the SFCs’ values do not reflect these land use restrictions. Donald Trump’s SFCs for 2011-2021 value Mar-a-Lago at between $426,529,614 million and $612,110,496, an overvaluation of at least 2,300%, compared to the assessor’s appraisal.

In all, the judge ruled Trump had inflated the value of his various properties by more than $2 billion. As noted above, Donald Trump Jr. and Eric Trump are also found liable because they signed documents connected with the valuations. Several other people and entities are also part of the case (the full list can be found in the ruling). Even Trump’s lawyers get fined for repeatedly making the same arguments after those arguments had twice been found invalid.

One would not know from reading defendants’ papers that this Court has already twice ruled against these arguments, called them frivolous, and twice been affirmed by the First Department…

Defendants’ conduct in reiterating these frivolous arguments is egregious. We are way beyond the point of “sophisticated counsel should have known better”; we are at the point of intentional and blatant disregard of controlling authority and law of the case…

Accordingly, this Court grants OAG’s motion for sanctions, in part, to the extent of sanctioning each of defendants’ attorneys who signed their names to the instant legal briefs7, in the amount
of $7,500 each, to be paid to the Lawyer’s Fund for Client Protection of the State of New York no later than 30 days from the date of this Order.

So, what does all of this add up to? It means that Trump, his sons and other people have been found liable and now the civil trial brought by the AG will proceed to determine the size of the penalty he must pay. The original lawsuit was for $250 million so the size of the penalty could be substantial.

Anything presented in the parties’ moving papers that this Court has not ruled upon in this Decision and Order, including determinations on liability for the second through seventh causes of action, the amount of disgorgement of profits to which OAG is entitled, and determinations on the third through ninth prayers for relief sought by OAG in its complaint, presents disputed issues of fact that shall proceed to trial.

Finally, the judge also granted one of the specific requests made in the AG in her lawsuit and this one could also have serious consequences for Trump’s business.

Justice Engoron’s ruling granted one of the biggest punishments Ms. James sought: the cancellation of business certificates that allow some of Mr. Trump’s New York properties to operate, a move that could have major repercussions for the Trump family business.

The decision will not dissolve Mr. Trump’s entire company, but it sought to terminate his control over a flagship commercial property at 40 Wall Street in Lower Manhattan and a family estate in Westchester County. Mr. Trump might also lose control over his other New York properties, including Trump Tower in Midtown Manhattan, though that will likely be fought over in coming months.

So Trump could lose control of some properties and could be on the hook for, potentially, tens of millions of dollars in penalties.

Before all of that can be decided, an appeals court has to rule on Trump’s lawsuit against Judge Engoron. That court is expected to issue a ruling this week. Unless that ruling goes Trump’s way, his net worth is likely to take a significant hit.