NEW YORK – The judge hearing a high-profile civil fraud case against former President Donald Trump, his companies and his three adult children on Thursday ordered the appointment of a high-powered watchdog to oversee all Trump-related businesses.
Acting Manhattan Supreme Court Justice Arthur Engron filed suit after hearing arguments from New York’s attorney general, and Trump’s attorney said the attorney general lacked the authority and legal standing to make the request. First order appointing the supervisor and monitoring the case.
“The defendants are wrong,” wrote Ingoron, who Trump’s legal team asked to remove the case from the hearing.
Ingoron’s ruling prohibits Trump businesses from selling, transferring or disposing of non-cash assets without first giving 14 days written notice to the attorney general’s office and the court. It also directs that an inspector be appointed to ensure compliance with the order.
Trump’s businesses must provide the regulator with access to financial statements, statements of financial condition and “a full and accurate description of the structure and liquidation and illegal holdings and assets” of the Trump Organization and its affiliates and partners, a state court judge ordered.
The businesses must provide the monitor with at least 30 days’ advance notice of any proposed reorganization or restructuring of the Trump Organization. Ingoron set a Nov. 10 deadline for state officials and Trump attorneys to submit up to three nominees each.
“This court’s appointment of an independent monitor is a very cautious and narrowly tailored approach to ensure that no further fraud or illegality occurs … pending the final decision of this action,” Ingoron wrote.
“The defendants have not presented any documentary evidence or affidavits from persons with personal knowledge of the Attorney General’s “gross demonstration of persistent fraud,”” the ruling added.
The decision is likely to be appealed by Trump. Barring a successful appeal, the ruling marks a major defeat for Trump and the first victory for the state, according to a September lawsuit filed by New York Attorney General Letitia James, a Democrat who has frequently clashed with Trump.
“Today’s decision confirms that Donald Trump and his organizations cannot continue the massive fraud we have come to know,” James said in a statement.
Christopher Kiss, a lawyer for Trump’s business entities, said in an emailed statement, “This unprecedented order effectively controls the financial affairs of a highly successful private corporation empire by exaggerating the normal valuation differences common to the complex business realities of asset financing transactions.”
James also argued that she “stretched the boundaries of her authority to set a very dangerous precedent” that would hurt other businesses.
In a statement posted on the Save America Political Action Committee, Trump called the ruling “Communism has come to our shores.”
“As part of a 10-year scheme in which Trump vastly increased his personal wealth by billions of dollars, the indictment alleges, he then used the high valuations to get banks to lend the money to the Trump Organization better than they otherwise would have.”
The alleged actions violated New York laws and likely cost Trump, his business and his family more than $150 million from 2011-2021, the complaint said.
James’ office is seeking $250 million in fines and an injunction barring Trump and his sons from holding executive positions at any New York businesses.
Lawyers for the HH said there was no wrongdoing.
Lawyers for both sides presented their arguments for nearly three hours in a heated hearing before Ngoron on Thursday.
Kevin Wallace, a senior legal adviser in James’ office, argued that the appointment of a regulator and other measures are necessary to stop “ongoing fraudulent practices” at the Trump Organization.
The recently formed Trump Organization II said a legal ban is needed to prevent the new organization or other entities from accepting transfers from long-standing Trump businesses. Any such transactions could frustrate efforts to enforce the $250 million fine sought in the lawsuit, Wallace said.
Wallace cites reports of a major asset leak since James filed the civil suit. The Trump Organization is moving to sell the rights to the Trump International Hotel in Washington, D.C., Wallace said.
And he cited the lawsuit Trump’s lawyers filed against James in Florida state court on Wednesday. The filing, criticized by James, argued that her office did not have the authority to seek internal details of the Florida-based trust that holds all of Trump’s businesses on behalf of the former president. Trump previously lost a federal court action to stop the James investigation.
That new charge by Trump aims to provide “no visibility” into trust decisions and transactions, making it difficult for James’ office to detect ongoing and potential fraud, Wallace said.
A court-approved regulator will address potential financial questions about Trump companies, Wallace said, adding that the regulator “will not interfere with the day-to-day operations of the Trump Organization.”
However, Keese, a Florida-based attorney, argued that the supervisor’s appointment was an unusual move that was not supported by any evidence.
James argued that he did not have legal standing to defeat such an appointment, especially before court proceedings were conducted on the merits and validity of the civil fraud case.
There has been no effort to avoid penalties that would have been imposed if James had won the case, Keese said. He argued that Trump’s two Manhattan real estate properties, including Trump Tower, are worth more than $250 million and “are not going anywhere.”
Big banks and insurance companies involved in Trump-related real estate development projects have not complained or suffered losses in loan deals with the Trump Organization, Keese said.
James’ office argued that the loan agreements were “negotiated by experts on both sides” and misunderstood the diversity and complexity of the loan agreements.
“This is a private dispute, and the private parties did not see fit to file a complaint,” Keese said. “We are treating this as a fabricated complaint document.”
If a monitor is appointed, every business in New York state should be very concerned about the same “nationalization of a private corporation,” Keese said.
Ingoron, the judge who issued a contempt order against Trump and fined him more than $100,000, asked his lawyers during Thursday’s argument that James would not cooperate with subpoenas.
Late Wednesday, Engron declined a request by Trump’s lawyers to move the civil case to the court’s business division, which typically handles complex corporate cases. Ingoron has previously said that a New York supervisory judge’s denial of such a transfer is final and cannot be appealed.
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