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New York’s $250 million fraud trial against Donald Trump gets underway

NEW YORK — A civil trial over alleged business fraud by former president Donald Trump and his company began Monday, with attorneys for New York Attorney General Letitia James and Trump presenting opposing views on whether he misrepresented business deals by drastically inflating the value of his real estate properties.

Both sides are expected to rely on testimony by accountants, appraisers, bankers and consultants who can speak to the reasoning Trump and his executives may have had in determining the values of his properties to seek business loans and insurance policies.

James has alleged in her $250 million suit that Trump and his executives knowingly and intentionally misstated not only the values, but also the basic facts of his properties, such as the square footage or zoning rules, to get better terms from partners.

She says Trump’s use of inflated financial statements constitutes rampant fraud, while Trump’s side says that despite inaccuracies, the documents were an earnest effort to assess the value of his hotels, office buildings, luxury condominiums and golf courses.

James won a major victory last week in a pre-trial ruling when Judge Arthur Engoron ordered that the former president be stripped of his New York business licenses, the first step in what experts say will probably lead to a sell-off or transfer of those properties barring a successful appeal by Trump.

Trump was not required to be in court Monday and did not testify. He may testify later in the trial.

Trump spoke outside the courtroom before, during and after the hearing, pointing fingers at others while suggesting the case was connected to larger political and legal forces he has denounced on the campaign trail as a Republican 2024 presidential candidate.

Trump told reporters that Engoron, who had issued a pre-trial decision stripping Trump of control of his New York business licenses, was “a disgrace” who should be disbarred. The court’s clerk, he said, shouldn’t be working the case because she “hates Trump” more than the judge.

James, a Democrat, was “a total crook, a terrible person,” who should be focused on murders not on his financial statements, he said.

Inside the courtroom, the focus largely remained on the matter at hand — the bean-counting mechanics that make up real estate values.

In opening arguments, Kevin Wallace, a lawyer in the New York state attorney general’s office, said it will prove an intent to falsify records, issue false financial statements and commit insurance fraud — all violations of the state penal law — by Trump, his adult sons, two longtime executives, his company, the Trump Organization and related entities.

“There’s ample evidence of intent based on the defendants’ knowing and intentional lies,” Wallace said.

Trump shook his head in disagreement as Wallace said the defendants falsified the former president’s net worth from 2011 to 2021 by amounts between $812 million and $2.2 billion.

Trump attorney Christopher Kise walked through the defense, arguing that there was no single standard way to evaluate assets, and Trump settled back, crossed his arms and occasionally leaned over to speak with Alina Habba, another of his attorneys.

Kise said that “there was no nefarious intent” and that the business of valuing real estate often does not rely strictly on appraisals.

“There was no illegality, there was no fraud, there are no victims,” Kise said.

Trump and his legal team have said on numerous occasions that they have “won 80 percent of the trial” because an appellate court intended to dismiss claims on statute-of-limitations grounds. The defense is suing Engoron over what they say is an improper refusal to follow the appellate court order.

“As you know we won an appellate victory in June of this year,” Kise said. “We make a blanket objection to testimony in that regard.”

Because of Engoron’s ruling last week, Trump has begun to lose control of the New York real estate empire he spent decades building, among them Trump Tower, luxury retail and Park Avenue condominiums.

At issue now, in a trial expected to last several weeks or months, is how severe the ultimate penalties will be. James has made six claims beyond the one the judge initially ruled on, asking among other things that he and his company pay $250 million in penalties and be barred from doing future business in the state.

After speaking to reporters briefly before the case began, Trump delivered a more pointed diatribe during a midday lunchbreak.

Armed with printouts of press releases and news stories supporting his innocence, he stood in a courthouse hallway and called the proceedings “a pure witch hunt with the purpose of interfering with the elections of the United States of America. It is totally illegal, and this judge should be disbarred.”

The fraud case begins as Trump faces criminal charges in four separate cases. At the moment, three of the four criminal cases are scheduled to go to trial next year. If any of the cases do go to trial in 2024, they would unfold in tandem with Trump’s campaign.

Trump skipped a trial this year where a jury found that he sexually assaulted E. Jean Carroll in the mid-1990s and defamed her after she publicly accused him. The jury awarded Carroll $5 million in damages.

Several people close to Trump said he grows particularly incensed when questioned about his worth and the value of his properties. The hearing focused on what he is accused of: intentionally inflating the value of his assets in his financial statements submitted to banks and insurance companies over many years.

Following a break, Trump looked around the courtroom as the first of his former trusted lieutenants, longtime accountant Donald Bender, readied to take the stand.

As Bender prepared to begin, Kise, Trump’s attorney, told the judge that he would like to issue a “blanket objection,” based on an appellate ruling in June, which allows the defense to express their protest without stopping after each question to object, thus slowing down the trial.

Bender worked for Mazars USA, the accounting firm that handled Trump’s business and personal tax returns until 2022, when the firm announced that it could no longer stand behind the statements and cut ties with Trump. Bender did so much accounting work for the company and its executives (including their personal tax returns) that he was in the Trump Tower offices often.

James’s office posits that Trump and his executives were responsible for feeding inflated asset values to Bender to include in annual statements of Trump’s wealth from 2011 to 2021. The statements came with a cover letter from Mazars, one that included a warning to recipients that he did not verify the validity of the figures he compiled and they did not comply with standard accounting practices.

The defense has argued that the warning served as a heads-up to banks, who also benefit from having sophisticated underwriting professionals. No company has come forward to claim that it lost money because of inaccuracies in Trump’s statements.

At the end of the day, as Bender reviewed 2011 records, Engoron paused the proceedings and seemed to suggest that he was open to excluding evidence relating to older transactions, which the Trump side has been arguing must be dismissed on statute-of-limitations grounds in line with a recent appellate court ruling.

While it remains unclear if a chunk of the case will be formally dismissed based on what was said, Trump took Engoron’s cryptic comments as a victory and threw up a double thumbs-up from the defense table.

“I think that was very good, that last five minutes was outstanding,” Trump told reporters outside the courtroom after the proceedings ended.

One of his attorneys came up to say that the judge’s remarks suggested that all transactions that concluded before 2014 may be removed from the case. Trump appeared taken aback by the judge’s comments, saying he had initially planned to “come out and complain” following the trial’s proceedings.

He said it was possible he would be back tomorrow.

Berman and O’Connell reported from D.C. Amy B Wang in D.C. contributed to this report.

This post appeared first on The Washington Post

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