New York Attorney General Letitia James’ civil lawsuit filed Wednesday alleging “persistent fraud” by the Trump Organization devastates Donald Trump’s manufactured self-image as a billionaire businessman.
It stings. Not only has Trump been accused of lying about his wealth and business successes, but the considerable wealth he has achieved, James alleges, has also been achieved by cheating banks and insurance companies.
A voter need not understand the intricacies of top-secret document classifications or the selection of presidential electors to grasp James’ claims that Trump’s business and political brand is a con game
While the swirl of criminal and congressional investigations has seemingly made little dent in Trump’s political standing, the massive fraud allegations undermine the core of Trump’s brand as a businessman and a potential 2024 presidential candidate.
A voter need not understand the intricacies of top-secret document classifications or the selection of presidential electors to grasp James’ claims that Trump’s business and political brand is a con game rooted in years of fraudulent valuations.
The 214-page complaint alleges a decade of inflated real estate values employed to fabricate a facade that Trump was an enormously successful businessman. James’ civil lawsuit strikes Trump at the two places he is most vulnerable: his ego and his money.
When Trump launched his presidential bid in 2015, he claimed that he was worth $8.7 billion. “I’m not doing that to brag. … I’m doing that to say that’s the kind of thinking our country needs,” he said.
Trump highlighted his net worth as a qualification for his presidential bid, saying: “I’m proud of my net worth. I’ve done an amazing job. … We need a leader that wrote ‘The Art of the Deal.’”
A few weeks later, he jettisoned that value and issued a statement boosting his wealth to “in excess of TEN BILLION DOLLARS.”
Trump’s claim of business success attracted voters.
In a May 2019 Politico/Morning Consult national poll of registered voters, when they were asked whether, “generally speaking,” they thought Trump was successful or unsuccessful in business, 54% said they believed Trump was “very” or “somewhat” successful. Thirty-six percent said he was “very” or “somewhat” unsuccessful.
But that same poll revealed that Trump supporters could change their opinions if they were confronted with financial information undermining his narrative. After they were told that Trump had reported $1 billion losses on his federal income tax returns from 1985 to 1994, those who believed he was a successful businessman dropped to 43%.
James’ detailed complaint cites scores of bloated valuations. Specifically, the complaint alleges that the defendants engaged in “an overall scheme to fraudulently and falsely inflate Mr. Trump’s assets in order to comply with Mr. Trump’s instruction to increase his net worth.”
To be clear, Trump has been accused of financial misconduct before. In 2019, James announced a settlement of her investigation of the Trump Foundation. Trump acknowledged his personal misuse of the charity’s funds. He was ordered to pay $2 million to the foundation, which disbursed its assets to other charities and was shut down.
After the 2016 election, Trump agreed to pay $25 million to settle a civil class action alleging that students enrolled in Trump University had been defrauded.
While neither of these fraud claims seemed to erode Trump’s political support, the newest lawsuit may inflict major damage on Trump’s political brand for six key reasons.
First, unlike fraud claims related to peripheral activities such as Trump University or the Trump Foundation, the newest lawsuit contends that the entire Trump Organization — the core of Trump’s claimed wealth — engaged in massive fraud for a decade. James’ lawsuit meticulously lists fraudulent valuations for Trump Tower, Mar-a-Lago, 40 Wall Street, numerous Trump golf courses and, importantly, Trump’s cash assets.
Second, James has sued not only Donald Trump but also Donald Trump Jr., Eric Trump, Ivanka Trump, Allen Weisselberg (the former chief financial officer of the Trump Organization) and multiple Trump business entities. All are accused of engaging in a criminal conspiracy to defraud lenders and insurers by inflating Trump’s net worth.
Third, James’ suit seeks damages of $250 million — 10 times the settlement in the Trump University lawsuit.
Fourth, if successful, James’ lawsuit would bar Trump and his three named children from running the Trump Organization and require the company to prepare audited financial statements in compliance with generally accepted accounting principles that would disclose Trump’s actual net worth.
Fifth, unlike in her previous lawsuit, James shows no intention of settling this case. According to The New York Times, she rejected a settlement overture by Trump before she filed the lawsuit. A trial would draw even more public attention to these fraud allegations.
Sixth, while some of the fraud claims relate to the intricacies of proper asset valuation methods, others can be grasped by a third grade math student. Take the claim about Trump’s New York apartment in Trump Tower. Allegedly the apartment was valued as being 30,000 square feet, but it was really just under 11,000 square feet. This caused it to be valued at $327 million ($29,738 per square foot) in 2015. In the suit, James said that the price was “absurd” and that “in 30-year-old Trump Tower, the record sale as of 2015 was a mere $16.5 million at a price of less than $4,500 per square foot.”
The former president’s approval ratings with voters and his grasp on the Republican Party have remained steady despite investigations related to the Jan. 6, 2021, insurrection attempt, the scheme to discredit the legitimacy of the election of President Joe Biden and Trump’s retention of classified documents.
But James’ civil suit is public, detailed and aimed at the core of Trump’s brand and self-image. His reaction to James’ inquiry has been telling. After a losing battle to avoid being deposed, Trump reportedly asserted his Fifth Amendment privilege to decline to answer more than 440 times in August.
That’s the clearest indication that James’ lawsuit is a potential game changer.