Donald Trump and Trump Organization Prohibited from Moving Assets to
Evade Liability and Required to Appoint a Monitor to Oversee Financial Disclosures
NEW YORK – New York Attorney General Letitia James today won a major victory in her office’s ongoing lawsuit against Donald Trump and the Trump Organization with a court ordering the defendants to immediately stop engaging in the financial fraud outlined in Attorney General James’ September 2022 lawsuit pending trial. The Honorable Arthur Engoron of the New York County State Supreme Court granted Attorney General James’ motion for a preliminary injunction, finding that the claims in the suit are likely to succeed at trial, and ruled that Donald Trump and the Trump Organization cannot transfer any material assets to another entity without court approval, are required to include all supporting and relevant material in any new financial disclosures to banks and insurers, and ordered to appoint an independent monitor to oversee compliance with these measures.
“Time and time again, the courts have ruled that Donald Trump cannot evade the law for personal gain,” said Attorney General James. “Today’s decision will ensure that Donald Trump and his companies cannot continue the extensive fraud that we uncovered and will require the appointment of an independent monitor to oversee compliance at the Trump Organization. No number of lawsuits, delay tactics, or threats will stop our pursuit of justice.”
Last month, the Office of the Attorney General (OAG) filed a motion for a preliminary injunction to stop Donald Trump and the Trump Organization from continuing to engage in the significant fraudulent and illegal business activity outlined in OAG’s September 2022 lawsuit pending trial. Since Mr. Trump and the Trump Organization became aware of OAG’s investigation, they have continued to engage in many practices they knew to be improper or fraudulent, including on Mr. Trump’s 2021 Statement of Financial Condition.
Beyond the continuation of that fraud, the Trump Organization appeared to be taking steps to restructure its business to evade the reaches of OAG’s lawsuit. On September 21, 2022, the same day OAG filed its lawsuit, the Trump Organization registered a new entity with the New York Secretary of State: “Trump Organization II LLC.” That entity is a foreign corporation that was incorporated in Delaware. The Trump Organization refused to provide any assurance that it will not seek to move assets out of New York to evade legal accountability.
Specifically, OAG sought an order to prohibit the Trump Organization from submitting a statement of financial condition or other asset disclosure for Mr. Trump to lenders and insurers, either to satisfy existing obligations or to obtain new financing and insurance, that fails to adequately disclose the assumptions and techniques used for valuing his assets, as outlined in the complaint. The order also sought to prohibit the Trump Organization from transferring any material asset to a non-party affiliate or otherwise disposing of a material asset without court approval.
In order to oversee these requests, the motion sought the appointment of an independent monitor until trial that would oversee the submission of financial disclosure information to any accounting firm compiling the 2022 Statement of Financial Condition; financial disclosures to lenders and insurers required by continuing obligations or to obtain new financing and insurance; and any corporate disposition of significant assets.
In September 2022, Attorney General James filed a lawsuit against Mr. Trump, the Trump Organization, senior management, and involved entities for engaging in years of financial fraud to obtain a host of economic benefits. The lawsuit alleges that Mr. Trump, with the help of his children Donald Trump, Jr., Ivanka Trump, and Eric Trump, and other senior executives at the Trump Organization, falsely inflated his net worth by billions of dollars to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to satisfy continuing loan covenants, to induce insurers to provide insurance coverage for higher limits and at lower premiums, and to gain tax benefits, among other things. From 2011 to 2021, Mr. Trump and the Trump Organization knowingly and intentionally created more than 200 false and misleading valuations of assets on his annual Statements of Financial Condition to defraud financial institutions.
This investigation and subsequent legal action have been conducted by Senior Enforcement Counsel Kevin Wallace, Special Counsel Andrew Amer, Assistant Attorney General Colleen K. Faherty, Assistant Attorney General Alex Finkelstein, Assistant Attorney General Wil Handley, Assistant Attorney General Stephanie Torre, Special Counsel to the Solicitor General Eric R. Haren, Enforcement Section Chief Louis M. Solomon and Legal Support Analyst Samantha Stern. Additional support was provided by Assistant Attorney Generals Sherief Gaber and Matthew Conrad, Data Analyst Anushua Choudhury, Senior Data Analyst Akram Hasanov, Data Scientist Chansoo Song, Deputy Director of Research and Analytics Megan Thorsfeldt, and Director of Research and Analytics Jonathan Werberg; as well as Information Technology Specialist Hewson Chen, Information Technology Specialist Paige Podolny, and Information Technology Specialist John Roach. Appellate support was provided by Deputy Solicitor General Judith Vale and Assistant Solicitor General Eric Del Pozo. The investigation and legal action are overseen by First Deputy Attorney General Jennifer Levy.