Judge Appoints Independent Monitor To Oversee Trump Organization Amid Fraud Probe

Topline

The Trump Organization will now be restricted in how it moves and reports its business assets as New York Attorney General Letitia James’ lawsuit alleging fraud by former President Donald Trump and his company moves forward, a judge ruled Thursday, appointing an independent monitor to oversee its activities.

Former President Donald Trump raises his fist while walking to a vehicle outside of Trump Tower in … [+] New York City on August 10.

AFP via Getty Images

Key Facts

An independent monitor will be appointed to oversee the Trump Organization’s activities and financial statements, New York State Supreme Court Justice Arthur Engoron ruled Thursday, and the company is barred from transferring or disposing of material assets without giving advance notice to the court and James’ office.

James had asked the court to temporarily stop the Trump Organization from continuing activities she alleges constitute fraud while her civil lawsuit is still playing out in court.

The independent monitor will be tasked with reviewing the Trump Organization’s financial documents “to assess [their]

accuracy,” as well as provide information to the monitor in advance of any plans to restructure the company.

James has accused the Trump Organization of fraudulently inflating the value of its assets for financial gain—so the appointment of the independent monitor would help ensure it can’t continue to state allegedly false valuations on financial documents—and alleged the company has tried to restructure its business and move activities out of New York in order to “avoid existing responsibilities under New York law.”

The Trump Organization argued the “overbroad” injunction should be rejected, alleging the state is inserting itself into what should be a private business matter and decrying James as just wanting to “generate extensive press coverage on the eve of an election.”

Engoron—whom Trump has previously attacked as “biased”—ruled the Trump Organization was “mistaken” in its argument that James didn’t have standing to sue, and said while James has attached “dozens of exhibits” showing evidence of alleged fraud that suggest her office is likely to succeed in the litigation, the Trump defendants “have failed to submit an iota of evidence” that disproves her claims.

Crucial Quote

“Failure to grant … an injunction could result in extreme prejudice to the people of New York,” Engoron wrote in his order, noting New Yorkers “derive enormous economic and other benefits” from the city’s financial activities. “Our executive, legislative and judicial institutions are obligated to ensure that financial transactions are conducted truthfully, not fraudulently.”

Chief Critic

Trump attorney Chris Kise argued during a hearing Thursday that James’ request was a “manufactured bill of grievances,” as quoted by Politico, adding a ruling in James’ favor “could be used in a way that doesn’t really relate to any kind of harm” because “we’re a few days out from an election.” Trump and his company have more broadly objected to James’ lawsuit as being politically motivated, with the Trump Organization previously describing it in a statement as “the culmination of nearly three years of persistent, targeted, unethical political harassment” by the AG and “about politics, pure and simple.” The Trump Organization has not yet responded to a request for comment on Engoron’s ruling.

Big Number

$250 million. That’s approximately how much James is asking Trump and the other defendants to pay in fines should the state ultimately win its lawsuit.

What To Watch For

James’ lawsuit could take years to play out, legal experts have predicted, explaining why the AG wanted the court to issue some measures now that could stymie the Trump Organization until the case is fully resolved. The New York lawsuit ultimately asks the court to impose a range of punishments on Trump, his children and business, including canceling certificates for Trump’s businesses, imposing more oversight on the company, barring Trump from engaging in any commercial real estate acquisitions for five years and blocking him and his children from serving as officers or directors in any New York business. While James’ litigation is a civil lawsuit, she said her office has also referred evidence of crimes to the Justice Department and Internal Revenue Service, which could result in additional criminal charges.

Key Background

James sued Trump, the Trump Organization, his children and other business associates in September, the culmination of a years-long investigation into the company’s financials that began in March 2019 after ex-Trump attorney Michael Cohen testified to Congress the then-president had fraudulently changed the value of his assets on financial statements for personal gain. The lawsuit accuses the Trump Organization of fraudulently inflating the value of its assets more than 200 times between 2011 and 2021 in order to obtain more favorable business deals and inflate Trump’s own net worth, including valuations for Trump’s Mar-A-Lago estate and apartment at Trump Tower. Those allegedly false valuations “were approved at the highest levels of the Trump Organization—including by Mr. Trump himself,” the lawsuit alleges. James deposed Eric Trump, Donald Trump Jr. and Ivanka Trump as part of her office’s investigation into the company, which included interviews with more than 65 witnesses in total. Trump himself was also deposed in August, though he refused to answer questions and invoked his Fifth Amendment rights. Engoron noted in his ruling Thursday the judge “drew a negative inference” about Trump’s innocence based on him invoking his right against self-incrimination.

Tangent

Trump separately sued James Wednesday in Florida state court in an effort to stop her from getting some financial documents as part of the New York lawsuit. The ex-president is asking the court to block James from receiving a copy of Trump’s revocable trust in Florida, which holds ownership of the Trump Organization, asking the court for “protection from James’ ongoing abuse and efforts to interfere with, control, gain access to, and publicly expose the terms of his Florida revocable trust.” James’ office pointed to that lawsuit in court on Thursday as “put[ting] beyond doubt” that the court should grant its request for an injunction, saying the lawsuit shows Trump “is, in fact, attempting to shield the key documents governing the structure of his business conglomerate and ownership of his business assets from review.”