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Could "Trump Org II" be used to escape fraud ruling? What we know

An alleged attempt by Donald Trump to escape penalties in a $250 million fraud lawsuit involving his real estate company may already have been foiled by New York Attorney General Letitia James’ office.

Judge Arthur Engoron on Tuesday resolved one of the main claims made in James’ suit against the former president and ruled that Trump provided false and misleading financial statements, inflating the value of several of his properties for years in order to achieve financial perks and better bank loans.

The decision is a huge victory for James and means that the upcoming civil trial involving Trump, his real estate company and sons Eric and Donald Trump Jr., due to begin on October 2, will not need to determine whether the Trump family and the real estate company gave fraudulent statements overvaluing his properties by billions of dollars for years and will only decide on the penalty handed out.

Trump said he will appeal the ruling, and accused the “widespread, radical attack” against him of having “devolved to new, un-American depths.”

In October 2022, James’ office said that Trump’s company set up a new entity that could have been an attempt to offload assets before the case went to trial.

The entity, called the Trump Organization II, was registered in New York state on September 21, 2022, the same day that James announced her $250 million lawsuit against the former president and his company.

James’ office called for measures to be implemented to ensure that the original Trump Organization does not move assets out of New York into the Delaware company or anywhere else without court approval.

“Since we filed this sweeping lawsuit last month, Donald Trump and the Trump Organization have continued those same fraudulent practices and taken measures to evade responsibility,” James said.

Trump attorney Alina Habba said at the time that the real estate company had “repeatedly provided assurance” that the Trump Organization has “no intention of doing anything improper.”

In November 2022, Engoron agreed to James’ request that an independent monitor be brought in to oversee the transactions of the Trump Organization after the Delaware-based entity was set up.

In his ruling, Engoron said that Trump and the Trump Organization “demonstrated propensity to engage in persistent fraud” and that appointing an outside monitor “is the most prudent and narrowly tailored mechanism to ensure there is no further fraud or illegality” is committed while James’ lawsuit is pending.

The alleged attempt by the Trump Organization to dodge potential penalties from James’ lawsuit was noted by legal analyst and former federal prosecutor Joyce Vance after Engoron’s Tuesday ruling.

“Trump created a Delaware business entity a year ago in an effort to avoid the consequences of the corporate death penalty a NY judge imposed on his business entities today,” Vance posted on X, formerly Twitter.

The Trump Organization has been contacted via email for comment.

In his 35-page ruling, Engoron said that Trump’s inflated assessment of his properties, including his Mar-a-Lago resort in Florida, golf courses and his triplex apartment at Trump Tower in New York, came from a “fantasy world, not a real world.”

In a statement after the decision, Trump called Engoron deranged and accused him of doing the bidding of the completely biased and corrupt New York attorney general.

“We are rapidly becoming a communist country, and my civil rights have been taken away from me,” Trump added. “This is Democrat political lawfare and a witch hunt at a level never seen before.”

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