Thursday, July 25, 2024

Assets Trump May Lose Control in New York Fraud Case

A New York judge this week ruled that former President Donald J. Focusing on Trump’s business empire, the ruling determined that he had significantly inflated the value of his assets and obtained favorable terms on loans and insurance.

If this verdict, Mr. Trump could lose control of his most famous New York real estate — a result the state’s Attorney General Letitia James demanded when she filed a lawsuit accusing him of embezzlement last year. Cancellation of business certificates of any company in the state benefiting from fraudulent practices.

New York State Supreme Court Justice Arthur F. Engoron’s ruling comes ahead of a hearing to determine penalties that could begin as early as Monday. Trump’s lawyers are likely to appeal.

Mr. Trump’s attorneys and leading real estate expert, Ms. James’ case doesn’t properly factor in the value of the Trump brand or take into account the subjective nature of real estate appraisals, with borrowers and lenders routinely providing differing valuations.

Mr. Nearly a dozen properties owned or partially controlled by Trump and his organization could be subject to Judge Engron’s ruling. Here are the key ones that are vulnerable, as mentioned in the case.

Ms. James’s case is that the Trump Organization, for good, and Mr. A collection of approximately 500 separate companies, all of which were controlled by Trump, used deceptive practices to bring the highest possible value to Trump Tower.

In 2015, for example, the Trump Organization based the tower’s valuation on the sale of a nearby building, which was described in the press as a world record, allowing Mr. Trump and his allies to claim that the property’s value had increased. $170 million over the previous year.

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The three-story Trump Tower penthouse has been home to Mr. Trump for more than two decades. It was Trump’s home. He used to show off his wealth to heads of state and film crews.

But the suit claims it was worth much less than he claimed: The value of the Trump Organization’s financial statements rose 400 percent, from $80 million in 2011 to $327 million in 2015. Mr. Ms. James trusts Trump and his allies. It justified the jump by increasing the unit’s square footage from 10,996 to 30,000 square feet.

In 2019, Mr. Trump and his companies, which previously leased the buildings that housed Niketown, valued the interest in the buildings at $445 million. The lawsuit said the amount was inflated because the income and expense periods did not match.

The Trump Organization is accused of using forward-looking income figures, which were high, combined with backward-looking spending figures, which were low, resulting in at least $37 million in inflation, according to the lawsuit.

The property has 12 rent-stabilized apartments that are rated by the Trump Organization as being rented at market rate. According to the lawsuit, the company’s appraisal for the rent-stabilized units was nearly $50 million, with an assessed value of $750,000.

In this 43-story skyscraper in midtown Manhattan near Radio City Music Hall, Mr. Trump owns a minority stake. According to the case, Mr. Trump owns a 30 percent stake in the company that owns the building, and partnership rules restrict his ability to sell his stake.

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Nevertheless, in assessing their stake in the building, Mr. Trump and his companies were accused of simply calculating 30 percent of the skyscraper’s value, deducting its debt, and treating it as an asset that could be sold in a day. Next. In fact, the partnership exits the deal before 2044, Mr. severely limits Trump’s ability to

He was also accused of inflating the building’s value by misusing the “capitalization ratio,” a real estate valuation metric used to compare different investments.

In 2015, the Trump Organization’s valuation of the leased property in Lower Manhattan was $735 million. The lender-ordered appraisal came to $540 million, the suit says. Mr. Even though the $1.4 million lease agreement with Dean & DeLuca was not signed in Trump’s estimation.

His financial statements also understated the cost of the building. For example, the company reported administrative fees and expenses of $100,000 for 2012, 2013 and 2014, with fees closer to $1 million each year.

The suit alleges that the Trump Organization inflated the price of memberships at the golf course in order to raise the value of the property. For example, the club’s listed initiation fee in 2011 and 2012 was $10,000. Yet in 2011, the Trump Organization valued 93 percent of its 161 unsold memberships at $15,000 and above. In 2012, the company estimated 78 percent of its 254 unsold memberships were between $15,000 and $30,000.

In 1995, a subsidiary owned by the Trump Organization purchased 212 acres of land in three towns in Westchester County. More than a decade ago, the former president’s son, Eric Trump, planned to build 24 luxury homes there. An appraiser hired by the Trump Organization in 2014 valued the lots at about $30 million. But that same year, according to the lawsuit, the company announced $23 million for each location in one of the cities in Bedford.

Additionally, the financial statements reported these values ​​as if the homes had already been built, although the Trump Organization faced a legal challenge from the Nature Conservancy, which sought restrictions on what the organization could build.

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