Donald Trump “repeatedly” committed fraud by over-inflating his wealth by as much as $2 billion (£1.6 billion), a New York judge has ruled.
Judge Arthur Engoron found that the former president and his company deceived banks and insurers by overvaluing his assets and exaggerating his net worth.
Ruling in a civil lawsuit brought by New York Attorney General Letitia James, Mr Engoron said Mr Trump’s estimates were based on the “fantasy world, not the real world”.
Mr Engoron ordered some of Mr Trump’s business licences be rescinded, making it difficult to do business in the city.
Mr Trump has long insisted he did nothing wrong and claimed the lawsuit is a politically motivated “crusade” by the Democrat judge.
In a post on Truth Social on Tuesday night, Mr Trump accused the judge of being a “Trump hater” and called the case a “witch hunt”.
The ruling finds Mr Trump, his company and key executives repeatedly lied about the assets on his annual financial statements, to cash in on favourable loan terms and lower insurance premiums.
Such tactics violated the law, the judge said, rejecting Mr Trump’s contention that a disclaimer on the financial statements absolved him of any wrongdoing.
“In the defendant’s world: rent-regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air; a disclaimer by one party casting responsibility on another party exonerates the other party’s lies,” Mr Engoron wrote in his 35-page ruling.
“That is a fantasy world, not the real world.”
The judge ruled the defences Mr Trump sought to use were “wholly without basis in fact or law”.
Manhattan prosecutors had looked into bringing a criminal case over the same conduct but declined to do so, leaving Ms James to sue Mr Trump and seek penalties that could disrupt his and his family’s ability to do business in the state.
The ruling is a big step for Ms James, who last month claimed the lawsuit did not need to go to trial because there is a “mountain” of evidence.
The claim, filed last year in the State Supreme Court in Manhattan, seeks a $250 million judgment and a ban on Mr Trump doing business in New York.
Mr Engoron’s ruling, in a phase of the case known as summary judgment, resolves the key claim in Ms James’ lawsuit, but six others remain.
A non-jury trial is slated to start on October 2 before deciding on those claims and any punishments the judge may impose. The trial could last into December.
Mr Trump’s lawyers had asked the judge to throw out the case.
They contend that Ms James was not legally allowed to file the lawsuit because there is no evidence that the public was harmed by Mr Trump’s actions. They also argued that many of the allegations in the lawsuit were barred by the statute of limitations.
Mr Engoron said he had “emphatically rejected” those arguments earlier in the case, equated them to the “time-loop in the film ‘Groundhog Day’”.
Ms James, a Democrat, sued Mr Trump and the Trump Organisation a year ago, alleging a pattern of duplicity that she dubbed “the art of the steal”, a twist on the title of Trump’s 1987 business memoir The Art of the Deal.
Among the allegations were that Mr Trump claimed his Trump Tower apartment in Manhattan — a three-story penthouse replete with gold-plated fixtures — was nearly three times its actual size and valued the property at $327 million. No apartment in New York City has ever sold for close to that amount, Ms James said.
Mr Trump valued Mar-a-Lago as high as $739 million — more than 10 times a more reasonable estimate of its worth. Mr Trump’s figure for the private club and residence was based on the idea that the property could be developed for residential use, but deed terms prohibit that, Ms James said.
Mr Trump has denied wrongdoing, arguing in sworn testimony for the case that it did not matter what he put on his financial statements because they have a disclaimer that says they should not be trusted.
The judge said the disclaimer on the financial statements “makes abundantly clear that Mr Trump was fully responsible for the information contained within” them and that “allowing blanket disclaimers to insulate liars from liability would completely undercut” the “important function” that such statements serve “in the real world”.
Mr Trump responded with a post on Truth Social, in which he said he had been “unfairly sued by the Trump-hating Democrat Attorney General of New York State, Letitia James, over the false claim that I inflated my financial statements in order to borrow money from banks”.
He added: “The judge in the case refused to allow the case to go to the commercial division where it belongs because he is a Trump hater beyond even AG James, who campaigned against me, spewing horrible inflammatory statements. I am not even allowed a jury.
“The facts of the case case are quite simple. I am worth much more than the number shown on my financial statements. I didn’t even include my most valuable asset - my brand”.
He said his company had been slandered and maligned in a “witch hunt”.
“I call for help from the highest courts in New York state or the federal system to intercede,” he added. “This is not America.”
Mr Trump and the other defendants said they plan to appeal the judgment.
“Today’s outrageous decision is completely disconnected from the facts and governing law,” Christopher Kise, a lawyer for Mr Trump, said in a statement.
“President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice.”