New York AG asks judge to bar Trump from moving assets to new company he formed amid fraud lawsuit – CNBC

Former U.S. President Donald Trump speaks during a rally in Warren, Michigan, U.S., October 1, 2022. 
Dieu-nalio Chery | Reutersm

The New York attorney general’s office on Thursday asked a judge to bar former President Donald Trump from moving his businesses to a new holding company he formed amid a pending civil lawsuit accusing him, three of his children, and the Trump Organization of widespread fraud.

That request is spurred by concerns that the AG’s office would have difficulty getting Trump to pay a fine, if he loses the suit, as a result of his assets being held by a company that is not named as a defendant in the case.

On Sept. 21, the same day that Attorney General Letitia James sued Trump and the other defendants, her office saw that the Trump Organization had registered with New York’s secretary of state a new company, called “Trump Organization II LLC.” That new firm is incorporated in Delaware.

James, who on Thursday accused Trump and the Trump Organization of engaging in an “ongoing fraudulent scheme,” wants the Trump Organization blocked from moving any material assets to another entity.

“Beyond just the continuation of its prior fraud, the Trump Organization now appears to be
taking steps to restructure its business to avoid existing responsibilities under New York law,” James’ lawyers wrote in a filing in Manhattan Supreme Court.

James in that filing also asked Judge Arthur Engoron to order Trump not to use a new statement of his business’ financial conditions in dealings with lenders and insurers — either to satisfy existing obligations or to obtain new loans or insurance coverage — without adequately disclosing the assumptions and methods used to calculate the valuations of assets.

James is concerned that Trump’s latest statement of financial condition, which includes claims of valuations for a range of real estate, would rely on the same process used to generate the prior financial statements that she has alleged are fraudulent.

The attorney general in the new court filing also is seeking the appointment of an independent monitor who would oversee the submission by Trump of financial statements to any accounting firm, as well as their disclosure to lenders and insurers.

“There is every reason to believe that the Defendants will continue to engage in similar fraudulent conduct right up to trial unless checked by order of this Court,” James’ office said in the filing.

And James asked Engoron for permission to serve her lawsuit electronically on Trump and his son Eric Trump, noting that both of them and their lawyers have refused for weeks to accept service of the complaint.

New York Attorney General Letitia James speaks during a press conference at the office of the Attorney General on July 13, 2022 in New York City.
Michael M. Santiago | Getty Images

“Our investigation uncovered the fact that Donald Trump and the Trump Organization engaged in significant fraud to inflate his personal net worth by billions of dollars to illegally enrich himself and cheat the system,” James said in a statement.

“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.

“Today, we are seeking an immediate stop to these actions because Mr. Trump should not get to play by different rules.”

Trump’s attorney, Alina Habba, in a statement, said in response to James’ filing, “We have repeatedly provided assurance, in writing, that the Trump Organization has no intention of doing anything improper.”

“This is simply another stunt which Ms. James hopes will aid her failing political campaign.”

Habba also called the filing “nothing more than a thinly-veiled attempt to keep this case with Justice Engoron rather than have it transferred to the Commercial Division [of the court system] where it belongs.”

The Commercial Division of New York state courts handles complicated cases involving businesses. Habba in a Sept. 28 letter to the administrative judge of Manhattan Supreme Court, asked that the case be reassigned from Engoron to the Commercial Division.

Habba at times chafed under Engoron’s rulings when he was conducting hearings related to James’ investigation before the lawsuit was filed. In her letter to the administrative judge, Habba said that James appeared to “judge shop” to get Engoron assigned to handle the lawsuit with past filings that linked the suit with the prior litigation involving James’ subpoenas of Trump family members.

James’ lawsuit accuses Trump of overstating his net worth by billions of dollars in 11 previous annual statements that were provided to banks, insurance companies and the IRS to obtain financial benefits.

James’ lawsuit seeks at least $250 million in damages, and also asks that the Trump companies named in the complaint be permanently barred from doing business in New York state.

When she announced the suit, James revealed that she had asked federal prosecutors and the IRS to investigate Trump for possible federal crimes, saying her office’s nearly three-year probe had found evidence of potential bank fraud and the crime of making false financial statements.

Trump has called the lawsuit baseless, and “another witch hunt” by James.

He and Habba have also said that James’ investigation and suit are politically motivated.

James, who is seeking reelection, is a Democrat whose first campaign for attorney general featured her promising to investigate Trump when he was president.

Trump is a Republican who is considering whether to run again for the White House in 2024.