The New York attorney general’s office has rejected an offer from Donald J. Trump’s attorneys to settle a controversial civil investigation into the former president and his family’s real estate business, generating money subject to a lawsuit accusing Mr. Trump of fraud, according to three people with knowledge of the matter.
The attorney general, Letitia James, is also considering suing at least one of Trump’s adult children, the people said. Ivanka, Eric and Donald Trump Jr., all served as senior executives at Trump’s company, the Trump Organization.
Many have raised the possibility of a lawsuit this month after Ms. James’s office rejected at least one settlement offer from Mr. Trump’s lawyers. While the Trump Organization for months has made a decision on the attorney general’s office – and the two sides can still reach a deal – there is no indication that the settlement will materialize any time soon.
Ms. James, a Democrat who is running for re-election in November, focused on whether Mr. Trump had fraudulently inflated his net worth and launched a three-and-a-half-year investigation. mounts her as one of the former president’s main opponents. Mr Trump, who has denied all wrongdoing and mocked the investigation as a politically motivated witch hunt, shot her back, unsuccessful lawsuit filing to block her investigation and call Miss James, the Black, a racist.
A lawsuit from Ms James would add to their protracted battle, giving her the opportunity to deal a blow to the former president and his business, which she vowed before taking office to “strongly investigate”. strong”. If the case goes to trial and Trump loses, a judge could impose financial penalties and restrict the former president’s business in New York – all potentially in the midst of the war. presidential campaign in 2024 that he is expected to participate in.
Still, while many politicians can back off from a government lawsuit, Mr. Trump has a track record of leveraging law enforcement surveillance to energize the establishment. himself while portraying himself as a political martyr. And Ms. James is not guaranteed victory if the case goes ahead; If that’s the case, Mr Trump will likely put his preferred legal tactics – delaying and litigating every last detail of a case – that will be put on hold in the coming months or years.
Ms. James is hardly the only one investigating Mr. Trump, who spent his final weeks in office under the microscope in at least three separate criminal investigations. The FBI last month searched his Florida home and club as part of a federal investigation into his removal of sensitive material from the White House; Federal authorities recently seized the phones of two of his close advisers and sent subpoenas to dozens of his aides in the investigation of Mr. Trump’s efforts to reverse his election defeat. his nomination; and a Georgia district attorney have cast their nets widely in an investigation into possible election interference by the former president and his allies.
Mr. Trump has denied any wrongdoing, and it is unclear whether any of these investigations will lead to charges against the former president. However, his company was accused of an unrelated case.
The Trump Organization is due in court next month on criminal tax charges in Manhattan, a case that could subject the company to hefty financial penalties if found guilty. And although Mr. Trump was not accused of wrongdoing in that case, in which the attorney general’s office was also involved, his longtime chief financial officer recently pleaded guilty to participating in tax planning and co-operation. willing to testify at the company’s trial, bringing in prosecutors. The Manhattan District Attorney’s Office is at the top.
Mr. Trump moved to Florida after leaving the White House, but his company is still headquartered at Trump Tower in Midtown Manhattan. The company also owns or manages a variety of properties in New York: a hotel overlooking Central Park, three golf clubs, and several commercial properties and residential towers.
It is possible that Ms. James, as part of her lawsuit, could seek to curtail Mr. Trump’s Manhattan real estate portfolio, although she has given mixed signals about the type of sanctions she is taking. will try to impose.
The two faced off last month, when Mr. Trump refused to answer her questions under oath during the four-hour court-ordered removal process. Mr Trump invoked his Fifth Amendment rights more than 400 times during the session, breaking his silence only to attack Ms James as a “rebellious prosecutor” who which he said was leading a witch hunt against him, people with knowledge of the matter said.
Understanding New York’s Trump Investigation AG
An empire under close scrutiny. Letitia James, the attorney general for the state of New York, is currently conducting a civil investigation into former President Donald J. Trump’s business practices. Here are the things to know:
His decision to keep quiet may have given the attorney general some additional leverage: In civil cases, in some cases, a refusal to answer questions could work against a defendant at trial.
What we consider before using anonymous sources. Do the sources know the information? What is their motivation to tell us? Have they proven reliable in the past? Can we verify the information? Even if these questions are satisfied, The Times still uses anonymous sources as a last resort. Reporters and at least one editor know the source’s identity.
Eric Trump, who ran the company while Mr. Trump was in the White House, also invoked his Fifth Amendment rights more than 500 times during his 2020 impeachment with Ms. James’ office. When Donald Trump Jr. and Ivanka were interviewed during hour-long swearing-in sessions this summer, where they answered questions. There is no indication that they played a role in setting the value of Mr. Trump’s fortune, but they served as senior officials at the company for many years.
Ms. James’s civil investigation focuses on whether Mr. Trump’s annual financial statements falsely inflated the value of his assets – golf courses, hotels and commercial real estate – so he could guarantee preferential loans and other financial benefits. That area of focus overlaps with a separate criminal investigation from the Manhattan district attorney’s office, which moved to indict Mr Trump earlier this year before prosecutors became concerned about proving that Mr. deliberately fabricating property values.
The District Attorney, Alvin L. Bragg, has said that his office is continuing to investigate Mr. Trump, an investigation separate from tax allegations against the Trump Organization that his office will bring to trial. in the next month.
Mr. Trump’s silence during the oath of office was partly due to the existence of the investigation into Mr. Bragg. His lawyers fear that any lapses – or self-incriminations – could breathe new life into that investigation, a person with knowledge of his thinking said at the time. that point.
Ms. James, who does not have the authority to charge Mr. Trump with criminal charges, appeared before the former president in December to testify under oath and provide a series of documents to her office.
In January, Ms. James filed an unusual court document accusing Mr. Trump’s company of “fraudulent or misleading” practices regarding his annual financial statements, adding: that she needed to gather more records and testimony before deciding whether to sue Mr. Trump or his company.
Mr. Trump fought the subpoena, but in March a New York state judge ruled in Ms James’ favor, ordering the former president and Ivanka and Donald Trump Jr. sat for interrogation under oath.
In April, the same judge, Arthur F. Engoron, disdained Mr. Trump in court for failing to fully comply with Ms. James’ subpoena for the documents. The judge ultimately ordered Mr. Trump to pay $110,000.
In court papers, Ms. James outlined the outlines of a potential civil lawsuit against Mr. Trump and the Trump Organization over his annual financial statements, accusing the company of repeatedly misrepresent the value of its assets to bolster its profits.
Many of Mr Trump’s financial statements, the filing argued, “are often inflated as part of a model to show that Mr. Trump’s net worth is higher than it is.” The filing cites what Ms James’s office believes are false statements about the value of Mr Trump’s golf clubs in Westchester County, NY and Scotland, his flagship commercial property at No. Wall Street in Manhattan and his three-story penthouse in Trump Tower.
The company provided these statements to lenders and insurance companies, the filing said.
Her case against him can be difficult to prove. Asset valuations are often subjective, and if James does end up suing Trump, his lawyers will likely point to a disclaimer in his financial statements that says his accountant did not audit the valuation.
They could also argue that the Trump Organization sent reports to sophisticated financial institutions that conducted their own due diligence. In recent months, he has paid off some of those loans, resulting in hundreds of millions of dollars in the vaults of his banks, making them an unsympathetic victim.
Mr. Trump also famously doesn’t use email, so any instructions he might give employees about financial statements are most likely not in writing. The lack of a damn email – or the witness currently at his company willing to testify against him – could make it difficult to prove that he used his financial statements to defraud anyone. anyone becomes difficult.
But during a podcast appearance in June, Ms James expressed confidence she would prevail.
“We all know that he used funny numbers in his financial documents,” she said, adding, “And he was arrested.”
Preliminary settlement talks between Ms James’ office and Mr Trump’s lawyers began earlier this summer and have yet to gather much momentum, people with knowledge of the matter said. . Ms. James’s office has rejected an offer from Mr. Trump’s lawyers, although they are expected to continue trying to negotiate in the coming days.
Typically, attorneys entertain settlement negotiations both before and after filing a lawsuit.
A deal-breaker for Mr. Trump would be if Ms. James sought to shut down his New York businesses. But in the same podcast appearance, Ms. James suggested that she might stop looking for what is sometimes called the “corporate death penalty,” in which a judge orders the dissolution of a company.
“I don’t want to go that far,” Mrs. James said. All she wanted to do, she added, was to make sure Mr. Trump and his company understood they couldn’t use fraudulent valuations in the future. “He needs to be held accountable,” she said. “He and his company.”
Maggie Haberman contribution report.
