A New York State Supreme Court judge issued a ruling on Tuesday that, if it stands, would have major consequences for Donald J. Trump.
The ruling came as part of the New York attorney general’s civil case against Mr. Trump. The attorney general, Letitia James, has accused the former president of fraudulently overstating the value of his assets on annual financial statements by as much as $2.2 billion a year in order to receive favorable terms on loans and benefits.
In the ruling, the judge, Arthur F. Engoron, agreed that Mr. Trump committed fraud when he sent those statements to banks and insurance firms. A trial in the case could start as soon as Monday; if Mr. Trump does not successfully have the ruling reversed before then, the proceeding will largely focus on the size of the penalty against him. Ms. James is seeking a fine of $250 million.
The financial statements are deceptive, Justice Engoron wrote, and he punctuated his order with harsh criticisms of the legal strategies deployed by Mr. Trump’s lawyers, whom he fined $7,500 each for using arguments that he had already rejected.
Mr. Trump, a Republican, has denied all wrongdoing and accused Ms. James, a Democrat, of political persecution. He noted Tuesday in a post on his social media platform, Truth Social, that Justice Engoron was also a Democrat.
One of his lawyers, Christopher M. Kise, indicated that he might appeal the ruling, which he called “outrageous” and “completely disconnected from the facts and governing law.”
Here are some takeaways from Justice Engoron’s decision.
The decision dealt Mr. Trump a major blow.
Mr. Trump’s lawyers were preparing to challenge Ms. James’s accusation that he had fraudulently inflated his net worth by billions of dollars, but Justice Engoron has short-circuited that aspect of the trial. In effect, Justice Engoron ruled that no trial was necessary to determine that Mr. Trump’s financial statements were fraudulent.
In his ruling, Justice Engoron wrote that the statements that Mr. Trump had submitted to banks and insurance companies “clearly contain fraudulent valuations that defendants used in business.”
Mr. Trump’s lawyers had planned to argue that the banks that lent Mr. Trump money were hardly victims — they turned profits on their dealings with the Trump Organization — and that valuing property can be subjective.
Consequences for his company may be serious.
Ms. James had sought to bar Mr. Trump from doing business in New York, in part by canceling certificates that allow his properties to operate there. Justice Engoron granted that punishment, which could have enormous repercussions for the Trump Organization.
For example, Mr. Trump could lose control of several properties, including Trump Tower in Midtown Manhattan and a flagship commercial building at 40 Wall Street. His grip over his Westchester County golf club is also threatened. At one point in his order, Justice Engoron referred to the limited liability companies that he had shut down as “the canceled LLCs.”
Mr. Trump’s family business itself has not been dissolved. Although popularly known as the Trump Organization, it actually comprises hundreds of entities, many of which were not named as defendants in the lawsuit. But the decision could still have a sweeping impact, with the potential to shut down an entity that employs hundreds of people working for Mr. Trump in New York.
The ruling is a victory for New York’s attorney general.
Ms. James’s investigation into Mr. Trump opened in 2019 and heated up after he left the White House. Mr. Trump was deposed twice: In the first instance, he avoided answering questions by invoking his Fifth Amendment rights; in the second instance, he answered questions and claimed that as president he had helped the world avoid a nuclear holocaust.
Nonetheless, Ms. James sued him in September 2022, accusing him of “staggering” fraud. She has said in legal filings that the undisputed facts show that Mr. Trump overvalued his assets by as much as $2.2 billion each year.
On Tuesday, Ms. James said in a statement, “We look forward to presenting the rest of our case at trial.”
Criminal cases against Mr. Trump are not affected.
Ms. James’s case is civil. She does not have the authority to indict Mr. Trump.
Yet the former president has been indicted in four other cases, two brought by a federal special counsel and one each by local prosecutors in Manhattan and Georgia. Those cases are separate from Ms. James’s lawsuit and will not be directly affected by Justice Engoron’s ruling.
The first of the criminal cases, which involves Mr. Trump’s effort to remain in power after losing the 2020 election, is scheduled to go to trial in March.
The judge was harsh with Mr. Trump’s lawyers.
There is little love lost between Justice Engoron and Mr. Trump’s lawyers, who tried to move the case to another judge and more recently sued the judge himself.
He has often expressed impatience with them. In an appearance last week, he appeared to grow tired of a particular line of argument advanced by Mr. Kise and, pounding on the bench, said, “You cannot make false statements and use them in business.”
In his order on Tuesday, he took the unusual step of fining each of Mr. Trump’s lawyers $7,500, writing that their continued assertion of arguments he had previously rejected was “indefensible.”
That sum was more than what Ms. James was seeking when she asked the judge to penalize them.
At one point, he criticized the arguments of Mr. Trump’s lawyers as straining credulity, including the notion that the square footage of an apartment could be subjective.
“That is a fantasy world, not the real world,” he wrote.
Trump is not out of options.
Mr. Trump has at least two routes left to challenge Justice Engoron. He can appeal the ruling and seek an emergency stay of the trial, a move that Mr. Trump’s lawyers indicated they might pursue.
Even if that does not work, Mr. Trump is awaiting a decision from an appeals court on the lawsuit he filed against Justice Engoron. In it, Mr. Trump argued that the judge had ignored an earlier appeals court ruling that raised the prospect that some evidence against the former president was too dated to be used at trial.
The appeals court is expected to rule as soon as Thursday.
THE NAIS IS OFFICIAL EDITOR ON NAIS NEWS