Trump committed fraud by inflating his net worth, New York judge rules

Civil lawsuit in New York challenges validity of Mr Trump's image as a wealthy businessman

Former US president Donald Trump after giving a deposition to New York Attorney General Letitia James in April. Reuters

A New York judge has ruled that former US president Donald Trump committed fraud for years while building the real estate empire that launched him to fame and the White House.

Judge Arthur Engoron, ruling on Tuesday in a civil lawsuit brought by New York’s Attorney General, found Mr Trump and his company deceived banks, insurers and others by greatly overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.

The decision, days before the start of a non-jury trial in Attorney General Letitia James’s lawsuit, is the strongest repudiation yet of Mr Trump’s carefully shaped image as a wealthy and shrewd real estate mogul turned political powerhouse.

Beyond mere bragging about his riches, Mr Trump, his company and key executives repeatedly lied about them on his annual financial statements, reaping rewards such as favourable loan terms and lower insurance premiums, Mr Engoron found.

Those tactics crossed a line and broke the law, the judge said, rejecting Mr Trump’s contention that a disclaimer on the financial statements absolved him of any wrongdoing.

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.

Mr Engoron’s ruling, in a phase of the case known as summary judgment, resolves the key claim in Ms James’s lawsuit, but six others remain.

Mr Engoron is due to hold a non-jury trial starting on October 2 before deciding on those claims and any punishment he may impose.

Ms James is seeking $250 million in penalties and a ban on Mr Trump doing business in New York, his home state. The trial could last into December, Mr Engoron has said.

Mr Trump’s lawyers had asked the judge to throw out the case, which he denied.

They said Ms James was not legally allowed to file the lawsuit because there was not any evidence that the public was harmed by Mr Trump’s actions.

They also said many of the allegations in the lawsuit were barred by the statute of limitations.