A New York state judge on Thursday ordered an independent monitor to oversee the Trump Organization’s financial statements following allegations that the company has been vastly overstating its assets.
Justice Arthur Engoron signed off on a preliminary injunction that also blocks former President Donald Trump’s company from transferring assets without court approval. In his ruling, the judge said the company must also make the monitor aware of all its holdings and assets and give 30 days advance notice of any restructuring at the company and any plans for “disposing or refinancing of significant Trump Organization assets.”
Given “defendants’ propensity to engage in persistent fraud, failure to grant such an injunction could result in extreme prejudice to the people of New York,” the judge wrote.
Engoron’s ruling came in a civil suit filed against the company by the New York attorney general’s office alleging the Trump Organization had been inflating its worth in financial statements to banks and insurers by billions of dollars. The judge’s ruling cited numerous examples of the company’s alleged fraud in the attorney general’s lawsuit, which he described as “more than sufficient to demonstrate OAG’s likelihood of success on the merits.”
In a hearing earlier in the day in state Supreme Court in Lower Manhattan, Trump attorney Chris Kise argued the move was unnecessary and could hamper the company’s business.
“It’s really about seizing control of a successful company,” Kise said of the request for a monitor.
Kevin Wallace, a lawyer for the attorney general’s office, said, “Our goal is not to impact the day to day operations” of the company, but “oversight.”
He said the office is trying to protect against “ongoing fraudulent activity or deceptive activity,” and the “Trump Organization has a consistent record of not complying with court orders. It should not be incumbent on the court or the attorney general to be looking over their shoulder.”
New York Attorney General Letitia James asked the judge to take action last month, citing actions the company took around the time she filed a $250 million lawsuit against Trump, his three oldest children and the Trump Organization alleging fraudulent business practices in September.
The motion for a preliminary injunction said Trump Organization representatives created a new company with the same name in Delaware six days before James’ office brought the suit. The company then filed paperwork to register Trump Organization II LLC in New York on Sept. 21, the same day the civil action was filed.
James praised the judge’s ruling in a statement, saying it “will ensure that Donald Trump and his companies cannot continue the extensive fraud that we uncovered.”
“No number of lawsuits, delay tactics, or threats will stop our pursuit of justice,” she added.
In a highly unusual move Wednesday night, Trump filed suit against James in Florida seeking a court order to block her from getting financial information involving his trust in Florida, which the attorney general’s office has noted holds the entities comprising the Trump Organization.
“President Trump comes before this court for protection from James’ ongoing abuse and efforts to interfere with, control, gain access to, and publicly expose the terms of his Florida revocable trust,” the suit argues, contending that James’ investigation into him is a political vendetta.
In a letter to Engoron on Thursday morning, James’ office said the trust documents “pertain to ownership and control of the business assets.” The letter said the suit was evidence that Trump is trying to “frustrate” their investigation by hiding documents they should have access to, and said it highlighted their need for immediate court action.
Kise told NBC News that James is overreaching in the New York case, and contended the institutions the company allegedly misled are sophisticated banks and insurers who have their own accounting procedures.
“The attorney general should not be in the business of policing private transactions between sophisticated commercial parties,” Kise said.
The former president has been critical of the judge in the case, who found Trump in contempt of court earlier this year for dragging his feet with subpoenas from the attorney general’s office. That temporarily resulted in a $10,000 a day fine until Engoron found Trump in compliance.
Trump blasted Engoron in a social media post last week, calling him “vicious, biased and mean.”
The hearing came as the company is facing a criminal trial about a block away from Engoron’s courtroom. The Manhattan district attorney’s office has charged the company with participating in a 15-year scheme to cheat on taxes by paying some officials off the books.
In opening statements earlier this week, a lawyer for the company suggested the scheme was all the work of former Trump Organization chief financial officer Allen Weisselberg, who’s pleaded guilty and is scheduled to testify against his former employer after the trial resumes next week.