I’m sorry did someone say conservation easements? In the same sentences as >$250M fraud…hold on

Award disgorgement of all financial benefits obtained through the persistent fraudulent practices of an amount to be determined at trial and estimated to total at least $250,000,000.00

No really did someone say: Conservation Easements…

It’s not like my position on the Manhattan DA and New York Attorney General investigations has changed (read more here, here, here, here, more specifically the first federal prosecution concerning conservation/preservation easements, found here and more generally here) you see some of us never bought in to the Blue QANON-sense “sex trafficking, drug trafficking” clickbait bullshit. No some of us decided to look at the papers (mortgages, appraisals, springing loans, shell and self companies) of Trump and his properties. And then some of us decided to dig deeper into the “millions, tens of millions of dollars” fraud scheme that the entire Trump Organization relied upon. Ultimately landing us smack dab in the middle of conservation/preservation easement

And just like that 👇🏻Here. We. Are. 👇🏻

Exactly where some of us said we’d be. Granted my prediction of the Manhattan DA bringing a criminal case against Trump has yet to materialize. But having read the newly filed New York Attorney General’s civil complaint —interestingly enough the AG specifically stated other violations of Federal Law. And frankly that in of itself is significantly notable.

the Defendants:

As detailed by the New York Office of Attorney General (NY-OAG),, there are 16 defendants…which includes the following;

• Donald Trump, Donald Trump, Jr., Ivanka Trump, Eric Trump,

• the Trump Organization Inc.,

• the Trump Organization LLC,

• the Donald J. Trump Revocable Trust,

• DJT Holdings LLC, DJT Holdings Managing Member,

• Allen Weisselberg, Jeffrey McConney

This also included various business entities that received the loans which are the subject of the action, including:

• Trump Endeavor 12 LLC, 401 North Wabash Venture LLC, Trump Old Post Office LLC, 40 Wall Street LLC, and Seven Springs LLC.

Financial Fraud Allegations:

The OAG alleges fraud (a whole bunch of it) and illegality under 63(12) in connection with the defendants’ conduct in preparing the statements and submitting those statements to financial institutions to obtain financial benefits. The OAG argues as part of demonstrating Trump et al’s illegality under NY Law 63(12), Which further details actions by Mr. Trump and the defendants (his children and his Company) violated state laws, including:

• Falsification of business records in violation of Penal Law § 175.10;

• Issuing a false financial statement in violation of Penal Law § 175.45;

• Engaging in insurance fraud by submitting false and misleading information in a written application for insurance and to obtain other insurance benefits in violation of Penal Law § 176.05;

• Engaging in a conspiracy to commit each of aforementioned state law violations.

See link to the full addendum of properties subject to the civil complaint but what being overlooked is —two criminal referrals made. Granted we already knew that the IRS CI had initiated a criminal investigation. Largely due to the fact in February of 2022 Mazars officially dumped Trump and Trump Org because on a scale of 0 to 10 with 10 being “very bad” —Mazars’ dumping Trump was a 10 times googolplex. In other words infinitely worse than very bad…

…OAG has referred the matter to the U.S. Attorney’s Office for the Southern District of New York and the Internal Revenue Service (IRS) for criminal investigation….

Again we knew that in January 2022 that the NY-OAG had already concluded that Trump and his adult children likely mislead the IRS so knowing in September 2022 the NY-OAG made it official, that’s incredibly satisfying…

“For too long, powerful, wealthy people in this country have operated as if the rules do not apply to them. Donald Trump stands out as among the most egregious examples of this misconduct…With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system. In fact, the very foundation of his purported net worth is rooted in incredible fraud and illegality. Mr. Trump thought he could get away with the art of the steal, but today, that conduct ends. There are not two sets of laws for people in this country; we must hold former presidents to the same standards as everyday Americans. I will continue to ensure that no one is able to evade the law, because no one is above it.”

About those Conservation/Preservation Easements:

In the past I’ve explained why these easements would likely play a pivotal role in any action taken by the NY-OAG. Largely because a trial that’s “on paper” can be extraordinarily difficult for a Defendant. At best it limits various affirmative defenses and at worst paper doesn’t lie, nor is it subject to a person’s best recollection. No paper is not the case you want to be defending. For Example, see pages 69 thru 77 —this is a step by step factual recitation of how Trump used conservation easements to his financial advantage…

By over inflating the value of the parcel subject to subdividing into smaller lots, the Trump’s MO was over inflate the value of a conservation/preservation easements and then write it off as a tax deduction. For Example below is a step by step recitation of what the investigation uncovered, specifically at Seven Springs property:

…Trump Organization did ultimately decide to make the easement donation for tax year 2015. In connection with that donation, in March 2016, two Cushman appraisers retained by the Trump Organization completed another appraisal of Seven Springs and concluded that the entire property (including undeveloped land and existing buildings) as of December 1, 2015 was worth $56.5 million. Like Mr. McArdle’s verbal consultation, this March 2016 appraisal substantially undermined the much higher valuations of Seven Springs in the Statements of Financial Condition from 2011 through 2014, which reflect valuations that range from $261 million to $291 million.

…2011-2021, Mr. Trump’s statements were fraudulent and misleading in both their composition and their presentation

…OAG found that between 2011-2021, Mr. Trump’s statements were fraudulent and misleading in both their composition and their presentation. Mr. Trump made known through Mr. Weisselberg that he wanted his net worth on his statements to increase every year, and the statements were the vehicle by which his net worth was fraudulently inflated by billions of dollars year after year. All told, Mr. Trump, his children, the Trump Organization, and the other defendants as part of a repeated pattern and common scheme, derived more than 200 false and misleading valuations of assets for the 11 statements covering 2011 through 2021.

As noted the NY-OAG investigation included: 65 witness interviews and review of millions of pages of documents —this was not a simple investigation. Given the voluminous use of both shell and self companies, one undeniable fact, irrespective of the meandering path —the ultimate destination was in Trump’s irrevocable trust.

In the 220 page civil complaint, the NY-OAG provided dozens of examples of Trump’s pernicious fraudulent activity. Explaining the how Trump and the Trump Organization had a routine practice of intentionally misvalued assets to further enrich Mr. Trump. The complaint includes fraudulent conduct across more than 23 different properties and other assets owned by Mr. Trump and the Trump Organization. It’s not at all surprising the examples given. I mean back in January 2022 that’s when we first learned about the astoundingly divergent appraisal values (see Trump Triple-Plex)

The NY-OAG Relief Sought

Keep in mind the civil action filed today is over 220 pages. As a consequence of this persistent and repeated fraud and illegality, OAG is asking the court to:

• Permanently bar Mr. Trump, Donald Trump, Jr., Ivanka Trump, and Eric Trump from serving as an officer or director in any New York Corporation or similar business entity registered and/or licensed in New York state;

• Bar Mr. Trump and the Trump Organization from entering into any New York state commercial real estate acquisitions for a period of five years;

• Bar Mr. Trump and the Trump Organization from applying for loans from any financial institution registered with the New York Department of Financial Services for a period of five years;

• Award disgorgement of all financial benefits obtained through the persistent fraudulent practices of an amount to be determined at trial and estimated to total at least two hundred and fifty million dollars ($250 million).

• Permanently bar Allen Weisselberg and Jeffrey McConney from serving in the financial control function of any New York Corporation or similar business entity registered and/or licensed in New York state;

• Appoint an independent monitor to oversee compliance, financial reporting, valuations, and disclosures to lenders, insurers, and tax authorities at the Trump Organization for a period of no less than five years;

• Replace the current trustees of the Donald Trump Revocable Trust with new independent trustees, and require independent governance in any newly formed trust should the Revocable Trust be revoked and replaced with another trust structure;

• Require the Trump Organization to prepare, on an annual basis for the next five years, a GAAP-compliant, audited statement of financial condition showing Mr. Trump’s net worth, to be distributed to all recipients of his prior Statements of Financial Condition; and,

• Cancel any certificate filed under and by virtue of the provisions of section 130 of the General Business Law for the corporate entities named as defendants and any other entity controlled by or beneficially owned by Donald Trump which participated in or benefitted from the foregoing fraudulent scheme.

And no I’m not going to lie —When I read the 2nd paragraph on page one of: Background on Trump Organization Properties and Fraudulent Schemes I. Fraudulent, Misleading Values of Properties and Other Properties I couldn’t stop laughing —it’s as if all the walls are closing around Trump and I’m here for it, all of it…

Again the following documents can be pulled down directly from the NY-OAG September 21, 2022 press release;

• Compliant

• Full Property addendum. 

• I’d also bookmark the NYS SCROLL that way you can have near real-time access to filings in this particular case

I would also recommend you take the time to watch the full Attorney General James’ press conference, specifically at 16:39 -in which she goes through a pretty damning tick-tock of events.

Trump Inflated his net worth by billions of dollars…

Which caused him to essentially unjustly enrich himself, his children and his Company. By relying upon fraudulent appraisal values Trump was able to negotiate lower interest rates, favorable financial status, pay less taxes and in some cases fraudulently used the Conservation/Preservation Easement tax right off… what’s clear is Attorney General James and her staff did an exhaustive investigation which resulted in a series of protracted litigation.

As far as criminality —I’m sorry to burst your bubble but this particular case is a civil case. Not to say that the Manhattan DA couldn’t present the evidence to a grand jury. But then again it’s possible the new Manhattan DA may have presented some evidence to a grand jury, in either case none of is know the facts. So my point is; yes it’s possible this could turn out to be a criminal case —hence why the referral to the USAO-SDNY and to the IRS-CI should be worth paying attention to. I think the bigger issues at play here, are:

• what discovery will entail. Since discovery cuts both ways don’t celebrate too quickly.

• the parties that both aided and abetted Trump’s decades long grift might actually be both accountable and liable for. For Example: bank loan officers, banks (the actual financial institution), insurers, appraisers, accounting firms.

• Trump attorneys materially lying to investigators, that’s something that could lead to said attorney’s disbarment or at a minimum a public sanction by the local bar.

So my point is this years long investigation by the NY-OAG appears to have culminated into today’s civil complaint —it’s not a criminal case —but as previously explained there’s a possibility that it could (operative word) morph into a criminal case. Which would either be prosecuted by the USAO and/or IRS CI. Realistically though I wouldn’t get your hopes up that Trump will face the criminal justice system for his decades long fraud scheme. But the relief sought by the NY-OAG —I suppose it’s best to wait for the Court to make their ruling. Incidentally I don’t think the previous leak about Trump’s settlement offer being rejected by the the OAG’s came from her office. I genuinely think it came from team Trump to “get ahead” of the eventual civil complaint.

Again as you’ll note “conservation easements” are mentioned in the construct of the fraudulent financial framework Trump used —some 33 times. And the context of each —the NY-OAG’s gave a fact by factual recitation of how Trump proffered off these easements. But again that shouldn’t be a sunrise given we knew in January 2022 some of the evidence the NY-OAG was holding. Again when I’ve said: repeat after me: conservation/preservation easements that’s Trump’s Achille’s Heel —that wasn’t me being hyperbolic, that was me saying the conservation/preservation easements literally landed on the annual IRS Dirty Dozen list —which is a roundabout of saying —both the IRS & DOJ are going to crack down on the abuse and fraud perpetrated by way of unethical real estate developers who over inflate the value of these easements…

And your daily saltwater therapy —and yes I’m insanely busy this week so I’m going to be hit or miss until the first part of October…

file411_dc

A post shared by File411 (@file411_dc)