Dive Brief:
- The Trump Organization can continue to operate its core businesses in New York while it stands trial for fraud in a win for the company last week.
- “We are very pleased the First Department upheld New York law and put a halt to any cancellation of business certificates, receivers or dissolution,” Trump attorney Christopher Kise said in a statement reported by NBC. “The trial court’s attempt to reach issues, entities and assets beyond the scope of this case has been suspended.”
- The ruling by Appeals Court Judge Peter Moulton on October 6 stays the cancellation of a handful of New York General Business Law Section 130 certificates allowing the company to do business in the state. New York Supreme Court Judge Arthur Engoron, who found the company guilty of fraud in late September, canceled the certificates and asked the company and New York Attorney General Letitia James to provide names for a receiver to take over the business entities.
Dive Insight:
The Trump Organization had sought a stay of the fraud trial as well, but that request was denied.
James, who didn’t oppose Trump’s request to stay the canceled business certificates but did oppose pausing the fraud trial, CNBC reported, said the Trump team was putting too positive a spin on the win; the main finding of law, that Trump committed fraud, stands.
“Unsurprisingly, he is twisting this ruling and falsely claiming victory for a resolution we proposed,” James said in a statement reported by The Wall Street Journal. “The truth is simple: a judge ruled that he committed repeated and persistent fraud, and we will continue to demonstrate that in court.“
In his September 26 ruling, Judge Engoron found in a partial summary judgment that The Trump Organization fraudulently inflated the value of his showcase properties over a seven-year period to get better terms on loan and insurance applications.
Judge Engoron opened a bench trial last week to examine outstanding counts in James’ lawsuit, including falsifying business records, issuing false financial statements and committing insurance fraud. The trial will also look at appropriate penalties, including a proposed $250 million in disgorgement.
In a separate action last week, Judge Engoron ordered The Trump Organization not to make any asset changes without first notifying a court-appointed monitor. James had sought the order out of concern an entity The Trump Organization created last year, Trump Organization II LLC, could be used to hide assets, frustrating disgorgement if that’s ordered as a remedy. The appellate ruling wouldn’t affect this order.
