On Friday, a New York judge stepped up pressure on the family business of former President Donald J. Trump and several associates, ordering them to provide state investigators with documents in a civil investigation to see if the company forged assets to obtain bank loans and tax benefits.
It was the second blow that the judge, Arthur F. Engoron, of the Manhattan State Supreme Court, has dealt against Trump’s company in recent weeks.
In December, he ordered the company, the Trump Organization, to produce records that its lawyers tried to protect, including some related to Westchester County, NY, a property that is among those being examined by New York State Attorney General Letitia James.
On Friday, Judge Engoron went further, saying that even more documents, as well as communications with a law firm hired by the Trump Organization, should be delivered to James’s office. In doing so, he rejected the lawyers’ claim that the documents in question were protected by the attorney-client privilege.
The decision was a new reminder that Trump – who stepped down about a week ago under the cloud of impeachment and is going to a Senate trial on charges of “inciting insurrection” after his supporters invaded the Capitol in a violent turmoil – face significant legal risks as a citizen.
The most serious threats the former president faces include a criminal investigation by the Manhattan district attorney and the attorney general’s civil investigation into possible fraud in Trump’s business before he was elected.
James’s investigation began in March 2019, after Michael D. Cohen, a former attorney for the former president, told Congress that Trump had inflated his assets in financial statements to secure bank loans and underestimated them elsewhere to reduce your tax account.
Investigators in Ms. James’s office focused their attention on a series of transactions, including a financial restructuring of the Trump International Hotel & Tower in Chicago in 2010, which resulted in the debt relief of Fortress Credit Corporation worth more than $ 100 millions.
James’s office said in court documents that the Trump Organization – Trump’s primary business vehicle – has thwarted efforts to determine how that money was reflected in its tax records and whether it was reported as revenue, as the law normally requires.
An analysis of Trump’s financial records by The New York Times found that he had avoided federal income tax on almost all debts forgiven.
James’s office is also examining whether the Trump Organization used inflated valuations when it received large tax breaks after promising to conserve land where its development efforts failed, including the Seven Springs estate in Westchester County.
Accusing the Trump Organization of trying to delay the investigation, lawyers at James’ office sought an order from the judge in August forcing the company to deliver documents related to the Seven Springs estate and other properties, and demanding that the son of former President Eric Trump , a vice president of the company, to testify in the investigation. (Eventually, he did.)
In December, Judge Engoron ordered the Trump Organization to hand over to Mrs. James the documents of an engineer related to a conservation easement on the Seven Springs estate.
Ms. James’s office is examining whether bondage is legitimate and whether an inadequate valuation of the property has allowed the Trump Organization to make a $ 21 million tax deduction to which she was not entitled.
The firm’s lawyers tried to hide the engineer’s documents from investigators, claiming that the materials were privileged because the Trump Organization’s lawyers had relied on them to assess the property. Judge Engoron rejected that argument.
In the order issued on Friday, Judge Engoron again concluded that the Trump Organization’s lawyers invoked the attorney-client privilege for documents to which he did not apply.
Some communications that were marked as privileged, he wrote, were “addressing business tasks and decisions, not exchanging soliciting or providing legal advice”. He also said that communications related to public relations were not of a legal nature and that the privilege was waived in some circumstances where third parties were involved in the discussions.
Judge Engoron did not specify in the order which documents should be provided to Ms. James’s office, but gave the Trump Organization until February 4 to deliver them.
A spokesman for the attorney general declined to comment. A Trump Organization representative did not immediately respond to a request for comment.
The estate of Seven Springs is also now in question in the long-running investigation conducted by Manhattan district attorney Cyrus R. Vance Jr., as first reported by The Wall Street Journal. Prosecutors involved in the investigation, Trump’s only known active criminal investigation, subpoenaed records related to Westchester property, according to people familiar with the matter.
Vance’s investigation has largely stalled since last fall, when Trump filed a lawsuit to block a subpoena for his tax returns and other records, sending the bitter dispute to the United States Supreme Court for the second time. A decision is expected soon.
Danny Hakim contributed reports.