James has filed a $250 million lawsuit, claiming that Trump and his executives knowingly and intentionally misrepresented not only the values but also the fundamental facts of his properties, such as square footage or zoning rules, in order to secure better terms from partners. She argues that Trump's use of inflated financial statements constitutes widespread fraud, while Trump's defense maintains that despite inaccuracies, the documents were a sincere attempt to assess the value of his hotels, office buildings, luxury condominiums, and golf courses.
Last week, James achieved a significant victory when Judge Arthur Engoron ruled in favor of stripping the former president of his New York business licenses. This ruling is considered the first step towards the likely sale or transfer of those properties unless Trump successfully appeals. Trump was not required to be present in court on Monday and did not provide testimony, although he may do so later in the trial.
Trump made remarks outside the courtroom before, during, and after the hearing, suggesting that the case was linked to larger political and legal forces that he has criticized during his campaign as a potential Republican presidential candidate in 2024. He referred to Engoron as "a disgrace" who should be disbarred for issuing the pretrial decision to strip him of control over his New York business licenses. Trump also criticized the court clerk, alleging that she "hates Trump" more than the judge and should not be involved in the case. He described James as "a total crook, a terrible person" who should focus on murders rather than his financial statements.
Inside the courtroom, the focus remained primarily on the mechanics of real estate valuation. In his opening arguments, Kevin Wallace, a lawyer from the New York State Attorney General's office, stated that they would provide evidence of an intent to falsify records, issue false financial statements, and commit insurance fraud, all of which are violations of state penal law. Wallace argued that there was ample evidence of intent based on the defendants' deliberate lies. Trump disagreed, shaking his head during Wallace's statement that the defendants falsified his net worth between 2011 and 2021 by amounts ranging from $812 million to $2.2 billion.
Trump's attorney, Christopher Kise, countered by asserting that there is no single standard method for evaluating assets and that real estate valuation often does not solely rely on appraisals. Kise claimed that there was no nefarious intent and that there was no illegality or fraud involved, and he argued that there are no victims in this case. Trump and his legal team have repeatedly claimed that they have already "won 80 percent of the trial" due to an appellate court's intention to dismiss claims based on statute-of-limitations grounds. The defense is suing Engoron for what they perceive as an improper refusal to adhere to the appellate court order. Kise stated, "As you know, we won an appellate victory in June of this year. We make a blanket objection to testimony in that regard."
Due to Engoron's ruling last week, Trump has started to lose control of the New York real estate empire he spent decades building, including Trump Tower, luxury retail, and Park Avenue condominiums.
The trial, expected to last several weeks or months, will determine the severity of the ultimate penalties. James has made six additional claims, requesting a $250 million penalty and a ban on future business in the state for Trump and his company.
Before the case began, Trump briefly spoke to reporters and later delivered a more direct criticism during a midday lunch break.
Armed with evidence supporting his innocence, he stood in a courthouse hallway and referred to the proceedings as "a pure witch hunt with the purpose of interfering with the elections of the United States of America. It is totally illegal, and this judge should be disbarred."
The fraud case comes as Trump faces criminal charges in four separate cases. Currently, three of the four criminal cases are scheduled for trial next year. If any of the cases do go to trial in 2024, they would coincide with Trump's campaign.
Trump avoided a trial this year where a jury found him guilty of sexually assaulting E. Jean Carroll in the mid-1990s and defaming her after she publicly accused him. The jury awarded Carroll $5 million in damages.
According to sources close to Trump, he becomes particularly angry when questioned about his worth and the value of his properties. The hearing focused on the intentional inflation of his asset values in financial statements submitted to banks and insurance companies over many years.
After a break, Trump observed the courtroom as his former trusted lieutenant, longtime accountant Donald Bender, prepared to take the stand.
As Bender got ready to testify, Kise, Trump's attorney, requested a "blanket objection" based on an appellate ruling in June that allows the defense to express their protest without interrupting after each question, thus not slowing down the trial.
Bender worked for Mazars USA, the accounting firm that handled Trump's business and personal tax returns until 2022 when they announced they could no longer support the statements and cut ties with Trump. Bender frequently worked in the Trump Tower offices, conducting accounting work for the company and its executives, including their personal tax returns.
James's office alleges that Trump and his executives provided inflated asset values to Bender for inclusion in annual statements of Trump's wealth from 2011 to 2021. The statements were accompanied by a cover letter from Mazars, which included a warning that the figures were not verified and did not comply with standard accounting practices.
The defense argues that the warning served as a heads-up to banks, who also benefit from having knowledgeable underwriting professionals. No company has come forward to claim financial losses due to inaccuracies in Trump's statements.
At the end of the day, as Bender reviewed 2011 records, Engoron paused the proceedings and hinted at the possibility of excluding evidence related to older transactions. The Trump side has been arguing for their dismissal based on statute-of-limitations grounds in line with a recent appellate court ruling.
While it is unclear if a portion of the case will be formally dismissed based on Engoron's comments, Trump interpreted them as a victory and expressed his satisfaction to reporters after the proceedings ended.
One of his lawyers approached to state that the judge’s remarks implied that all transactions that were finalized before 2014 could potentially be excluded from the case. Trump seemed surprised by the judge’s comments, mentioning that he had originally intended to "voice his dissatisfaction" after the trial's proceedings.
Later, James disputed the defense's interpretation of the matter in a recorded statement. "We strongly disagree with the statements made by Mr. Trump and his lawyer regarding the statute of limitations issue during today's proceedings," James stated.
Trump is anticipated to appear in court again on Tuesday.
