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Legal Consequences of Inflated Valuations: Trump Case and Beyond

Posted in Business Valuation, on Sep 2023, By: Mark S. Gottlieb

Yesterday, New York Supreme Court judge Arthur Engoron ruled in the ongoing lawsuit alleging former President Donald Trump and his businesses provided false financial statements to obtain loans and other benefits. This case piqued my interest as a credentialed business valuation expert, forensic accountant, and expert witness. Yesterday’s decision was over thirty pages long, and I wanted to break down the extent of the document for those following these ongoing legal battles.


The New York Attorney General’s office had brought claims against President Trump, his family members, and corporate entities under a statute prohibiting persistent fraudulent conduct in business. The AG submitted evidence that President Trump inflated the valuations of his assets on financial statements from 2011 to 2021.

For instance, President Trump claimed his apartment in Trump Tower was 30,000 square feet, later learned to be about three times its actual size. This overstatement led to an overvaluation of over $100 million! The Court also found evidence that other Trump assets, such as branding premiums, shared the same misstatement.

President Trump’s legal team asked the Court to dismiss the entire case, arguing the financial statements contained disclaimers and that determining value is subjective. Those requests were later denied.

The Court ruled yesterday that the Attorney General provided sufficient evidence that President Trump knowingly submitted false financial statements over multiple years. The judge ordered the dissolution of several corporate entities owned by the Trumps and the appointment of an independent monitor for the Trump Organization.

While further potential penalties will be determined at an upcoming trial, the Court also sanctioned five of Trump’s attorneys $7,500 each for engaging in frivolous motion practice to dismiss the claims.

The outcome highlights the importance of substantial evidence and objective standards in fraud cases involving financial disclosures, including valuation issues. The next steps will establish additional consequences, with the next court date being Monday, October 2nd.

Since the issues at bar seem in line with our firm’s work, we will pay close attention to its developments. In the interim, I am curious to see if any new issues come to the Court’s attention from the newly appointed monitor.