Trump forms new company amid lawsuit

Days before the New York attorney general filed a lawsuit accusing Donald Trump and his company of fraud and seeking to shut down some of their business in the state, Trump’s lawyers created a new company in Delaware.

The new company’s name had a familiar ring to it: the Trump Organization, the same name as his old company, now threatened by the lawsuit. And Sept. 21, the day the suit was filed, the new Delaware company filed paperwork in New York, seeking to be recognized there as the Trump Organization II.

Those maneuvers were detailed for the first time in a court filing Thursday from the attorney general, Letitia James, who raised the prospect that Trump was seeking an end run around some of her lawsuit’s harshest potential punishments.

But her filing acknowledged that Trump’s lawyers had explicitly said they had not taken any steps to avoid the potential consequences of the lawsuit. Trump’s lawyers, according to the court filing, also offered to provide “assurances and advance notice” to address James’ concerns.

And because the new company was formed before the lawsuit was filed, Trump’s lawyers would not have known the specific consequences the attorney general was seeking.

James, however, remained concerned about the company’s motives and sought intervention from a judge. Her Thursday filing requested an order from the judge that would prohibit the Trump Organization from transferring its assets without court approval.

“Since we filed this sweeping lawsuit last month, Donald Trump and the Trump Organization have continued those same fraudulent practices and taken measures to evade responsibility,” James said in a statement. “Today, we are seeking an immediate stop to these actions because Mr. Trump should not get to play by different rules.”

Alina Habba, a lawyer for the former president and his company, said in a statement that James’ filing was “simply another stunt.”

“We have repeatedly provided assurance, in writing, that the Trump Organization has no intention of doing anything improper,” she said.

Habba also accused James of using the filing to keep the case before Arthur Engoron, the state judge who had overseen disputes between Trump’s lawyers and James’ office during her investigation, before the lawsuit was filed. Engoron ordered Trump to sit for a deposition and at one point held him in contempt of court, fining him $110,000.

In her lawsuit, which accused Trump of lying to his lenders and insurers by fraudulently overvaluing his assets by billions of dollars, James asked a judge to impose a variety of punishments that would restrict his ability to do business in New York. She is seeking to bar Trump and the Trump Organization from acquiring commercial real estate there for five years and to prohibit him and three of his adult children from running companies in the state.

While James stopped short of trying to dissolve the Trump Organization, her lawsuit indicates that she wants to shut down at least a portion of the former president’s New York operations. Her lawsuit asks that a judge cancel the business certificates that allow some of his properties there to function, including his flagship commercial property at 40 Wall St. in lower Manhattan.

James is also asking that the Trump Organization be made to forfeit some $250 million that she said it improperly reaped by misleading lenders and insurers about Trump’s net worth. Her Thursday filing expressed concern that if the company is able to transfer its assets out of state, it might skirt those payments.

In the filing, James also asked a judge to immediately install a monitor to oversee the company’s disclosures to lenders and insurers, the issue at the heart of her case.

The lawsuit, citing “substantial, persistent and repeated fraudulent and misleading conduct,” centers on Trump’s annual financial statements, yearly records that include the Trump Organization’s estimated value of its holdings and debts. The company provided the statements — which wildly inflated the worth of nearly every one of its marquee properties, James said — to lenders and insurers “to obtain beneficial financial terms,” including lower interest rates and premiums.