NEW YORK, Sept 21 (Reuters) - Former U.S. President Donald Trump and his adult children were sued on Wednesday for what New York state's attorney general called numerous acts of fraud and misrepresentation, accused of misstating the values of real estate properties to obtain favorable loans and tax benefits.
The lawsuit, filed in a New York state court in Manhattan, accused the Trump Organization of wrongdoing in preparing Trump's annual statements of financial condition from 2011 to 2021. It also named as defendants the Trump Organization - a family company that manages hotels, golf courses and other real estate around the world - as well as the former president's sons Donald Trump Jr. and Eric Trump and his daughter Ivanka Trump.
Attorney General Letitia James, a Democrat, said her office uncovered more than 200 examples of misleading asset valuations, and the complaint mentioned 23 assets that she called "grossly and fraudulently inflated."
Trump in a social media post called the lawsuit, one of the biggest legal blows for the Republican businessman-turned-politician since he left office in January 2021, "another Witch Hunt" and launched a personal attack on James. Trump is considering running for president again in 2024.
The lawsuit was civil, meaning it did not involve criminal charges. But James said she was referring allegations of criminal wrongdoing to federal prosecutors in Manhattan and the Internal Revenue Service for investigation.
"The pattern of fraud and deception that was used by Mr. Trump and the Trump Organization for their own financial benefit is astounding," James told a news conference.
"Claiming that you have money that you do not have does not amount to the 'art of the deal,' it's the art of the steal," James said, referring to the title of a 1987 book written by Trump.
The lawsuit accused Trump of inflating his net worth by billions of dollars to induce banks to lend money to his company on more favorable, to satisfy continuing loan terms, to coax insurers to provide coverage for higher limits at lower premiums, to gain tax benefits and other purposes.
James is seeking to permanently bar Trump and his three children named as defendants in the case from serving as an officer or director in any New York corporation, prohibit Trump and the Trump Organization from entering into any commercial real estate acquisitions in New York for five years and award disgorgement of all financial benefits gained fraudulently - estimated to total $250 million. read more
James said her office rejected settlement offers submitted by the defendants, but said "our doors are always open" for future negotiations.
The Trump Organization has separately been charged with criminal tax fraud by the Manhattan District Attorney's office and is preparing for an Oct. 24 trial. Its former chief financial officer Allen Weisselberg - who is also named as a defendant in James' suit - has pleaded guilty and is expected to testify against the company. read more
'DISASTERS OF THE WORLD'
Following the news conference by James, Trump on social media disparaged her integrity.
"She is a fraud who campaigned on a 'get Trump' platform, despite the fact that the city is one of the crime and murder disasters of the world under her watch!" Trump wrote.
James opened the civil investigation into Trump's business practices after Michael Cohen, Trump's former lawyer and fixer, said in congressional testimony that the president inflated some asset values to save money on loans and insurance.
"The Attorney General's Office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place," Alina Habba, a lawyer for Trump, said in a statement, calling the accusations "meritless."
Wednesday's lawsuit followed a contentious investigation in which James accused Trump, his company and some family members of using delay tactics to ignore subpoenas and avoid testifying.
Trump on Aug. 10 declined to answer questions in a closed-door deposition at the office of the attorney general, invoking his right against self-incrimination under the U.S. Constitution's Fifth Amendment more than 400 times.
Donald Trump Jr. and Ivanka Trump agreed to sit for depositions only after courts required it. Eric Trump invoked his Fifth Amendment rights more than 500 times in a 2020 deposition. read more
Among the properties James cited as examples in the lawsuit was Trump's own apartment in Manhattan's Trump Tower.
James said Trump said the apartment was 30,000 square feet, when in fact it was only 10,996 square feet, and that its $327 million valuation in 2015 was "absurd" since no New York City apartment had sold for $100 million at the time.
She also said Trump valued his Mar-a-Lago estate in Florida as high as $739 million by pretending it could be developed for residential use, when he knew there were restrictions. James said Mar-a-Lago should have been valued closer to $75 million.
James also aims to bar Trump and his company from borrowing from state-licensed banks for five years.
She acknowledged that Trump, who now lives in Florida, could try to move his company or borrow elsewhere, but that would not excuse him from his obligations in New York.
"There cannot be different rules for different people in this country or state, and former presidents are no different," James said.
Trump has been beset with legal troubles. The FBI conducted a search at Mar-a-Lago on Aug. 8 as part of a criminal investigation into his handling of presidential records including classified material. read more
Trump also faces a criminal investigation in Georgia over his efforts to overturn the 2020 election results. read more
He has denied wrongdoing in the various probes.
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