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New York Attorney General: Trump Organization Misled Banks And Tax Officials

NEW YORK (CBSNewYork) -- There has been major escalation in the legal battle between former President Donald Trump and New York Attorney General Letitia James.

James has filed court papers requesting Trump, his son, Donald Jr., and daughter Ivanka be questioned under oath, citing significant evidence of alleged fraud, CBS2's Marcia Kramer reported Wednesday.

It was a broadside, plain and simple. James, apparently frustrated by years of legal wrangling with former President Trump and his family, filed court papers charging the Trump Organization engaged in "fraudulent or misleading" practices to bolster its bottom line.

"For more than two years, the Trump Organization has used delay tactics and litigation in an attempt to thwart a legitimate investigation into its financial dealings," James said, claiming her probe had "uncovered significant evidence" the former president inflated the value of his company and his own fortune.

"To your knowledge, did the president or his company ever inflate assets or revenue?" then-Rep. William Lacy Clay asked former Trump attorney Michael Cohen back on Feb. 17, 2019.

"Yes," Cohen answered.

"And was that done with the president's knowledge or direction?" Clay asked.

"Everything was done with the knowledge and at the direction of Mr. Trump," Cohen said.

James said she began a civil investigation after Cohen testified before Congress that Trump's annual financial statements did two things -- inflated the value of assets to get favorable loans and insurance coverage and deflated the value of other assets to reduce real estate taxes.

The attorney general claimed misleading statements were made about the value of six Trump properties, including his golf clubs in Westchester County and Scotland, flagship buildings and Trump's own penthouse in Trump Tower.

James said he misrepresented the size of his penthouse, saying it was triple its actual size, leading to a difference of $200 million.

James said the company said its stake in 40 Wall St. was worth between $525 and $602 million, even though appraisers at a lender said it was worth two to three times less.

"I love loans. I love other people's money," Trump once said.

David Schwartz, a lawyer and former prosecutor, said the charges are serious. But it will be up to James to decide whether she can ultimately prevail.

"If she could prove that beyond a preponderance of the evidence in a civil case, then he will be liable or the Trump Organization will be liable for fraud," Schwartz said.

Trump fired back on Wednesday.

"The only one misleading the public is Letitia James. She defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule," a Trump spokesperson said, adding "Her allegations are baseless and will be vigorously defended."

If a judge forces the former president, Donald Jr., and Ivanka to testify, they are expected to take the Fifth, just like his other son, Eric, did when he was questioned in October 2020.

While this is a civil probe, the attorney general is also participating in a criminal investigation by the Manhattan district attorney.

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