Will the Trumps lose their homes? NY judge who dissolved Trump Org is cryptic at a tense hearing

President Donald Trump during a campaign stop at Drake Enterprises.
Scott Olson/Getty Images
  • Trump's lawyers were back on Wednesday before the NY judge who on Tuesday "dissolved" Trump Org.

  • One asked the judge if the LLCs that own the Trumps' homes are covered under the dissolution.

  • "I'm not prepared to make a ruling at this time," the judge answered.

Lawyers for Donald Trump asked for clarity on Wednesday from the Manhattan judge who ordered the Trump Organization be dissolved in a stunning ruling the day before.

That clarity was not forthcoming. But concern – including over the fate of the Trump residences that are held as LLCs under the Trump Org umbrella – was present in abundance.

Would all the defendants' homes need to be sold? Are they even covered under the ruling?

All New York Supreme Court Justice Arthur Engoron would say was, in essence, check back with me later. Also: he's happy and available to sit down with everyone to "work things out."

"I'm not prepared to make a ruling at this time," Engoron told Trump's lawyers with a slight smile, shifting the focus of the hearing instead on more mundane matters of pre-trial logistics.

New York Attorney General Letitia James won a staggering victory Tuesday night in her $250 million fraud lawsuit against Trump, his golf and real-estate empire, his two eldest sons, and two longstanding executives.

Just five days before the scheduled trial is set to start, Engoron decided early – based on three years of pre-trial investigation and litigation – that Trump had committed years of fraud by inflating his worth to banks and insurers, by adding as much as $3.6 billion in fictional value to his annual net worth.

Experts are calling his ruling "the corporate death penalty," as it orders the cancellation of the New York state "certificates" that allow Trump Organization and its hundreds of underlying trusts and LLCs to function as corporate entities.

The ruling also orders that within 10 days, Trump's side submit to the court the names of three possible "independent receivers to manage the dissolution of the canceled LLCs." Two former Manhattan financial fraud prosecutors told Insider that by "dissolution," the order means the selling off of corporate properties.

At Wednesday's morning-long hearing, the judge gave Trump's side the 30 days they requested to agree to a receiver.

The judge also said that, barring any conflict of interest, he was open to retired judge Barbara Jones, currently the independent monitor, assuming the receiver role, an idea that the attorney general's side also favored.

But there was no guidance on how dissolution will work in a multi-billion-dollar organization whose assets include not just interests in skyscrapers – such as Trump Tower in Manhattan, where Trump Org is based, and a ground lease in 40 Wall Street – but home addresses, too.

"Certain of the entities, entities that own physical assets like Trump Tower and 40 Wall – is the court under the impression that those are to be sold or are they to be managed under the monitor?" Trump attorney Chris Kise asked Engoron.

It was at this point the judge said he was not yet prepared to make a ruling.

"Which entities are covered here?" Kise pressed. 'You have New York entities that just own a house or a townhouse. Maybe Don Jr. 's or Eric's residence… are those covered?" Kise asked.

"At least under a technical reading of the order, those entities should be surrendering their GBL 130s" – legalese for corporate licenses – "even though they have no connection to this," Kise said.

Again there was no specific guidance from Engoron.

"I try to be very accessible and work things out," the judge said, speaking generally. "I'd be happy to sit down with Judge Jones when she is available," he added of Trump Org's potential receiver-in-waiting.

The state has alleged fraud involving two of Trump's residences, at Trump Tower and Mar-a-Lago.

Trump owns and sporadically lives in the triplex penthouse atop Trump Tower.

The AG has alleged, and the judge Tuesday found, that the former president fraudulently tripled the apartment's size, claiming it was 30,000 square feet, in five years of his annual financial statements.

The statements were relied on by banks to collateralize and maintain hundreds of millions of dollars in loans.

The judge also found Tuesday that Trump valued Mar-a-Lago as high as $739 million based on the false premise that it was free of any development restrictions. Trump had personally signed deeds giving up any residential development rights, collecting a tidy tax benefit by doing so, the AG and judge found.

The actual value should have been closer to $75 million, the AG has estimated.

Trump and his lawyers have repeatedly denied that his valuations were fraudulent, instead claiming that he was a "visionary" who saw value beyond what non-visionaries could see. His team has promised to fight the fraud claims and appeal the dissolution order.

Read the original article on Business Insider