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Opinion Why Trump may be at a tipping point

New York Attorney General Letitia James speaks during a news conference on Wednesday. (Brittainy Newman/AP)

If you want to understand why New York Attorney General Letitia James’s civil lawsuit against Donald Trump and others in his business is so ominous for the former president, turn to Paragraph 5 of her complaint.

The numerous financial misrepresentations by Trump and his companies, the complaint states, “violated a host of state criminal laws, constituting repeated and persistent illegality in violation of Executive Law § 63(12),” referring to New York’s civil fraud statute. “Among other laws, Defendants repeatedly and persistently violated the following: New York Penal Law § 175.10 (Falsifying Business Records); Penal Law § 175.45 (Issuing a False Financial Statement); and Penal Law § 176.05 (Insurance Fraud).”

Trump and his family have repeatedly denied wrongdoing. Trump attorney Alina Habba said in a statement on Wednesday, “Today’s filing is neither focused on the facts nor the law — rather, it is solely focused on advancing the Attorney General’s political agenda.”

In any case, James’s complaint is a shot across the bow of the hapless Manhattan District Attorney Alvin Bragg, who so far seems to have failed to find a basis to pursue criminal charges against the Trump Organization, leading to the resignation of experienced prosecutors Carey Dunne and Mark Pomerantz. (Bragg claimed on Wednesday that the criminal investigation is “ongoing.”)

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Norman Eisen, who served as co-counsel for the House Judiciary Committee during Trump’s first impeachment and authored multiple analyses on Trump’s potential civil and criminal exposure, tells me, “Whatever Mr. Bragg’s failures, the Southern District of New York is not known for turning its back on evidence of serious crimes.” Indeed, fact-finding in civil litigation could offer fodder in criminal investigations.

In other words, the same facts set out in James’s complaint could lead to a host of federal charges, including federal bank, tax and wire fraud. And remember, this would be in addition to possible criminal cases concerning Trump’s mishandling of top-secret documents stashed at Mar-a-Lago, his actions leading up to the Jan. 6, 2021, coup attempt and his attempt to pressure Georgia officials to overturn the state’s election results.

As Eisen wrote for Just Security with E. Danya Perry and Joshua Stanton, “At some point, the aggregate effect of all these investigations will reach a tipping point.… The cumulative weight bearing down upon a possible defendant — whether corporate, individual, or both — at some point becomes unsustainable.”

Even before the New York civil case reaches a settlement or verdict, financial firms are now on notice of potential misconduct and may cease doing business with Trump. If, for example, banks begin to exercise their rights to call in loans based on financial covenants they believe were violated, financial turmoil and even bankruptcy become real possibilities. (No financial institution wants to be the last in line to get its money out.)

Consider the myriad ways in which a civil suit of this magnitude might impact Trump:

  • If he loses his ability to do business in New York for five years, as James seeks, his financial empire would be essentially kaput. He might lose the right to control multiple properties, including Trump Tower and Trump National Golf Club Westchester. He might retain properties elsewhere, but if James’s allegations are correct, they would be worth far less than he has claimed. For example, the complaint alleges that Trump’s Mar-a-Lago, “was valued as high as $739 million based on the false premise that it was unrestricted property and could be developed and sold for residential use ... In reality, the club generated annual revenues of less than $25 million and should have been valued at closer to $75 million.”
  • Bragg may feel compelled to reconsider his lack of interest in the case against Trump’s business, as James boldly urges him to do.
  • Trump’s already enormous legal bills may become unmanageable, even for someone adept at squeezing gullible supporters for cash. That could make it difficult for Trump to formally declare his candidacy for president, since he wouldn’t be able to rely on self-funding his campaign.

In sum, Trump’s entire claim to fame as a financial “genius” may soon lie in ruins. His fortune, political power and ability to garner attention might slip away. And if so, he would finally have faced accountability for his actions.