Hudson Valley properties at center of AG suit

New York Attorney General Leticia James' civil fraud lawsuit against former President Donald Trump, three of his children, and several Trump companies and employees alleges longstanding schemes to inflate the value of his enterprises to obtain favorable treatment from banks and insurance companies.

These schemes played out at Trump facilities across the country, including three high-profile properties in the Hudson Valley – the Seven Springs estate in Bedford, North Castle and New Castle; Trump National Golf Club Westchester in Briarcliff Manor; and Trump National Golf Club Hudson Valley in Stormville.

The 220-page complaint seeks to shutter the Trump Organization and the company that owns the sprawling Seven Springs estate, which stands on 212 acres where, in the face of fierce opposition from Westchester environmentalists, Trump first failed to develop an 18-hole golf course, and later, a luxury housing development.

"This investigation revealed that Donald Trump engaged in years of illegal conduct to inflate his net worth, to deceive banks and the people of the great state of New York," James said at the news conference. "Claiming 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 is seeking $250 million in penalties, which the lawsuit said was equal to the financial benefits amassed through the fraudulent business practices.

In a tweet, Eric Trump, whom James named as the family member most involved in the Seven Springs valuations, said that the New York attorney was more concerned with the Democratic National Committee − the DNC − than what's best for the people of New York.

"Letitia James is not working for the Attorney Generals office − she is working for the DNC," he tweeted. "49 days before her election (newest poll has her tied with a Republican in New York State)."

The inflated values were an essential part of the Trump family real estate empire's business approach, with the never-ending need to meet mortgage obligations − be it for a new endeavor or to renegotiate the terms of a loan, according to the accusations. Trump did that several times with Seven Springs, owned by a Trump company called Seven Springs LLC.

According to lawsuit, the company annually submitted Trump's Statements of Financial Condition, which in 2014 listed his net worth at $5 billion, and $339 million in cash and marketable assets.

James' lawsuit contends Trump "grossly inflated" his assets by billions of dollars.

At Seven Springs, the loan from Bryn Mawr Bank was personally guaranteed by Trump. His purported worth backed the bank's decision to extend the loan eight times, with the last extension in 2019. The lawsuit states Trump's personal guarantee reduced the interest rate by 0.5% and eliminated the need to have $700,000 in escrow when the loan was extended.

Seven Springs value in question

The inflated value of undeveloped property at Seven Springs, as well as the 60-room mansion that was once the home of Washington Post publisher Eugene Meyer, was also central to James' lawsuit.

Both Eric Trump and Donald Trump declined to answer several questions regarding Seven Springs during depositions for the case, citing Fifth Amendment protections against self-incrimination.

The property, which Trump bought for $7.5 million in 1995, was valued at $30 million by a bank in 2006. Yet in Trump's financial statements from 2011 to 2021, the value of Seven Springs had grown more than 8 times, ranging from $261 million to $291 million.

By the end of an extended battle over housing development there, Trump won preliminary approval for seven homes in Bedford.

But the values for those lots − and the homes to be built on them − were hugely inflated, the lawsuit stated, with each mansion estimated to sell for $35 million. The 2011 valuation also raised the purported value of the Seven Springs mansion from $70 million to $100 million, without explanation.

"All of these values were a fiction, totally unsupported by the development history of the property, and contradicted by every professional valuation of the property," the lawsuit stated.

Another appraisal in 2014 set the value for 24 building lots across the estate at about $30 million. But the 2014 financial statements placed the value at $161 million.

"The $161 million value placed on those Bedford lots was false and misleading," the lawsuit stated.

So, too, was the value placed on the Seven Springs conservation easement, which was donated to a land trust in 2015, with the donation reducing Trump's tax liability by more than $3.5 million.

Suit claims Trump sought cover

To provide cover from the authorities, the lawsuit states that Trump advised his agents in the Hudson Valley to conduct business by phone, and limit writing emails, which could be obtained through litigation.

"Bedford conversations with engineer, broker, or attorney should be phone calls, not email when ever possible," a senior appraiser advised.

At Trump National Golf Club Hudson Valley, the lawsuit stated Trump's financial statement failed to disclose Trump's company had a lease on the property but was not the owner of the land. The statements also did not account for expenses on the ground lease, such as rent to the property's landlord.

In addition, the financial statements inflated the value of the Stormville club in 2012 by valuing 198 unsold memberships at between $15,000 and $30,000 at a time when most initiative fees were waived.

A similar scheme unfolded at Trump National in Briarcliff Manor. There, initiation fees were $150,000, but the financial statements pegged the value of many unsold memberships at $250,000 each.

The lawsuit also noted in 2011, when the values were based on memberships with initiation fees of $150,000, many new members paid no initiation fee for their memberships.

Follow David McKay Wilson on Twitter @davidmckay415.