Explained: why New York's Attorney General is suing Donald Trump for 'fraud'

New York's attorney general sued former President Donald Trump and his company for fraud on Wednesday, alleging they padded his net worth by billions of dollars by lying about the value of prized assets including golf courses, hotels and his homes at Trump Tower and Mar-a-Lago.

Attorney General Letitia James dubbed it: “The art of the steal.” James' lawsuit, filed in state court in New York, is the culmination of a three-year civil investigation of Trump and the Trump Organisation.

Trump's three eldest children, Donald Jr, Ivanka and Eric Trump, were also named as defendants, along with two longtime company executives, Allen Weisselberg and Jeffrey McConney.

The lawsuit strikes at the core of what made Trump famous, taking a blacklight to the image of wealth and opulence he's embraced throughout his career — first as a real estate developer, then as a reality TV host on “The Apprentice” and “Celebrity Apprentice,” and later as president.

James wants Trump and the other defendants to pay at least $250 million, which she said was the approximate worth of the benefits it got through fraudulent practices.

James, a Democrat, announced details of the lawsuit at a news conference on Wednesday. She said her office filed the case — which is civil, not criminal in nature — after rejecting settlement offers made by lawyers for the defendants.

The alleged scheme was intended to burnish Trump's billionaire image and the value of his properties when doing so gave him an advantage, such as in obtaining favorable loan terms, while playing down the value of assets at other times for tax purposes, James' office said.

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“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 said her investigation uncovered potential criminal violations, including falsifying business records, issuing false financial statements, insurance fraud, conspiracy and bank fraud. She said her office is referring those findings to federal prosecutors and the Internal Revenue Service.

In a statement posted to his Truth Social platform, Trump called the lawsuit “Another Witch Hunt by a racist Attorney General" and called James, who is Black, "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 lawyer Alina Habba said the lawsuit “is neither focused on the facts nor the law — rather, it is solely focused on advancing the Attorney General's political agenda," accusing James of abusing her authority “by prying into transactions where absolutely no wrongdoing has taken place.” Habba said the allegations in the lawsuit are “meritless.”

James is seeking to remove the Trumps from businesses engaged in the alleged fraud and wants an independent monitor appointed for no less than five years to oversee the Trump Organization's compliance, financial reporting, valuations and disclosures to lenders, insurers and tax authorities.