Donald Trump committed fraud for years by inflating his worth to banks and insurers, a New York judge finds

• Trump deceived banks and insurers, a Manhattan judge found Tuesday.
• The ruling is a pre-trial win for the state Attorney General, who wants him banned from doing business in NY.

In a stunning, pre-trial win in New York attorney general's all-out war on the Trump Organization, a Manhattan judge has found that Donald Trump committed fraud for years by inflating his worth to banks and insurers by as much as $3.6 billion a year.

A strongly-worded ruling by state Supreme Court Justice Arthur Engoron rejected outright Trump's request for a range of pre-trial victories, calling his arguments "rehashed" and "erroneous."

Instead, the judge gave a major victory to Attorney General Letitia James, immediately revoking Trump's license to do business in New York.

"It's the corporate death penalty," said Diana Florence, a veteran financial crimes prosecutor for the Manhattan district attorney's office, now in private practice.

"This ruling essentially dissolves his company," she said, though she predicted that years of appeals may pass before anything actually happens.

A trial, scheduled for next month, must still be held to determine if Trump and company executives acted intentionally.

The trial will also determine what further penalties Trump, his two eldest sons, and his company must pay.

For now, though, James is entitled to cancel "any certificate" allowing Trump Organization to operate as a New York-chartered company, the decision says.

"Today, a judge ruled in our favor and found that Donald Trump and the Trump Organization engaged in years of financial fraud," James said in a statement Tuesday night.

"We look forward to presenting the rest of our case at trial."

Trump's side, meanwhile, promised an immediate appeal, and to keep fighting.

"Today's decision is fundamentally flawed at every level," Trump attorney Alina Habba said in a statement.

"It is important to remember that the Trump Organization is an American success story," she added, calling the decision "an affront to our legal system."

James is seeking $250 million in penalties, and to ban Trump and his adult sons from ever running a business in New York state again. She also wants to ban Trump and the Trump Organization from borrowing from a New York bank and from purchasing real estate in the state for five years.

Almost as an aside, the judge on Tuesday also ordered that Trump attorneys Michael Madaio, Clifford S. Robert, Michael Farina, Christopher Kise, and Armen Morian pay penalties of $7,500 each in the next 30 days.

The sanctions, requested by the attorney general, are "the only way to impress upon defendants' attorneys the consequences of engaging in repetitive, frivolous motion practice after this Court, affirmed by the Appellate Division, expressly warned them against doing so," the judge wrote.

Engoron saved some of his harshest words for Trump's claim that no banks were victimized, and that "disclaimers" in his official banking statements somehow render him fraud proof.

Such claims "invoke the time-loop in the film 'Groundhog Day,'" Engoron wrote, in a scorching latest chapter to the state's lawsuit against Trump, his two adult sons, two of his senior managers, and Trump Organization.

At another point in the 35-page ruling, the judge referenced "Defendants' inscrutable persistence" in repeatedly claiming that the attorney general, Letitia James has no power to sue him.

"Infants, legally-declared incompetents, and persons under certain legal disabilities are not allowed to sue," the judge wrote. "The New York Attorney General is none of the above."

Read the judge's decision declining to streamline Trump's business fraud trial.

Engoron, who will preside over the non-jury trial, has insisted on opening statements starting promptly on Monday, October 2, "come hell or high water."

Trump's side threw that timing into question two weeks ago by asking a Manhattan-based appellate panel to consider Trump's bid to toss at least part of the AG's case on statute-of-limitations and other grounds.

The trial can't start until that five-judge ruling, expected to come in days.

Trump's legal team has argued that real-estate appraisals are subjective, and that Deutsche Bank in particular, far for being victimized, actually profited from the disputed loans, arguments Trump himself has continued to make, including, in a deposition.

"The defenses Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact," the judge wrote on Tuesday. "The documents here clearly contain fraudulent valuations that defendants used in business."

"Defendants' respond that: the documents do not say what they say; that there is no such thing as 'objective' value, and that, essentially, the Court should not believe its own eyes," he added.

At that point in the decision, the judge inserted a footnote, citing the Marx Brothers.

"As Chico Marx, playing Chicolini, says to Margaret Dumont, playing Mrs. Gloria Teasdale, in 'Duck Soup," the footnote read, "'Well, who ya gonna believe, me or your own eyes?'"

Engoron singled out for scorn Trump's claim that he couldn't have overvalued his properties in official banking statements if the property values ultimately went up.

"He also seems to imply that the numbers cannot be inflated because he could find a 'buyer from Saudi Arabia' to pay any price he suggests," the judge scoffed at another claim from Trump's deposition.

The decision focused on the five years of Trump's annual financial statements, from 2012 through 2016, when he tripled the square footage of his three-story penthouse atop Trump Tower on Manhattan's Fifth Avenue.

"In opposition, defendants absurdly suggest that 'the calculation of square footage is a subjective process that could lead ot differing results or opinions based on the method employed to conduct the calculation,'" the judge wrote, quoting from previous Trump court documents.

"Well, yes, perhaps, if the area is rounded or oddly shaped, it is possible measurements of square footage could come to slightly differing results," the judge countered.

But "a discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud."

Last week, during the parties' last in-person appearance, Engoron signaled he was unswayed by Trump's no harm, no foul defense.

"There's a role here for the attorney general," the judge said. "What was arguably hurt was fairness in the marketplace. Honesty in the marketplace."

The parties are scheduled to return to the courtroom Wednesday for their final pre-trial conference.

This story was updated with response from Trump's legal team and additional details from the decision.