Trump v. Trump
| Decision Date | 14 November 2022 |
| Docket Number | Index No. 654698/2020 |
| Citation | 77 Misc.3d 543,179 N.Y.S.3d 879 |
| Parties | Mary L. TRUMP, Plaintiff, v. Donald J. TRUMP, in his personal capacity, Maryanne Trump Barry, and Shawn Hughes, the executor of the Estate of Robert S. Trump, in his capacity as executor, Defendants. |
| Court | New York Supreme Court |
Kaplan Hecker & Fink LLP, New York City (John C. Quinn of counsel), for plaintiff.
Greenfield Stein & Senior, LLP, New York City (Gary R. Friedman and Jeffery H. Sheetz of counsel), for Maryanne Trump Barry, defendant.
Kylie, Kylie & Kylie, PLLC, Lake Success (James Kylie of counsel), for Donald J. Trump and another, defendants.
Robert R. Reed, J. Plaintiff Mary L. Trump (plaintiff) alleges that defendants Donald J. Trump, Maryanne Trump Barry, and Robert S. Trump, her uncles and aunt, carried out a fraudulent scheme to siphon funds from minority interests that she inherited in the family business, concealed their grift, and deceived her about the true value of what she had inherited. Plaintiff alleges that she reasonably relied upon their misrepresentations, and that, as a result, in April 2001, she relinquished her interests at a significantly underestimated value.
Maryanne Trump Barry moves, pursuant to CPLR 3211 (a) (3), (5), and (7), to dismiss the complaint as time-barred, barred by a release, and for failure to state a cause of action (motion sequence number 001).
Donald J. Trump and Shawn Hughes, as executor of the estate of Robert S. Trump, also move, pursuant to CPLR 3211 (a) (3), (5), and (7), to dismiss the complaint on the same grounds (motion sequence number 002).
Because plaintiff's claims are barred by releases, both motions are granted and the complaint is dismissed.
The following facts are taken from the complaint. Plaintiff, a clinical psychologist and author, is the granddaughter of Fred C. Trump (Fred Sr.), a property developer and landlord in New York City (NYSCEF doc. no. 20, complaint ¶ 31). Fred Sr. had five children: Maryanne Trump Barry; Mary's late father, Fred Trump Jr. (Fred Jr.); Elizabeth Trump Grau; Donald J. Trump; and Robert S. Trump (id. , ¶ 41). Plaintiff's father, Fred Jr., died in 1981 when she was sixteen years old (id. , ¶ 2).
Donald J. Trump is the former President of the United States (id. , ¶ 32). From 1999 to 2019, Maryanne Trump Barry served as a judge on the United States Court of Appeals for the Third Circuit (id. , ¶ 33). Robert S. Trump was a New York businessperson and real estate developer who passed away in August 2020 (id. , ¶ 34).
When plaintiff's father died, she inherited various minority interests in the Trump family real estate business (id. , ¶ 5). She became the beneficial owner of rights in over 70 acres of land in New York City, improved by more than 50 buildings and a shopping center (the Land Interests), in addition to interests in a collection of entities known as the Midland Associates Group (Midland), which held hundreds of New York City apartments, various other assets, and a portion of a 153-acre development (the Midland Interests) (id. , ¶¶ 48-58). Plaintiff was also a beneficiary of an irrevocable trust that her grandfather had established in 1976 (the 1976 trust) (id. , ¶ 60).
Plaintiff's Land Interests included: (1) a 10% interest in the land underlying Beach Haven, a complex in Coney Island, Brooklyn, spanning over 40 acres improved with at least 26 buildings; and (2) a 5% interest in the land underlying Shore Haven, a complex in Bensonhurst, Brooklyn, spanning more than 30 acres improved by 32 six-story buildings and a shopping center (id. , ¶¶ 46, 48-49). According to plaintiff, Beach Haven and Shore Haven were the "crown jewels in the Trump family's empire" (id. , ¶ 47). As a minority owner, plaintiff had an interest in the cash streams under the terms of leases and reversion interests in the land and buildings and improvements (id. , ¶ 52).
Plaintiff inherited a combined 10% interest in Midland, which the Trump family referred to as "the mini-empire" (id. , ¶ 54). Midland was made up of the following four entities: Midland Associates, LLC; Park Briar Associates, LLC; Highlander Hall, Inc.; and Coronet Hall, Inc. (id. , ¶ 55). Plaintiff held a 10% interest in each of these entities (id. ). Midland owned certain sponsor corporations that held, among other things, unsold cooperative shares in various apartment buildings (id. , ¶¶ 54, 55). Midland generated revenue by selling sponsor apartments, by renting unsold units, and by issuing loans (id. , ¶ 57).
According to plaintiff, her interest in Midland entitled her to portions of each of these revenue streams (id. ).
Plaintiff alleges that, in 1976, Fred Sr. established irrevocable trusts then worth $400,000 for each of his grandchildren, including plaintiff (id. , ¶ 60). Plaintiff was also a beneficiary of Fred Sr.’s estate (id. , ¶ 62).
According to plaintiff, in the 1980s and 1990s, as Fred Sr. descended into dementia, defendants maneuvered to take control over his business, including every entity in which plaintiff had an interest. Defendants became majority co-owners of the Land Interests (id. , ¶ 64). They were also majority partners, members, and owners of Midland (id. ). Plaintiff alleges that they dominated and controlled various management companies and purchasing agents that transacted with Midland (id. , ¶ 66). Defendants were also co-trustees of Fred Sr.’s 1976 trust (id. , ¶ 61).
As described below, plaintiff alleges that defendants engaged in three fraudulent schemes against her (id. , ¶ 11).
The First Alleged Fraudulent Scheme -- Plaintiff's Allegations as to Grift:
Plaintiff alleges that, between 1981 and 2001, defendants siphoned millions of dollars from plaintiff's interests in entities that defendants controlled, while concealing those transfers as legitimate business transactions (id. , ¶ 68).
For example, as first reported by The New York Times in 2018, defendants set up a sham corporation in 1992 called All County Building Supply & Maintenance Co., Inc. (All County), which was a shell without any corporate offices (id. , ¶¶ 69-70). Plaintiff alleges that defendants falsely portrayed All County as a legitimate middleman between vendors that provided maintenance and supplies for Trump properties and the operating companies that paid those vendors (id. ). According to plaintiff, All County then issued "padded" invoices to the Trump entities marking up the purchases, and defendants pocketed the difference (id. ). Plaintiff alleges that defendants concealed this grift through descriptions in financial statements such as "repairs," "maintenance," and "supplies" (id. , ¶ 94).
In addition, defendants allegedly used management companies that they owned and controlled, including Trump Management, Inc. (Trump Management) and Apartment Management Associates Inc., to make secret cash distributions to themselves under the guise of "management," "consulting," and "maintenance" fees and related salaries (id. , ¶¶ 74-75).
As alleged by plaintiff, defendants also issued loans to other entities that they controlled (id. , ¶ 76). These loans either did not have any repayment terms, did not impose any obligation to pay interest, or charged preferential rates far more favorable to the borrower than those in an arms-length transaction (id. ).
The Second Alleged Fraudulent Scheme -- Plaintiff's Allegations as to Devaluing:
Plaintiff further alleges that defendants used "phony" appraisals and other valuation tricks to dramatically understate the value of plaintiff's interests in financial statements year after year (id. , ¶¶ 83, 127-128, 160-163). Plaintiff claims that defendants procured fraudulent appraisals from their co-conspirator Robert Van Ancken (Von Ancken), an appraiser who performed favorable appraisals for defendants after Fred Jr.’s death (id. , ¶¶ 79, 80).
According to the complaint, Von Ancken inflated or deflated valuations based on the purposes for which defendants requested those valuations (id. , ¶ 81). For instance, in 1992, when Fred Sr. decided to donate Patio Gardens, one of his least profitable complexes, and take a charitable deduction, Von Ancken provided an inflated assessment: $34 million, or $61.90 per square foot (id. , ¶ 82). By providing such an inflated appraisal, Von Ancken boosted the tax deduction Fred Sr. claimed on his tax return (id. ). By contrast, in 1995, Von Ancken priced Beach Haven and Shore Haven, in which plaintiff had reversion interests, at a mere $23 million, or $11.01 per square foot, even though they were much more lucrative than Patio Gardens (id. , ¶ 83). Plaintiff further alleges that Von Ancken's false valuations were based on false and misleading data and other management information that defendants provided to Von Ancken (id. , ¶ 84).
The Third Alleged Fraudulent Scheme -- Plaintiff's Allegations as to the "Squeeze-Out":
Additionally, plaintiff claims that, upon Fred Sr.’s death in 1999, defendants saw an opportunity to push her out of the family business altogether (id. , ¶ 3). Defendants filed a probate petition seeking to probate Fred Sr.’s will in Surrogate's Court, Queens County (id. , ¶¶ 109, 112).
A few days after Fred Sr. died, plaintiff received a call from Robert Trump, who told her that it was time for her to relinquish her interests (id. , ¶ 110). Over the next month, Robert reiterated the same message to plaintiff: "Cash in your chips, Honeybunch" (id. ). She claims that, in October 1999, Robert threatened that "[i]f [plaintiff] did not comply with their demands, including consenting to probate, Defendants would bankrupt Midland and ‘leave you paying taxes on money you don't have for the rest of your lives’ " (id. , ¶ 112).
On March 23, 2000, plaintiff and her brother, Fred III, filed objections to the probate petition on the...
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