The new lawsuit, filed on 2 October in State Supreme Court in Brooklyn, has been filed by 20 people who live or lived in more than 30 apartment complexes across Brooklyn, Queens and Staten Island which previously belonged to the president's father, Fred Trump.
The buildings were sold in 2004, but the plaintiffs claim that the fraudulent scheme began in 1992 and the artificially-raised rents carried on after the sale.
“A massive fraud spanning 28 years, victimizing several hundred thousand tenants in Trump regulated apartments, needed to be addressed,” said Jerrold S. Parker, a lawyer who represents the 20 plaintiffs.
The tenants, he said, “must be made whole as a result of the money that was unlawfully and unknowingly taken from them by the Trump family for their own personal gain.”
They are seeking a return of the extra rent paid, plus interest and triple damages.
If the plaintiffs’ lawyers win approval of class-action status, any potential judgment would encompass every person who paid rent in more than 14,000 rent-regulated apartments since 1992.
The scheme, the plaintiffs allege, began in 1992 after the Trumps realized that their inheritance could face a 55 per cent estate tax. Fred Trump would die in 1999, aged 93, and with a fortune estimated at over $1 billion.
To skirt the taxes, his relatives and associated came up with a plan to found a company which they named All County Building Supply & Maintenance, which had no offices or employees and listed its address at the home of John Walter, a nephew and long-time employee of the Trumps, who died in 2018.
Walter is named in the suit, along with the president's sister Maryanne, a former federal judge, and their brother Robert, who died this year.
When materials were bought for the apartments, Walter would generate an invoice showing that All County had bought the items, and a second invoice marked up 20 to 50 per cent higher showing what All County had billed to Fred Trump’s properties.
The siblings and Walter siphoned off the difference, according to the suit.
It drove the costs of the apartments up, and led to rent increases for those living there.
The scheme could have resulted in criminal charges, according to The New York Times — which first outlined the scheme in 2018 — but the statute of limitations has expired.
Mr Trump’s federal income tax records for some of those years, which were revealed in an investigation published by the paper in September, show that he received $1.38 million from All County during the four years ending in 2003.
He paid federal income taxes in only one of those years — a total of $39,117 in 2003.
His sister, Ms Trump Barry, filed a financial disclosure form for 1998 showing that she collected more than $1 million that year from All County.
The amended complaint filed this week, obtained by The New York Times, notes that while Fred Trump’s empire was sold nearly two decades ago, the Trumps only dissolved All County shortly after the expose was published in 2018.
Leonie Green, one of the plaintiffs, lived in the Westminster Apartments in Brooklyn, having moved in to the Ditmas Park area 22 years ago.
She told the paper that paying the rent on her salary as an executive assistant has been difficult, and she has fought off several eviction actions after falling behind.
She was shocked to learn that her difficulties might have been made worse by a rich family “stealing from me.”
“You try so hard, and to hear something like this, it breaks my heart, because I believe they are just taking advantage of poor people,” Ms Green said.
The lawsuit was filed just before midnight on 2 October, moments before the expiration of the two-year statute of limitations for any fraud discovered through The Times’s 2018 investigation.
An amended complaint was filed on Tuesday.
A spokeswoman for the Trump family described the lawsuit as “completely frivolous.”
“Not only are the allegations completely unsupported by any evidence, but they relate to events which go back nearly 30 years — yet were never once raised by anyone at any time only to be conveniently filed just one month before the 2020 presidential election,” said Kimberly Benza.
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