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New York attorney general 'actively investigating' Trump Organization in a 'criminal capacity'

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ALBANY, N.Y. – State Attorney General Letitia James joined forces with Manhattan District Attorney Cyrus Vance, leader of a long-running criminal investigation into Donald Trump and his family business interests, escalating the potential legal jeopardy facing the former president and his associates.

For more than two years, James has investigated Trump and his company as part of a civil inquiry after former Trump attorney Michael Cohen claimed they fraudulently boosted property values to obtain tax breaks and better terms on loans and insurance.

James' office announced late Tuesday that the inquiry shifted to a criminal investigation and that state authorities are working with Manhattan prosecutors who successfully fought to obtain years of Trump's tax returns.

"We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature," James spokesman Fabien Levy said in a statement first reported late Tuesday by CNN. "We are now actively investigating the Trump Organization in a criminal capacity, along with the Manhattan (district attorney)."

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Levy declined further comment. The Trump Organization could not immediately be reached for comment late Tuesday.

Trump faces criminal investigations on two major fronts – in New York and in Georgia, where prosecutors are examining Trump's alleged attempts to interfere in the state election and tilt the vote count in his favor.

Georgia prosecutors acknowledged they are reviewing a range of possible offenses, including solicitation of election fraud, false statements, conspiracy, oath of office violations, racketeering and violence associated with threats to the election process.

The New York attorney general's action brings additional firepower to bear in a tax and bank fraud inquiry that potentially threatens Trump's business and political viability.

"What this suggests is that the attorney general has uncovered something to indicate that there is more than just questions about basic accounting principles," said former federal prosecutor David Weinstein. "This is turning up the heat and increased the likelihood that some sort of criminal charges are likely."

Trump, in a lengthy written statement, cast the attorney general's announcement as political warfare.

"There is nothing more corrupt than an investigation that is in desperate search of a crime," Trump said. "But, make no mistake, that is exactly what is happening here...The Attorney General of New York literally campaigned on prosecuting Donald Trump even before she knew anything about me."

New York AG's Trump investigation dates back to 2019

James launched her investigation after Cohen provided documents and testimony to Congress in 2019.

Cohen – who had a falling out with the president – claimed Trump regularly inflated the value of his properties and his net worth to get better insurance and loan rates.

In August, James' office filed documents in court signaling the investigation had zeroed in on four properties: the Seven Springs estate; 40 Wall Street in Manhattan; the Trump International Hotel and Tower Chicago; and the Trump National Golf Club in Los Angeles.

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Trump purchased the Seven Springs property for $7.5 million in 1995, failing to develop portions of it into luxury housing and a golf course. The property includes two mansions and cuts through the Westchester towns of Bedford, North Castle and New Castle.

In 2015, Trump agreed to conservation easement that saw him pledge not to develop 159 acres of Seven Springs, a decision that came with tax benefits.

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According to the court documents filed in August, James' office examined whether Trump and his company fraudulently boosted the assessed value of the sprawling Westchester property, allowing one of his limited liability companies to claim the easement was worth a $21.1 million tax exemption on forms submitted to the IRS.

Attorney general, Trump have clashed before

James' office and the Trump Organization clashed over the investigation and attempts to wrestle free documents and testimony.

In September, New York Supreme Court Justice Arthur Engoron of Manhattan ordered Eric Trump, the president's son and executive vice president of the Trump Organization, to sit for testimony under oath as part of the investigation.

The Trump Organization characterized James' investigation as political in nature. James, a Democrat, had clashed with Trump, a Republican, over the Trump Foundation, which closed under a settlement with the Attorney General's Office.

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"The Trump Organization has done nothing wrong and, as the motion papers clearly state, the NYAG has made no determination that anything was improper or that any action is forthcoming," the Trump Organization said in a statement in August.

Follow Jon Campbell on Twitter @JonCampbellGAN.

Contributing: Kevin Johnson, USA TODAY