Donald Trump "repeatedly" misrepresented his wealth by hundreds of millions of dollars to banks and insurers, a New York judge has ruled.
The decision resolves the key claim made by New York's attorney general in her civil lawsuit against the former president.
"The documents here clearly contain fraudulent valuations that defendants used in business," the judge wrote.
It is a major blow for Mr Trump before the case goes to trial next Monday.
An attorney for Mr Trump called the judge's decision "a miscarriage of justice" in a statement on Tuesday evening.
Attorney General Letitia James sued Mr Trump last September, accusing him, his two adult sons and the Trump Organization of lying about his net worth and asset values between 2011 and 2021.
Ms James claimed the defendants issued false business records and financial statements in order to get better terms on bank loans and insurance deals, and to pay less tax.
In a trial that will now resolve six remaining claims in her suit, she will seek $250m in penalties and a ban on Mr Trump doing business in his home state.
The non-jury trial is scheduled to begin October 2, and last until at least December.
In a pre-trial phase of the case known as summary judgement, Ms James had asked Justice Arthur Engoron of the New York state court in Manhattan to rule on her claims.
She argued that finding certain facts to be beyond dispute would speed up the trial.
Defence lawyers for Mr Trump, meanwhile, called for the suit to be thrown out, arguing the public had not been harmed by Mr Trump's actions and the loans in question occurred long ago.
Mr Trump has denied any wrongdoing and on Tuesday dismissed the case in New York as another political "witch hunt" brought by a prosecutor biased against him. He accused the judge of being "highly politicised".
In a statement, his lawyers said the decision ignored "basic legal, accounting and business principles".
As part of Tuesday's decision, the Trump Organization was ordered to cancel its New York business licenses and, within 10 days, recommend independent monitors who could oversee that process.
That is a legal loss for the New York native, who now lives in Florida.
The judge's ruling will not dissolve his company but could end his control over signature New York properties like the Trump Tower and the Trump Building at 40 Wall Street.
Judge Engoron on Tuesday also denied the Trump team's request to throw out the case, and separately fined five Trump attorneys $7,500 each for making arguments already rejected by the court.
During arguments in court on Friday, a lawyer with Ms James' office said the former president had signed off on statements that overinflated the valuations offered by appraisers his company hired.
But Trump attorney Christopher Kise argued doing so showed that Mr Trump was an "investment genius" and "a master at finding value where others see nothing".
But in his summary judgment, the judge said that Mr Trump's behaviour amounted to more than simply bragging about his riches, and that he and his company had repeatedly lied about his financial affairs.
"In defendants' world, rent-regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air," he wrote.
"That is a fantasy world, not the real world."
The judge determined that Mr Trump:
- Overvalued Mar-a-Lago by 2,300% in one financial statement
- Overvalued his penthouse at Trump Tower in New York by claiming that it was three times its actual size
- "Absurdly" argued that calculating the area of the penthouse was subjective, ruling "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"
Mr Trump is still seeking to delay the trial in New York and has sued the judge.
An appeals court is set to rule this week on that lawsuit. If it rules against him, Mr Trump will have to fight out the rest of the case in court.
It is just one of several legal battles he is enmeshed in as he campaigns for a rematch with President Joe Biden next year and a return to the White House.
Far and away the frontrunner to win the Republican nomination, he is also facing 91 felony charges across four criminal cases. He has pleaded not guilty in those cases.
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