Donald J. Trump and two of his adult children must sit for questioning under oath as part of the New York attorney general’s civil investigation into their business practices, a state appeals court ruled on Thursday.
Mr. Trump’s lawyers had argued that the inquiry by the state attorney general, Letitia James, was politically motivated and that she should not be permitted to question him or his children Donald Trump Jr. and Ivanka Trump. The lawyers also claimed that the attorney general could not force Mr. Trump to face questioning in her civil investigation because he was also the subject of a criminal inquiry into some of the same business practices.
But the court found that the Trumps had not shown they were being treated differently from other investigative targets and argued that “the existence of a criminal investigation does not preclude civil discovery of related facts.”
The decision represented the latest in a string of legal setbacks for Mr. Trump, who was also recently held in contempt of court for failing to fully comply with a subpoena from Ms. James seeking documents. And the rebuke will likely embolden Ms. James at a crucial moment in her investigation, as she weighs whether to sue Mr. Trump and the Trump Organization, his family real estate business.
“Once again, the courts have ruled that Donald Trump must comply with our lawful investigation into his financial dealings,” Ms. James said in a statement. “We will continue to follow the facts of this case and ensure that no one can evade the law.”
But the ruling does not mean that the Trumps will necessarily face questioning. The family’s lawyers could appeal to New York’s highest court, the Court of Appeals, although it is not clear whether that court would agree to hear the case.
Alan S. Futerfas, the lawyer who argued the case for the Trumps, said they were considering the court’s decision.
The unanimous ruling from a four-judge panel of the New York State Supreme Court’s Appellate Division, First Department, upheld a decision from a lower court granting Ms. James permission to question Mr. Trump and his children.
Another of Mr. Trump’s adult children, Eric Trump, was questioned by the attorney general’s lawyers in October 2020. During his testimony, he invoked his Fifth Amendment right against incriminating himself in response to more than 500 questions, a court filing said.
Mr. Trump and his other children could do the same. But declining to answer questions could harm them in Ms. James’s civil inquiry. Whereas in a criminal case, jurors are barred from inferring anything from a defendant’s refusal to testify, the same is not true in a civil inquiry, where the Trumps’ silence could be used against them.
Ms. James’s office is in the final stages of its investigation, which began more than three years ago and has focused on whether Mr. Trump improperly inflated the value of his properties and other assets. Because her inquiry is civil, Ms. James cannot file criminal charges, but she can file a lawsuit. Last month, a lawyer for her office said that Ms. James was preparing to file an “action” against Mr. Trump in the near future.
Understand the New York A.G.’s Trump Inquiry
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An empire under scrutiny. Letitia James, the New York State attorney general, is currently conducting a civil investigation into former President Donald J. Trump’s business practices. Here’s what to know:
The origins of the inquiry. The investigation started after Michael D. Cohen, Mr. Trump’s former personal lawyer and fixer, testified to Congress that Mr. Trump and his employees had manipulated his net worth to suit his interests.
The findings. Ms. James detailed in a recent filing what she said was a pattern by the Trump Organization to inflate the value of the company’s properties in documents filed with lenders, insurers and the Internal Revenue Service.
Mr. Trump’s lawsuit. In December, Mr. Trump sued Ms. James, seeking to halt the inquiry. The suit argues that the attorney general’s involvement in the inquiry is politically motivated.
Pushing back. Lawyers for the Trump family had sought to prevent Ms. James from obtaining documents as part of the inquiry and interviewing Mr. Trump, Donald Trump Jr. and Ivanka Trump under oath. But those efforts have failed so far.
Contempt ruling. A judge held Mr. Trump in contempt of court for failing to turn over documents to Ms. James, ordering him to provide the records and be fined $10,000 per day until he did so. Two weeks later, the judge withdrew the judicial order on the condition Mr. Trump paid the $110,000 fine he had accumulated over that period.
In a filing earlier this year, Ms. James’s office said that the Trump Organization engaged in “fraudulent or misleading” practices. But her lawyers added that they needed to collect additional records and testimony before they could make a decision about whether to file a lawsuit.
As Ms. James’s investigation ramps up, Mr. Trump also faces a criminal investigation into whether he falsely inflated the value of his properties. But while that investigation by the Manhattan district attorney’s office is continuing, prosecutors stopped presenting evidence about Mr. Trump to a grand jury earlier this year.
The criminal investigation had been heading toward charges before the Manhattan district attorney, Alvin L. Bragg, developed concerns about proving the case.
In an interview last month, Mr. Bragg said his office was monitoring Ms. James’s investigation for potential new leads.
In recent court filings, Ms. James has outlined the contours of a potential lawsuit against Mr. Trump or his company. One of her filings revealed that Mr. Trump’s longtime accounting firm had cut ties with him and essentially retracted nearly a decade’s worth of his annual financial statements.
And throughout the year, her office has worked to obtain testimony and documents from Mr. Trump. Last month, Justice Arthur F. Engoron of the New York State Supreme Court, who first permitted Ms. James to question the Trump family, also held the former president in contempt after his lawyers failed to explain their search process for documents relevant to the investigation that they claimed they were unable to find. The contempt order was lifted earlier this month, but only after Mr. Trump paid a $110,000 fine.