By Karen Freifeld and Jonathan Stempel
NEW YORK (Reuters) - A New York judge ruled on Thursday that former U.S. President Donald Trump and two of his adult children must answer questions under oath within 21 days in the state attorney general's civil probe into their family company.
Justice Arthur Engoron of the New York state court in Manhattan ruled in favor of Attorney General Letitia James in directing Trump, his son Donald Trump Jr and his daughter Ivanka Trump to testify.
Engoron said James had "the clear right" to issue her subpoenas and question the Trumps after having uncovered "copious evidence of possible financial fraud."
Failing to issue subpoenas "would have been a blatant dereliction of duty," Engoron wrote.
"Today, justice prevailed," James said in a statement. "No one will be permitted to stand in the way of the pursuit of justice, no matter how powerful they are. No one is above the law."
The decision followed a two-hour hearing in which the Trumps' lawyers accused James of doing an end run around their clients' constitutional rights by seeking testimony she could then use against them in a parallel criminal investigation.
Trump attorney Alina Habba accused James of "selective prosecution and prosecutorial misconduct that this country has never seen," citing what she called Democratic attorney general's "vile disdain" for Trump, a Republican.
"If he was not who he is, she would not be doing this," Habba said. "This court can help stop this circus."
Trump in a statement issued later on Thursday called the accusations false and accused James of a political agenda in targeting him and his family.
"It is a continuation of the greatest Witch Hunt in history - and remember, I can't get a fair hearing in New York because of the hatred of me by judges and the judiciary. Its not possible!," Trump said in the statement.
Last month, James said her nearly three-year investigation into the Trump Organization had uncovered significant evidence of possible fraud https://www.reuters.com/world/us/ny-attorney-general-details-possible-fraud-donald-trumps-family-business-2022-01-19.
She described what she called misleading statements about the values of the Trump brand and six properties, saying the company may have inflated real estate values to obtain bank loans and reduced them to lower tax bills.
The Trumps have not been accused of criminal wrongdoing.
Engoron declined the Trumps' request to put James' case on hold while the criminal case, led by Manhattan District Attorney Alvin Bragg, is pending. James joined that probe last May.
The criminal investigation, begun by Bragg's predecessor Cyrus Vance, resulted last July in tax fraud charges against the Trump Organization and its longtime chief financial officer Allen Weisselberg. Both pleaded not guilty.
'COMPLETELY MISSES THE MARK'
Engoron said the argument that James was trying to bypass grand jury protections, which would give the Trumps immunity, by issuing civil subpoenas "completely misses the mark."
He said the Trumps could refuse to answer questions, noting that Donald Trump's other adult son Eric Trump invoked his constitutional right against self-incrimination more than 500 times when the attorney general's office questioned him in 2020.
The judge also rejected the Trumps' claim that James' sometimes aggressive public statements about investigating Donald Trump, including a pledge that "we're definitely going to sue him," illustrated the "impropriety" of her probe.
Engoron said the spark for the investigation was not James' dislike of the former president, but rather congressional testimony from Donald Trump's former personal lawyer Michael Cohen that the Trumps were "cooking the books."
The judge also noted Trump's history of investigations by the attorney general's office, including "significant settlements" with James' predecessors concerning a namesake university and charitable foundation.
Trump is suing to try to stop James' investigation. He has not said whether he will run for president again in 2024.
Engoron ruled after Trump's longtime accounting firm Mazars USA decided last week to cut ties with him and the Trump Organization, saying it could no longer stand behind a decade of financial statements despite finding no material discrepancies.
The Trump Organization said Mazars' findings effectively rendered James' and Bragg's investigations "moot."
Washington D.C.'s attorney general is separately suing the Trump Organization and Trump's inaugural committee over the alleged misuse of $1.1 million of charitable funds. A Sept. 26 trial date was set on Thursday.