| | Trump Ordered to Pay $355 Million and Barred From New York Business |
The ruling in Donald J. Trump’s civil fraud case could cost him all his available cash. The judge said that the former president’s “complete lack of contrition” bordered on pathological.
The civil trial tested Donald J. Trump’s claims of wealth and a judge found them fraudulent. The former president is expected to appeal. Credit...Maansi Srivastava/The New York Times
By Jonah E. Bromwich and Ben Protess
Feb. 16, 2024Updated 3:41 p.m. ET
A New York judge on Friday handed Donald J. Trump a crushing defeat in his civil fraud case, finding the former president liable for conspiring to manipulate his net worth and ordering him to pay a penalty of $355 million that could wipe out his entire stockpile of cash.
The decision by Justice Arthur F. Engoron caps a chaotic, yearslong case in which New York’s attorney general put Mr. Trump’s fantastical claims of wealth on trial. With no jury, the power was in Justice Engoron’s hands alone, and he came down hard: The judge delivered a sweeping array of punishments that threatens the former president’s business empire as he simultaneously contends with four criminal prosecutions and seeks to regain the White House.
Not only did Justice Engoron impose a three-year ban preventing Mr. Trump from serving in top roles at any New York company, including his own, but the judge also applied that punishment to the former president’s adult sons for two years and ordered that they pay more than $4 million each. One of the sons, Eric Trump, is the Trump Organization’s de facto chief executive, and the ruling throws into doubt whether any member of the family can run the business in the near term.
In his unconventional style, Justice Engoron criticized Mr. Trump and the other defendants for refusing to admit errors for years. “Their complete lack of contrition and remorse borders on pathological,” he said.
He noted that Mr. Trump had not committed violent crimes and that “Donald Trump is not Bernard Madoff.” Still, he wrote, “defendants are incapable of admitting the error of their ways.”
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Mr. Trump will appeal the financial penalty — which could climb to $400 million or more once interest is added — but will have to either come up with the money or secure a bond within 30 days. The ruling will not render him bankrupt, because most of his wealth is tied up in real estate.
Mr. Trump will also most likely ask an appeals court to halt the restrictions on him and his sons from running the company while it considers the case.
Justice Arthur F. Engoron’s punishment strikes directly at Mr. Trump’s image as he seeks a second term in the White House.Credit...Jefferson Siegel for The New York Times
“This verdict is a manifest injustice — plain and simple,” Alina Habba, one of Mr. Trump’s lawyers, said in a statement. She added that “given the grave stakes, we trust that the Appellate Division will overturn this egregious verdict.”
But there might be little Mr. Trump can do to thwart one of the judge’s most consequential punishments: extending for three years the appointment of an independent monitor who will be the court’s eyes and ears at the Trump Organization, and strengthening her powers to watch for fraud and second-guess transactions that look suspicious.
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Mr. Trump’s lawyers have railed against the monitor, Barbara Jones, saying that her work has already cost the business more than $2.5 million; the decision to extend her oversight of the privately held family company could enrage the Trumps, who see her presence as an irritant and an insult.
The attorney general, Letitia James, had sought those consequences and more, asking for Mr. Trump to be permanently barred from New York’s business world. In the 2022 lawsuit that precipitated the trial, she accused Mr. Trump of inflating his net worth to obtain favorable treatment from banks and other lenders, attacking the foundation of his public persona as a billionaire businessman.
Even though the lenders made money from Mr. Trump, they were the purported victims in the case, with Ms. James arguing that absent his fraud, they could have made even more. The financial penalty reflects those lost profits, with nearly half of the $355 million — $168 million — representing the interest that Mr. Trump saved, and the remaining sum representing his profit on the recent sale of two properties, money that the judge has now clawed back.
Before the trial began, Justice Engoron ruled that the former president had used his annual financial statements to defraud the lenders, siding with the attorney general on her case’s central claim. The judge’s Friday ruling ratified almost all of the other accusations Ms. James had leveled against Mr. Trump, finding the former president liable for conspiring with his top executives to violate several state laws.
The judge’s decision for now grants Ms. James, a Democrat, a career-defining victory. She campaigned for her office promising to bring Mr. Trump to justice, and sat calmly in the courtroom during the trialas the former president attacked her, calling her a corrupt politician motivated solely by self-interest.
The victory is a major moment for Letitia James, the New York attorney general, who campaigned on bringing Mr. Trump to justice. Credit...Doug Mills/The New York Times
Her win is Mr. Trump’s second major courtroom loss in two months, following a January jury verdict in a defamation case brought by E. Jean Carroll, a writer whom he was found liable of sexually abusing. The jury penalized him $83.3 million.
And the civil fraud ruling comes as Manhattan prosecutors are set to try Mr. Trump on criminal charges late next month. He is also contending with 57 other felony counts across three other criminal cases.
But none of his legal troubles seem to have anguished Mr. Trump quite like the fraud case. During the trial, he protested its premise, pleading, “This has been a persecution of somebody that’s done a good job in New York.”
Throughout the trial, Mr. Trump’s lawyers emphasized that the fraud did not have a victim in the traditional sense, daring the attorney general to find someone who was harmed. They called as witnesses the president’s former bankers, who testified that they had been delighted to have Mr. Trump as a client. Several of them said that they had not relied on his annual financial statements, but had independently assessed his wealth.
Eric Trump and his brother Donald Trump Jr. testified as well, but their effort to distance themselves from their father’s financial statements fell flat with the judge. Justice Engoron found them liable for most of Ms. James’s accusations as well, and barred them from running any New York business for two years, a decision that will likely strike a nerve with the Trump family.
Justice Engoron also punished Mr. Trump’s adult sons. Eric Trump is the Trump Organization’s de facto chief executive.Credit...Hiroko Masuike/The New York Times
However, nothing will hurt quite as much as the financial penalty.
If upheld on appeal, it could erase the cushion of liquidity — cash, stocks and bonds — that Mr. Trump built in his post-presidential life. Mr. Trump claimed under oath last year that he was sitting on more than $400 million in cash, but between Justice Engoron’s $355 million punishment and the $83.3 million payout to Ms. Carroll, that might all be gone. If so, Mr. Trump might have to sell one of his properties or another asset to cover the payouts, in what would be a remarkable blow to the former president.
The judge’s other punishments of Mr. Trump — the three-year bar on his running a company in New York and a prohibition on his obtaining loans from the state’s banking system for the same time period — is unlikely to take a major financial toll on the former president. He can still own the Trump Organization. And although Mr. Trump has kept a hand in the family business in recent years, he has been otherwise focused on his political career.
Before the trial, the fallout from the case seemed to threaten the Trump Organization’s very existence. When Justice Engoron first ruled that Mr. Trump had committed fraud, he ordered that much of the former president’s New York empire be dissolved. But legal experts have questioned the judge’s ability to do so, and in his ruling on Friday, Justice Engoron pulled back that edict.
Instead, the judge said any “restructuring and potential dissolution” would be up to Ms. Jones, the independent monitor.
The judge also granted Ms. Jones new authority as part of an “enhanced monitorship,” and asked her to recommend an independent compliance director who will oversee the company’s financial reporting from within its ranks.
Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney's office, state criminal courts in Manhattan and New York City's jails. More about Jonah E. Bromwich
Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess
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