Trump’s Civil Fraud Verdict: A $355 Million Deep Dive

While making his appearance on the stand last year, Donald Trump openly declared his vast reserves of cash,” A public statement he might be regretting in light of the frightening penalty issued on his New York civil fraud trial on Friday.

The judicial mandate requires Trump, the previous President , to disburse $355 million out of his own pocket, alongside interest. This decision was reached as a result of him releasing fraudulent information about his wealth for years while negotiating loans and deals for developing his real estate empire – the foundation of his celebrity status and subsequent political career.

“The fraudulent behavior evident here is overwhelming and deeply disturbing,” wrote Judge Arthur Engoron in a comprehensive 92-page verdict. Trump’s company has been sparred from shutting down but it is subjected to years of court oversight, among other legal consequences.

The verdict can be credited to the efforts of New York Attorney General Letitia James’ lawsuit and raises questions on Trump’s narrative as a wealthy, astute real estate developer and political heavyweight.

The financial implications of this penalty, even for someone of Trump’s stature, cannot be underestimated. The potential deterioration of Trump’s growing legal bills may put the leading Republican presidential contender in a monetary crisis as he continues his campaign for the White House.

Trump however, asserts the ruling as “election inference” and insists on fighting it out in court.

Here is a detailed insight on the case, the penalties, and the future scenarios for Trump.

A DEEPER INSIGHT INTO THE JUDGE’S RULING

The judge concluded that Trump, with connivance of other top officials from his company, the Trump Organization, deliberately misled banks and insurers with respect to the expanse of his assets and actual worth of such properties as Trump Tower in Manhattan and Mar-a-Lago club in Florida.

Engoron, before the trial began, had already ruled that Trump and his associates engaged in fraudulent activities with his financial declarations. He held Trump accountable on five of the remaining six allegations in James’ lawsuit: forgery of company records, provision of false financial statements, collusion to engage in insurance fraud, and conspiracy to falsify enterprise records.

Allen Weisselberg and Jeffrey McConney, two long-time previous executives of the Trump Organization, were found guilty of insurance fraud.

Engoron was vested with the power to pass a judgment because the state law doesn’t permit juries in such lawsuits, characterized by the search for “equitable relief” and processing differently than other lawsuits involving big-money penalties. He also added that neither party requested a jury.

WHAT IS THE EXTENT OF TRUMP’S DEBT?

The repercussions of Friday’s judgment could possibly result in Trump owing a half-billion dollars or even more.

Trump has been ordered to return $355 million, a penalty accounted to the “ill-gotten gains” owing to his counterfeit financial statements — in addition to interest, calculated at an annual rate of 9%, yielding a large sum.

According to James’ office, Trump presently owes an additional $98.6 million in terms of interest. This leads to a total penalty of $453.5 million, with the interest continuing to add up until Trump clears the amount.

Engoron stated that the accrued interest on about half of the total penalty sum, relating to loan savings, can be computed from the beginning of the investigation in 2019, with interest on the residual amount from more recent transactions calculated from May 2022 or June 2023.

– Republican presidential candidate ex-President Donald Trump making a public address at an election rally in Waterford Township, Michigan, on Saturday, Feb. 17, 2024. (AP Photo/Paul Sancya Archived image)

The judgment obligates Trump and his co-offenders, including his sons Eric and Donald Trump Jr., to pay a total of $363.9 million in penalties. This mount up to about $464 million, including interest fees as estimated by James’ office.

Trump still insists that his net worth is close to several billion dollars, declaring in the previous year that he held about $400 million in cash, apart from other real estate holdings and investments.

WHAT EXPLAINS THE ENORMOUS DEBT?

The judge determined Trump’s consistent fraudulent exaggeration of his wealth to be a significant factor in his accomplishments, enabling him to secure loans at reduced interest rates and undertake projects that he would otherwise be unable to complete. He declared the resulting profits and savings as “ill-gotten gains,” and ruled that they had to be returned to the state, along with interest, by him and his co-offenders.

Trump, both in an individual capacity and as the proprietor of a number of corporate entities, is mandated to repay:

– $168 million – with additional interest – in loan savings made using his inflated financial statements for projects such as a golf resort near Miami, a hotel-cum-condominium tower in Chicago, a hotel in Washington, D.C., and an office building in Manhattan. Trump has managed to furnish three loans through Deutsche Bank’s private wealth management unit, whose interest rates are lower than their commercial rivals in the real estate sector. He manipulated his financial statements to conjure an image of wealth and reliability.

– $126.8 million – with interest – from the profit of selling the Trump International Hotel in Washington in May 2022 to a presently renamed organization, the Waldorf Astoria. Trump expended $170 million out of the $375 million to repay a loan on the property. The remaining sum was distributed among his children.

– $60 million – with interest – earned from selling the rights of managing a golf course in New York City in June 2023. Engoron noted in his verdict that Bally’s Corporation, the buyer, is obliged to pay Trump an additional sum of $115 million if the company manages to secure a casino license for the property. However, he did not imply whether Trump would have to return that amount as well.

Eric and Donald Jr., Trump’s children, are mandated to each pay over $4 million, with added interest, to the state as part of their shares from the Washington hotel sales. Meanwhile, Weisselberg, a former Trump Organization finance chief, has been sentenced to pay $1 million, which is half of the $2-million severance he is expecting to receive.

Trump Tower’s picture, situated in New York, was taken on the 11th of January, 2017 (Photograph by Evan Vucci, File via AP).

TRUMP AND HIS LAWYERS’ RESPONSES

Trump vehemently described the verdict as a form of “weaponization against a political opponent,” expressing dissatisfaction over his penalization for having established an “exemplary company, abundant cash, exceptional structures, and everything in order.”

Christopher Kise, Trump’s solicitor, stated, “President Trump will, without a doubt, file an appeal and is confident that the Appellate Division will eventually rectify the endless and catastrophic errors made by a lawless lower court.” Trump and his attorneys are of the opinion that any differences should have been pointed out by external accountants who aided in the compilation of his financial data and that disclaimers in the documents safeguarded him from liability.

They argue that Trump did not instruct anyone to overstate the value of assets and even if there were inconsistencies, nobody was injured. “There were no victims because the banks made plenty of profit,” Trump stated on Friday, reiterating his statement made during a trial in November.

Trump maintained that irrespective of his financial records, banks would have conducted due diligence and still provided him loans. He insisted that there’s no proof that the conditions or pricing would have been any different.

HOW WILL TRUMP’S APPEAL BE DEVELOPED?

Currently, Trump is unable to appeal the verdict because paperwork has yet to be filed by the Engoron courthouse’s clerk’s office to make it official.

Once that procedure is completed, Trump can submit an appeal to New York’s Appellate Division – the immediate superior court to Engoron’s trial court in the judicial hierarchy of the state. His lawyers will almost certainly solicit an immediate stay – a legal terminilogy for an order suspending the implementation of Engoron’s judgment while the appeal process continues.

Under the state’s legal regulation, Trump will be granted an automatic stay if he submits cash, assets, or an appeal bond covering the amount owed. The appeal process generally takes several months, or even longer. If Trump doesn’t succeed at the Appellate Division level, he has the option of requesting the state’s supreme court, the Court of Appeals, to consider addressing his case.

The crux of any appeal would likely involve Engoron, whom Trump’s lawyers have [accused of “tangible and overwhelming” bias](https://apnews.com/article/trump-new-york-civil-fraud-mistrial-motion-e3215363c13ee2d720c18493a4287c5d), as well as disputes relating to the legal aspects involved in James’ lawsuit. Trump argues that the law under which James took him to court is a consumer protection act typically employed to control businesses that swindle customers.

OTHER OUTCOMES OF THE DECISION

Engoron imposed rigorous restrictions on the ability of the Trump Organization to conduct business but removed the “corporate death penalty,” by reversing his previous decision to divest Trump of his firms.

The judge regulated the company under close inspection by a neutral monitor for a minimum of three years, mandated hiring an independent compliance director, and instigated an overhaul of its leadership. His statement was that in the absence of these limits, Trump and his co-defendants were “likely to persist in their fraudulent ways.”

The prohibition has affected Trump’s sons Eric and Donald Trump Jr., who have been banned from acting as director or officer of any New York-based company for two years. This effectively results in their dismissal from management roles in the Trump Organization’s daily operations.

Trump, the company owner who no longer has an official leadership position, received a three-year ban. Engoron also prohibited him and his companies from obtaining loans from banks registered in New York, a city widely regarded as the world’s financial hub, for three years.

Weisselberg and another seasoned company executive, the former controller Jeffrey McConney, were banned from ever undertaking a corporate finance or leadership role in the state.

The judge stated that seizing Trump’s companies was no longer necessary as they will be under the supervision of the independent monitor, retired federal judge Barbara Jones, and the compliance director monitoring any potentially fraudulent activities.

WHAT LED TO THIS CASE?

James, a Democrat, pursued legal action against Trump in 2022 in line with a New York law from several decades ago that grants her extensive power to investigate allegations of persistent fraud in business transactions.

James embarked on investigating Trump’s financial records in 2019 after Trump’s former personal attorney and confidant, Michael Cohen, submitted some of the documents to Congress and testified that his former employer had a track record of overestimating the value of his assets.

Jame’s lawsuit accuses Trump and his allies of routinely embellishing his financial reports – annual summaries of his assets – to create the illusion that he and his possessions were significantly more valuable than their actual worth. Trump provided these statements to banks, other entities he did business with, and even supplied them to financial magazines, such as Forbes, to justify his position among global billionaires.

WHAT DID TRUMP STAND ACCUSED OF?

Trump and his co-defendants stood accused of various fraudulent methods, including overestimating for several years the value of his penthouse in Trump Tower, Manhattan, based on incorrect measurements three times its actual size of 10,996 square feet (1,022 square meters).

It was also alleged that Trump estimated his Mar-a-Lago estate in Florida to be worth over $612 million, based on the presumption that the property could be developed for residential use, even though he had signed an agreement forfeiting rights to develop it for any other purpose than a club.

Engoron mentioned in his decision that Trump “was aware of having deeded away the entitlement to utilize Mar-a-Lago as anything other than a social club, and regardless, he continued to price it as if it could be employed as a single-family residence.”

Engoron made clear that Trump was well aware of the fact that the Triplex apartment which he, a real estate tycoon and self-proclaimed expert, had lived in for many decades, was not a 30,000 square feet area, but in fact, a 10,996 square feet area. Despite this, at trial, Trump remained confident that Mar-a-Lago holds a current value between $1 billion and $1.5 billion.

KEY WITNESSES’ EVALUATION BY THE JUDGE

Trump’s defiant, meandering trial testimony led Engoron to caution, “This is not a political gathering.” So, how did the judge really perceive Trump’s 3½ hours under oath?

Engoron wrote in his decision that, “Overall, Donald Trump seldom responded directly to the questions put forward, and frequently intervened with lengthy, irrelevant speeches on issues well beyond the scope of the trial.”; adding, “His refusal to directly answer the questions, or in some instances, not at all, severely undermined his credibility.”

In assessing other key witnesses, the judge stated that Weisselberg was “intentionally evasive, with major memory lapses,”, and that despite the clear hostility between Cohen and Trump, some “apparent discrepancies” in his testimony and the stain of his guilty plea, Cohen came across as truthful.

The judge concluded that despite Cohen’s “incentive to lie” following his fallout with Trump, he deemed the former lawyer’s testimony as credible due to his calm demeanour, the general plausibility of his responses, and most significantly, the way his testimony was corroborated by other evidence presented at the trial.

“A less forgiving factfinder might have concluded contrarily, might not have believed a single word of a convicted perjurer,” wrote Engoron. “This factfinder, however, does not believe that pleading guilty to perjury means that one can never tell the truth. Michael Cohen told the truth.”

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Contributors to this report include Associated Press writers Jennifer Peltz, Jake Offenhartz and Jill Colvin in New York and Adriana Gomez Licon in Palm Beach, Florida.