Trump Ordered To Pay Over $350 Million In Civil Fraud Case As Judge Finds Ex-President Knowingly Committed Fraud

Topline

Former President Donald Trump and his co-defendants will have to pay $364 million for fraudulently misstating the value of his and his company’s assets on financial statements, a New York judge ruled Friday, levying significant punishments against the ex-president and his business that could hurt him financially and affect his business’ operations.

Former President Donald Trump speaks on the first day of his civil fraud trial at New York State ... [+] Supreme Court on October 2, 2023 in New York City.

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Key Facts

New York Attorney General Letitia James sued Trump, his associates—including his sons—and the Trump Organization for allegedly fraudulently misstating the value of assets on financial documents in order to obtain more favorable business deals and reflect a higher net worth for Trump.

Judge Arthur Engoron had already found the defendants liable for fraud by misstating the value of their assets, but held a monthslong trial to determine whether the Trump defendants committed the fraud knowingly and violated laws on falsifying business records, insurance fraud and issuing false financial statements.

The judge ruled there was “overwhelming evidence” showing Trump and his co-defendants intentionally conspired to commit fraud and knowingly submitted false financial statements, shutting down arguments by the defendants that they relied on outside accountants to verify numbers were correct and finding “that the buck for being truthful in the supporting data valuations stopped with the Trump Organization, not the accountants.”

Engoron said Trump was liable in that scheme, ruling the ex-president “was aware of many of the key facts underpinning various material fraudulent misstatements” in the financial statements and “severely compromised his credibility” when testifying, noting Trump “rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial.”

Engoron ordered Trump and companies he controls to pay approximately $354.9 million, while sons Eric and Donald Trump Jr. are each ordered to pay approximately $4 million, and former CFO Allen Weisselberg must pay $1 million—totaling more than $450 million when interest is included, James’ office noted in a statement Friday.

The judge also leveled other penalties, including barring Trump from leading any New York businesses for three years, while his sons are each barred for two, continuing an Independent Monitor’s oversight over the business and appointing a new Independent Director of Compliance to oversee the company’s activities—ruling the Trump Organization “does not have the ability to operate with a functional financial reporting structure that would protect against fraud in the future.”

Crucial Quote

Engoron’s ruling accuses Trump and his co-defendants of “den[ying] reality,” taking issue with their refusal to admit their valuations were wrong even after the judge found them liable for fraud. “Their complete lack of contrition and remorse borders on pathological,” Engoron wrote, adding the defendants’ “refusal to admit error ... constrains this Court to conclude that they will engage in it going forward unless judicially restrained.”

Chief Critics

Trump decried the ruling Friday as a “Complete and Total SHAM,” claiming the judge’s decision was “based on nothing other than having built a GREAT COMPANY.” “Racist, Corrupt A.G. Tish James has been obsessed with ‘Getting Trump’ for years, and used Crooked New York State Judge Engoron to get an illegal, unAmerican judgment against me, my family, and my tremendous business,” Trump said in a statement. The ex-president’s attorney Alina Habba decried Engoron’s ruling Friday as a “a manifest injustice” and “the culmination of a multi-year, politically fueled witch hunt,” while Eric Trump told ABC the ruling was a “total joke” and “insane” and vowed the defendants would immediately appeal the ruling.

What To Watch For

Trump and his co-defendants are expected to appeal Engoron’s ruling and it remains to be seen how long that could take to play out. Despite the appeal, Trump will still be required to either pay cash into a court-controlled account or secure an appeals bond within 30 days of the judgment. Trump has already separately appealed Engoron’s ruling finding him liable for fraud, which also ordered for his business certificates to be canceled. That part of the order has been paused during the appeal, and Engoron clarified in his order Friday that it will now be up to the Independent Monitor and Director of Compliance to determine which certificates get canceled, rather than canceling them en masse.

Forbes Valuation

Forbes estimates Trump’s net worth at approximately $2.6 billion as of October, with an estimated $426 million in liquid assets. From 2011 to 2021, the years covered by James’ initial lawsuit, estimates for Trump’s net worth ranged between $2.5 billion (in 2020 and 2021) and $4.5 billion (in 2015). Ex-Trump attorney Michael Cohen alleged in testimony that Trump inflated the value of his assets in part to achieve a higher spot on Forbes’ wealth ranking.

Surprising Fact

It’s possible the fraud trial could lead to other legal consequences, as recent reports suggest Weisselberg is now in plea negotiations with the Manhattan district attorney’s office for perjury charges. Weisselberg was pulled off the stand during the fraud trial after Forbes accused him of lying under oath, as the ex-CFO testified he “never focused” on the size of Trump’s Manhattan penthouse—while notes and emails from Weisselberg’s discussions with Forbes show otherwise. Weisselberg has not yet made any admission of perjury and no charges have been brought against him, but Engoron asked the state and defense counsel about the reports in a letter Feb. 6, suggesting that if Weisselberg perjured himself, his “testimony on other topics could also be called into question,” and the judge could disregard it altogether.

Key Background

James first sued Trump and his co-defendants in September 2022, accusing the ex-president and his associates of misstating valuations on financial statements more than 200 times between 2011 and 2021. The case moved forward to trial in October—though Ivanka Trump was dismissed from the case in June—and wrapped up with closing arguments on Jan. 11. While Engoron had already found Trump and his co-defendants liable for fraud by misstating valuations, the state argued at trial that the fraud was committed intentionally, claiming the Trump Organization was “burning through cash” between 2014 and 2017 and needed favorable business deals with lower interest rates in order to stay afloat and keep up Trump’s spending. Cohen also claimed in court that Trump directed him and Weisselberg to intentionally inflate the value of assets in order to reach Trump’s desired net worth, which Trump and his attorneys refuted, painting Cohen as a “liar.” Trump’s attorneys used the trial to distance the ex-president and his sons from the alleged fraud scheme, repeatedly claiming they didn’t play a role in preparing the statements at issue, even as the Trumps signed off on them. Trump and his sons cast responsibility for any alleged issues on the company’s accountants, claiming they relied on their expertise to ensure valuations were correct. The ex-president’s attorneys also claimed any mistakes the company did make were victimless, because the financial institutions the company did business with were happy with Trump and did not lose money.

Tangent

The verdict comes after Trump was already ordered to make another high-dollar payment in his civil defamation case brought by writer E. Jean Carroll, as a jury ordered him on Jan. 26 to pay Carroll $83.3 million for defaming her. Trump has vowed to appeal that ruling, but it’s likely he’ll also still have to put the money into a court-controlled account while he does so, as he already did in Carroll’s first trial against him, which resulted in a separate $5 million damages verdict, or secure an appeals bond.

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