Business

Trump Fraud Trial Ends—Here Are The Punishments He Could Soon Face

January 12, 2024

Topline

The monthslong civil trial accusing former President Donald Trump and his company of fraud wrapped up on Thursday, leaving it now up to Judge Arthur Engoron to determine whether Trump and his associates knowingly misstated the value of their assets for personal gain—and what punishments the ex-president could face if he did, including forking $370 million over to the New York government.

Former President Donald Trump and his lawyer Christopher Kise attend closing arguments in the Trump … [+] Organization civil fraud trial on January 11 in New York City.

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Key Facts

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

If Judge Engoron finds the defendants liable for the allegations against them—which include determining whether the fraud was committed knowingly and whether they committed insurance fraud, falsification of business records and issuing a false financial statement—the attorney general has asked him to impose a range of penalties against them.

The attorney general is asking for the defendants to pay out approximately $370 million plus interest in “ill-gotten gains,” meaning money they earned as a result of the alleged fraud, including approximately $168 million for how much the Trump Organization saved in loan interest because they allegedly used false numbers; $139.4 million in profit from the sale of the company’s former Washington, D.C., hotel; $60 million for the sale of Trump’s New York golf course and $2.5 million in bonuses paid to ex-CFO Allen Weisselberg and former controller Jeffrey McConney, who are both defendants in the suit.

Most of that money should be paid by Trump and the business entities he controls, the state said, though Trump’s sons Donald Trump Jr. and Eric Trump should also pay approximately $4 million each—covering their personal profits from the D.C. hotel sale—and Weisselberg and McConney should pay back their severance payments of $2 million and $500,000, respectively.

James also wants the court to bar Trump, Weisselberg and McConney from serving in the real estate industry in New York or leading any New York-based company for life, and for Eric and Donald Trump Jr. to be barred from the industry and leading companies in New York for five years.

The state asked Engoron to impose injunctions that would prohibit defendants from making any further false financial records, require the Trump Organization to implement better controls, bar defendants from applying for any loans from a New York-based financial institution for five years and prohibit the Trump Organization’s entities from making any commercial real estate acquisitions in New York for five years.

What To Watch For

Engoron said Thursday he aims to issue his verdict by the end of January. Once he does, Trump is likely to appeal the ruling—assuming it’s not in his favor—and it’s unclear how quickly he could be forced to pay the state or other punishments would take effect.

Tangent

Engoron has already imposed several penalties against the Trump Organization, as even before the trial started he found the defendants liable for fraud for misstating the value of their assets. (The trial moved forward on other allegations.) The judge ordered Trump’s business certificates to be canceled as part of that ruling, though an appeals court has put that order on hold while it’s appealed. The judge also appointed an independent monitor in November 2022 to oversee the Trump Organization’s activities, and the state wants him to now extend the monitor’s control over the company for at least five years. Monitor Barbara Jones told Engoron in November that the Trump Organization did not disclose $40 million in loans to her, as they were required to do.

Chief Critic

Trump has strongly opposed the case against him and denied any wrongdoing, describing it as a politically motivated “witch hunt.” Trump spoke on his own behalf during closing arguments on Thursday, claiming the case was a “fraud on me” and he should be paid damages, rather than James. “Your honor, I did nothing wrong—they should have to pay me,” Trump told Engoron Thursday, claiming James “sued me to try to get publicity.”

Forbes Valuation

Forbes estimates Trump’s net worth at $2.6 billion as of October, ranking him as the 1229th richest person in the world on Forbes’ real-time wealth tracker. That includes an approximate $426 million in cash and liquid assets, which is what would be used to pay any financial penalty imposed by the court.

What We Don’t Know

What kind of impact any punishments leveled against Trump and his co-defendants will have. With $426 million in liquidity, a ruling that orders Trump to pay anything near $370 million could pose a significant issue for his finances, particularly if he’s forced to turn over the money quickly, rather than hang onto it as the appeals process plays out and potentially pay it out in a few years. While Trump largely stepped back from his company’s business dealings when he became president, his sons still run the Trump Organization’s day-to-day operations—particularly Eric—so an order barring them from the real estate industry in New York is likely to have more of an impact. It remains to be seen if there are legal maneuvers the Trumps could take to lessen the impact of penalties against them, however, such as by moving business operations out of state.

Key Background

James has accused Trump and his associates of misstating valuations more than 200 times between 2011 and 2021, including regarding major properties, like the value of Trump’s Mar-A-Lago estate and stating an incorrect square footage for Trump’s Manhattan penthouse. At closing arguments Thursday, the state argued Trump and his co-defendants had an intent to defraud and purposefully listed false valuations, alleging the company was “burning through cash” between 2014 and 2017 and needed lower interest rates—which they allegedly obtained using the false valuations—in order to stay afloat. Trump’s lawyers argued Thursday there was no wrongdoing and the state had no evidence to prove Trump or his associates had any knowledge of fraud, pinning any false numbers on the company’s accountants and claiming a real estate broker, rather than Trump, was responsible for the penthouse’s false square footage. (Audio recordings published by Forbes show Trump has pushed the incorrect size himself.) James asked Engoron to impose the $370 million penalty on Trump when the state filed its closing brief with the court earlier in January, after the attorney general had previously only asked for the judge to impose a $250 million payment.