A New York judge on February 16 imposed a $364 million penalty on Donald Trump, his companies, and some executives, ruling that they engaged in a yearslong scheme to dupe banks and others with financial statements that inflated the former president’s wealth.
Trump, who built his reputation as a real estate titan, also was barred from serving as an officer or director of any New York corporation for three years.
However, the judge backed away from an earlier ruling that would have dissolved the former president’s companies.
Trump’s lawyers vowed to appeal.
Judge Arthur Engoron issued his decision after a 2½-month trial that saw the Republican presidential front-runner bristling under oath that he was the victim of a rigged legal system.
Trump and his companies were ordered to pay $355 million. His eldest sons, Trump Organization Executive Vice Presidents Donald Trump Jr. and Eric Trump, each were ordered to pay $4 million. Former chief financial officer Allen Weisselberg was ordered to pay $1 million.
Engoron concluded that Trump and his co-defendants “failed to accept responsibility” for their actions and that expert witnesses who testified for the defense “simply denied reality.”
The judge called the civil fraud at the heart of the trial a “venial sin, not a mortal sin.”
“They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways,” wrote Engoron, a Democrat. He said their “complete lack of contrition and remorse borders on pathological.”
“The frauds found here leap off the page and shock the conscience,” the judge added.
The stiff penalty was a victory for New York Attorney General Letitia James who sued Trump over what she said was not just harmless bragging but years of deceptive practices as he built the multinational collection of skyscrapers, golf courses, and other properties that catapulted him to wealth, fame and the White House.
James sued Trump in 2022 under a state law that authorized her to investigate persistent fraud in business dealings.
The suit accused Trump and his co-defendants of routinely puffing up his financial statements to create an illusion his properties were more valuable than they really were. State lawyers said Trump exaggerated his wealth by as much as $3.6 billion one year.
By making himself seem richer, Trump qualified for better loan terms, saved on interest and was able to complete projects he might otherwise not have finished, state lawyers said.
Former White House adviser Steve Bannon described the Trump Organization in 2019 as a criminal entity and predicted that investigations into the president’s finances would lead to his political downfall, when he was revealed to be “not the billionaire he said he was, just another scumbag.”
Even before the trial began, Engoron ruled that James had proven Trump’s financial statements were fraudulent. The judge ordered some of Trump’s companies removed from his control and dissolved. An appeals court put that decision on hold.
In that earlier ruling, the judge found that, among other tricks, Trump’s financial statements had wrongly claimed his Trump Tower penthouse was nearly three times its actual size and overvalued his Mar-a-Lago estate in Palm Beach, Florida, based on the idea that the property could be developed for residential use, even though he had surrendered rights to develop it for any uses but a club.
Trump, one of 40 witnesses to testify at the trial, said his financial statements actually understated his net worth and that banks did their own research and were happy with his business.
Trump issued many threats during the trial, calling the judge “extremely hostile” and the attorney general “a political hack.” In a six-minute diatribe during closing arguments in January, Trump proclaimed “I am an innocent man” and called the case a “fraud on me.”
Trump and his lawyers have deflected responsibility by blaming the outside accountants who helped prepare the statements, claiming they should have flagged any discrepancies. They also unsuccessfully argued that some of the allegations were barred by the statute of limitations.
The suit is one of many legal headaches for Trump as he campaigns for a return to the White House. He has been indicted four times in the last year — accused in Georgia and Washington DC, of plotting to overturn his stunning loss in the 2020 election to Democrat Joe Biden, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid to porn actor Stormy Daniels on his behalf.
On February 15, a judge confirmed Trump’s hush-money trial will start on March 25 and a judge in Atlanta heard arguments on whether to remove Fulton County District Attorney Fani Willis from his Georgia election interference case because she had a personal relationship with a special prosecutor she hired.
Those criminal accusations have not appeared to undermine his march toward the Republican presidential nomination – where the party has become engulfed by the MAGA extremists, but civil litigation has threatened him financially.
On January 26, a jury ordered Trump to pay $83.3 million to writer E. Jean Carroll for defaming her after she accused him in 2019 of sexually assaulting her in a Manhattan department store in the 1990s. That’s on top of the $5 million a jury awarded Carroll in a related trial last year.
In 2022, the Trump Organization was convicted of tax fraud and fined $1.6 million in an unrelated criminal case for helping executives dodge taxes on extravagant perks such as Manhattan apartments and luxury cars.
“This was a case about greed and cheating,” Manhattan District Attorney Alvin Bragg had said then. “The Trump Corporation and the Trump Payroll Corporation got away with a scheme that awarded high-level executives with lavish perks and compensation while intentionally concealing the benefits from the taxing authorities to avoid paying taxes.”
In a civil lawsuit in 2023, a New York judge ruled that the organization had fraudulently overvalued its properties when applying for bank loans.
Engoron decided the case because neither side sought a jury and state law does not allow for juries for this type of lawsuit. James had asked the judge to impose a penalty of at least $370 million.
Because it was civil, not criminal in nature, the case did not carry the potential of prison time.
James, who campaigned for office as a Trump critic and watchdog, started scrutinizing his business practices in March 2019 after his former personal lawyer Michael Cohen testified to Congress that Trump exaggerated his wealth on financial statements provided to Deutsche Bank while trying to obtain financing to buy the NFL’s Buffalo Bills.
James’ office previously sued Trump for misusing his own charitable foundation to further his political and business interests. Trump was ordered to pay $2 million to an array of charities as a fine and the charity, the Trump Foundation, was shut down.
Trump incorporated the Trump Organization in New York in 1981. He still owns it, but he put his assets into a revocable trust and gave up his positions as the company’s director, president and chairman when he became president, leaving management of the company to Eric Trump and Donald Trump Jr.
Trump did not return to a stated leadership position upon leaving the White House in 2021, but his sons testified he has been involved in some decision-making.
Engoron had already appointed a monitor, retired federal judge Barbara Jones, to keep an eye on the company.
