What the civil fraud ruling means for Trump's finances and his empire
Donald J. Trump lost his civil fraud lawsuit On Friday, a judge found him liable for violating state laws and fined him nearly $355 million plus interest. In total, Mr. Trump is expected to have to pay more than $450 million.
The judge, Arthur F. Engoron, didn't stop there. Among other punishments, he also banned the former president from running any business in the state, including parts of Trump's family business, for three years. In doing so, he granted requests from the New York attorney general, who brought the case, accusing Mr. Trump of violating state laws by inflating his assets in documents submitted to lenders.
Mr. Trump will appeal, and it could take months, if not years, for the case to be resolved.
But Judge Engoron's decision could cause immediate pain, jeopardizing the former president's finances and his influence over the Trump family business, known as the Trump Organization. The threat is not existential — the judge did not dissolve the company and Mr. Trump is not at risk of bankruptcy — but the decision has dealt him a serious financial blow, along with a symbolic swipe at his billionaire image.
Attorney General Letitia James said at a news conference Friday evening that “when the powerful break the law and take more than their fair share, there are fewer resources available to working people, small businesses and families.”
She added: “There can't be different rules for different people in this country, and former presidents are no exception.”
Here's what we know about how the ruling affects Mr. Trump and his empire:
How is he going to pay the $450 million?
Mr. Trump has 30 days to raise the money or secure a bond.
A company providing a bond will essentially assure New York State that Mr. Trump has the money to pay the judgments. The surety will prevent authorities from collecting money while his appeal is being heard.
However, Mr Trump must find a company willing to issue the bond as he faces a wide range of legal challenges, including a separate $83.3 million judgment in a recent defamation case. A bond company will charge a premium and may require Mr. Trump to pledge cash and other liquid assets as collateral.
In recent years, Mr. Trump has amassed a large stash of cash, but the judge's ruling puts that in jeopardy. Between the judgment on the defamation case and the $450 million he is owed following Judge Engoron's ruling, Trump could run out of cash.
That doesn't mean he has no money left. He can sell one of his properties or look for a new mortgage to raise money.
How did the judge calculate the sentence?
Ms. James sued Mr. Trump using a powerful law that allows her to recoup money she says was obtained through fraud.
In the court filings, Ms. James quoted one of her expert witnesses from the trial, who calculated that figure at about $370 million, plus interest. She argued that Mr. Trump and the other defendants had not provided a specific answer to the expert's calculations.
The judge agreed, punishing Mr. Trump for his profits on the recent sale of two properties, as well as for the interest he saved by receiving favorable loans.
What is the immediate effect on the Trump Organization?
Trump's business could falter.
The judge banned Mr. Trump from serving as an officer or director of any New York company for three years, and his adult sons for two years. One of them, Eric Trump, is the de facto CEO of the Trump Organization, and the ruling puts the company's leadership on uncertain ground.
Judge Engoron also banned Mr. Trump and his company from applying for loans from New York-registered banks for three years.
And he strengthened the hand of Barbara Jones, an independent monitor he appointed to oversee the Trump Organization, by extending her appointment for three years with new powers. She has been a thorn in the company's side and Trump's lawyers have shamed her, saying her work has already cost them more than $2.5 million.
The judge asked Ms. Jones to appoint an independent compliance director as her eyes and ears, reporting to her from within the company's ranks.
What happened to Trump's sons?
During closing arguments last month, Judge Engoron made a comment suggesting he might spare Trump's adult sons.
“What evidence do you have – and I just haven't seen it – that they knew there was fraud?” the judge then asked.
Apparently he saw it sometime in the last few weeks. On Friday, he discovered that they had violated several laws while conspiring to overvalue their assets.
He wrote in his ruling that there was “sufficient evidence” that Donald Trump Jr. and Eric Trump had deliberately falsified company records, noting that Eric Trump had “knowingly provided false and inflated valuations” for one property to the company's former comptroller.
They're all on the hook for about $4 million.
What comes next?
However punishing the judge's ruling may have been on Friday, it was only a prelude.
On Thursday, a judge scheduled Trump's first criminal trial for March 25. The Manhattan district attorney's office has charged Mr. Trump with 34 crimes, accusing him of covering up a sex scandal that could have damaged his chances in the 2016 presidential election. election.
If found guilty, the former president could be sentenced to up to four years in prison. And because the case was brought by prosecutors, Mr. Trump could not pardon himself if he were re-elected.
Claire Fahy reporting contributed.