Judge Engoron Lowers the Boom on Donald Trump

After keeping the world waiting for an extra couple of weeks, Judge Arthur Engoron released his judgment in Donald Trump’s civil fraud trial on Friday. It was a punishing one: a fine of three hundred and fifty-five million dollars, and a ban on Trump serving in a top role at any New York corporation for three years. The ruling was based on Engoron’s finding that Trump and the Trump Organization were liable for persistently and egregiously inflating the value of their assets on financial documents that they submitted to banks and other financial institutions. “The frauds found here leap off the page and shock the conscience,” Engoron wrote in a damning ninety-two-page ruling, in which also he also suggested that the Trump Organization was so crooked from top to bottom that it “simply cannot, or will not” prepare a Statement of Financial Condition “without committing fraud.”

The three-year ban on Trump from running a business in New York fell short of the state attorney general Letitia James’s call for him to be drummed out of the state’s real-estate business permanently. But the fines that Engoron levied, which also included nine million dollars on Trump’s two eldest sons, and a million dollars on Allen Weisselberg, a former chief financial officer of the Trump Organization, more or less matched James’s ask, which was three hundred and seventy million dollars. While Engoron’s ruling seems unlikely to plunge the Trump empire into bankruptcy, it represents a major financial setback for Trump—the second one this year. Last month, a jury ordered him to pay $83.3 million for defaming the writer E. Jean Carroll after she accused him of raping her in the nineteen-nineties.

Engoron’s judgment brought to an end a six-month drama, which began last September when he issued a pretrial ruling that the role Trump and the other defendants played in preparing the inflated financial statements made them liable for fraud under Section 63(12) of New York’s Executive Law. The statute gives the attorney general broad power to investigate and bring lawsuits against anyone whom it suspects has engaged in “repeated fraudulent or illegal acts or otherwise demonstrate[d] persistent fraud or illegality in the carrying on, conducting or transaction of business.” Engoron, in his initial ruling, said that Trump’s Statements of Financial Condition “clearly contain fraudulent valuations that defendants used in business, satisfying OAG’s burden to establish liability as a matter of law against defendants.”

The trial, which saw the two sides call forty witnesses, was held to determine whether the defendants were liable for six remaining counts in the attorney general’s indictment—including conspiring to submit false financial statements and conspiring to commit insurance fraud—and to determine how large the financial penalty should be. In his final ruling, Engoron said that evidence showed the defendants were liable on the additional counts, and he based the size of his fine on the financial benefits that Trump is estimated to have gained by submitting false statements.

Engoron made short shrift of Trump’s defense, which was that his accountants were responsible for the inflated documents and that the documents didn’t matter, anyway, because the banks did their own due diligence. In his ruling, Engoron pointed to the evidence of Donald Bender, a partner at the accounting firm Mazars, which “made absolutely clear” that the Trump Organization “was responsible for ensuring that assets were stated at their ‘estimated current values.’ ” The judge also pointed to evidence from one of Trump’s employees that Trump had final sign-off on the Statements of Financial Condition, and the former President’s own admission, in his time on the witness stand, that he discussed the statements with Weisselberg, the Trump Organization’s former chief financial officer.

During the course of the trial, Trump repeatedly claimed, inside and outside of the courtroom, that he was being railroaded for political reasons. Unsurprisingly, Engoron didn’t set much store by these statements. Referring to Trump’s actual evidence, he wrote, “Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial. His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility.”

Attention will now focus on Trump’s appeal—“we trust that the Appellate Division will overturn this egregious verdict,” one of his lawyers, Alina Habba, said in a statement—and his ability to pay the fines imposed. Factoring in interest, the former President and his family could be responsible for paying close to half a billion dollars in this case and the Carroll case combined, which would probably require the former President to sell one or more of his trophy assets. More immediately, he will have to raise tens of millions of dollars in cash to post bonds pending his appeals of the two judgments. Given the Trump Organization’s history of running through cash on money-losing golf courses and other properties, this could present some difficulties.

On his 2019 Statement of Financial Condition, Trump claimed to have eighty-seven million dollars in cash and cash equivalents on hand. But evidence presented during the trial suggested that the Trump Organization included in its financial statements cash from its partnership with Vornado Realty Trust, which was under Vornado’s control. Since Trump reluctantly left the White House, in January, 2021, he has received two substantial windfalls. The first was in 2022, after the Trump Organization offloaded the former Trump International Hotel, on the site of the Old Post Office in Washington, D.C., selling it to a group of investors for a reported price of three hundred and seventy-five million dollars. After debts on the property were paid down, the net proceeds from the sale were $131.4 million before tax, according to the Times. The Trump Organization also benefitted from the refinancing of a San Francisco office building that it co-owns with Vornado. According to Forbes, that deal netted him a hundred and sixty-two million dollars.

In a deposition with James’s staff last year, Trump said, “I believe we have substantially in excess four hundred million in cash, which is a lot for a developer.”

Any Trump statement about his finances should be taken with a pinch of salt, of course—that’s what this entire case was about. Based on a recent estimate prepared by Forbes, which put his net worth at $2.6 billion, it seems likely that he has the financial wherewithal to withstand this fine should his appeal fail. Even so, the judgment could more than wipe out the financial gains he made from the Old Post Office and Vornado deals, and raise questions about his broader empire.

Trump wasn’t Bernie Madoff, Engoron said near the end of his ruling: he and his co-defendants stood accused “only of inflating asset values to make more money. The documents prove this over and over again.” But, after four years of investigation and litigation, the only thing they had admitted to was “the tripling of the size of the Trump Tower Penthouse, which cannot be gainsaid.” Engoron, who, like Trump, is a septuagenarian product of Queens, was moved to poetry in his ruling. After quoting Alexander Pope’s famous line, “To err is human, to forgive is divine,” he commented of Trump and the others, “Their complete lack of contrition and remorse borders on pathological.”

That’s Trump all over, of course. For decades, he’s been denying any misdeeds, attacking his critics, and plowing ahead regardless. In this instance, at last, a court has held him accountable for his actions. And, of course, he doesn’t like it one bit. ♦

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