Trump civil fraud case: Judge fines Trump $354 million, says frauds 'shock the conscience'
The former president was found to have defrauded lenders.
Former President Donald Trump has been fined $354.8 million plus approximately $100 million in interest in a civil fraud lawsuit that could alter the personal fortune and real estate empire that helped propel him to the White House. In the decision, Judge Arthur Engoron excoriated Trump, saying the president's credibility was "severely compromised," that the frauds "shock the conscience" and that Trump and his co-defendants showed a "complete lack of contrition and remorse" that he said "borders on pathological."
Engoron also hit Donald Trump Jr. and Eric Trump with $4 million fines and barred all three from helming New York companies for years. New York Attorney General Letitia James accused Trump and his adult sons of engaging in a decade-long scheme in which they used "numerous acts of fraud and misrepresentation" to inflate Trump's net worth in order get more favorable loan terms. The former president has denied all wrongdoing and has said he will appeal.
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Summary of penalties
Donald Trump and his adult sons were hit with millions in fines in the civil fraud trial and barred for years from being officers in New York companies. The judge said the frauds "shock the conscience."
Donald Trump: $354 million fine + approx. $100 million in interest
+ barred for 3 years from serving as officer of NY company
Donald Trump Jr.: $4 million fine
+ barred for 2 years from serving as officer of NY company
Eric Trump: $4 million fine
+ barred for 2 years from serving as officer of NY company
Former Trump Organization CFO Allen Weisselberg: $1 million fine
+ barred for 3 years from serving as officer of NY company
+ barred for life from financial management role in NY company
Former Trump Organization controller Jeffrey McConney:
+ barred for 3 years from serving as officer of NY company
+ barred for life from financial management role in NY company
Defense focusing on value of Mar-a-Lago
Donald Trump's lawyers plan to call two experts, Lawrence Moens and John Shubin, to testify on Trump's valuation of his Mar-a-Lago property in Palm Beach, Florida.
Moens is a well-known real estate broker in Palm Beach, and Shubin is an expert on deeds and land restrictions.
The value of the property has been bitterly contested by Trump's lawyers since the start of the trial, after Judge Arthur Engoron, in his pretrial partial summary judgment determined that Trump overvalued the property by at least 2,300%. When Trump testified in the trial in November, he repeatedly lashed out at Engoron for what he called a "crazy" assessment of the property.
"He said in his statement that Mar-a-Lago is worth $18 million and it's worth 50 times to 100 times more than that, and everybody knows it. And everybody is watching this case. He called me a fraud and he didn't know anything about me," Trump said on the stand.
According to evidence shown at trial, Trump agreed in a 2002 deed to "forever extinguish their right to develop or use the Property for any purpose other than club use." While Trump Organization executives were aware of the limited use of the property, they allegedly valued the property as a residence in Trump's financial statements while treating it as a social club for tax purposes, according to New York Attorney General Letitia James.
In Trump's statements of financial condition, he valued the property between $426 million and $612 million, despite a local tax assessor appraising the market value of the property between $18 and $27 million. Engoron, in his summary judgment ruling, wrote that James had proven that Trump was liable for a false valuation of the property.
Trump has repeatedly argued that Engoron misunderstood the purpose of a tax assessment, going as far as to call Engoron's finding "fraud."
"Are you paying taxes on an $18 million valuation of Mar-a-Lago or $1.5 billion?" state attorney Kevin Wallace asked Trump during his direct examination.
"You know that assessments are totally different from the valuation of property," Trump responded.
Court denies Trump’s effort to expedite gag order appeal
Former President Donald Trump’s request for an expedited grant of leave to appeal the gag orders in his civil fraud trial was denied Monday afternoon.
The gag order is now likely to still be in effect on Monday when Trump takes the witness stand in his own defense.
Trump’s lawyers requested that Judge David Friedman, who initially lifted the gag order, permit them to appeal the final decision that reinstated the gag order to New York’s Court of Appeals.
“You had a decision by a panel of judges. A single judge cannot undo a panel’s decision,” Lauren Holmes, a court attorney, said during a scheduling meeting Monday afternoon at the Appellate Division First Department.
Dennis Fan, a lawyer for the New York Attorney General, also declined to consent to expediting the briefing schedule.
“You just want to let this drag out until the end of the trial,” Trump attorney Christopher Kise said. “That’s what they are doing.”
Trump still has an avenue to appeal the decision to a higher court; however, the effort will take longer than his lawyers would like. Trump’s lawyers now face a deadline of Monday, Dec. 11 to file their papers to the First Department.
Developers have more latitude when valuing properties, expert says
Frederick Chin, a real estate valuation expert, testified that developers often have more latitude to value their properties compared to appraisers.
According to Chin, developers consider the enterprise value of their assets, meaning how different properties managed by the same company – such as Four Seasons or Ritz-Carlton hotels – increase in value as part of a collection of assets.
“The whole is worth more than the sum of its parts,” Judge Arthur Engoron said to summarize Chin’s testimony.
Chin added that developers also consider the long-term plan for how their assets might be impacted by outside circumstances, like the 2008 recession or the COVID-19 pandemic.
“Everyone in this room has a different perspective on what the next day and the future holds,” Chin said, comparing valuing assets to looking into a “crystal ball.”
Trump likely to attend trial Thursday, say sources
Former President Donald Trump will likely attend his civil fraud trial on Thursday, according to sources familiar with the matter. He is not expected to be in attendance on Wednesday when his son Eric testifies.
Trump last attended the trial on Nov. 6 when he testified as the last state witness. In total, the former president has attended the trial for eight of the 39 days the court has been in session.
Trump is scheduled to testify on Monday, Dec. 11, as the last witness in the case.
1st witness eyes Trump's decade-old financial statements
Testifying about the preparation of the Trump Organization's statements of financial condition in 2011, former Mazars USA accountant Donald Bender said Trump executives largely provided the input data for statements, in addition to dictating the standards by which the work was completed.
"We would cut and paste that information into a new worksheet," Bender said about the approach taken by Mazar after receiving new data from co-defendant Jeffrey McConney of the Trump Organization.
When asked about the compliance with the Generally Accepted Accounting Principles -- which Bender testified are the standards for accounting in the United States -- Bender repeatedly placed responsibility in the lap of the Trump organization.
"That was the Trump Organization's responsibility," Bender testified about GAAP compliance.
Bender acknowledged that he rarely questioned the inputs from the Trump Organization, and when he did, he largely dealt with McConney and executives other than Trump and his adult sons.
Repeatedly asked by the state attorney if Mazars would have issued the statements if they had known the Trump Organization included material misrepresentations in their data, Bender reiterated that Mazars would not have issued the statements.
When Judge Engoron remarked at the end of the trial day that the state would still need to present further evidence to prove that the 2011 statement was within the statute of limitations, Trump seized the statement as a partial victory.
"The last five minutes was outstanding, because the judge actually conceded that the statute of limitations … is in effect," Trump told reporters as he was leaving court.
Engoron, however, did not completely rule out the 2011 evidence during trial, instead appearing to remind counsel that they need to show the 2011 statement represents an ongoing concern that falls within the statute of limitations.
Testimony is scheduled to resume on Tuesday at 10 a.m. ET.