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 expert tells AG lawyer, 'You ought to be ashamed of yourself'
Donald Trump's accounting expert snapped at a lawyer for the New York attorney general after the lawyer suggested his opinion was bought by the defense team.
As accounting expert Eli Bartov was testifying about Trump's use of disclaimers in his financial statements, state attorney Kevin Wallace interjected, saying, "This is pure speculation from someone they hired to say whatever it is they want."
Still in the witness box, Bartov began yelling at Wallace about the comment as Trump sat watching a few feet away.
"You make up allegations that never existed," Bartov shouted. "I am here to tell the truth. You ought to be ashamed of yourself for talking like that."
Bartov, in his testimony, said that Trump's use of disclaimers functioned "just like the warning from the surgeon general on a box of cigarettes."
The accounting expert said that Trump's disclaimers clearly flagged to his lenders that they should conduct their own due diligence regarding the figures, rather than rely on them at face value. Witnesses from Deutsche Bank -- Trump's primary lender during the 2010s -- previously testified that they conducted due diligence and significantly undercut the valuations Trump provided in his financial statement when deciding to offer him loans.
"I never saw anything that is clearer than that," Bartov said about the language in Trump's disclaimer clause. "Even my nine-year-old granddaughter Emma would understand this language."
In his pretrial summary judgment ruling, Judge Engoron dismissed Trump's argument that disclaimer clauses protect him from allegations of fraud. While multiple defense witnesses have attempted to rebut Engoron's opinion about Trump's use of disclaimer clauses, the judge has signaled he stands by his opinion.
"My summary judgment is the law of the case on the legal effect of this paragraph or these sentences," Engoron said in response to Bartov's testimony, adding that the clauses "would not insulate the client."
Nevertheless, Trump attorney Chris Kise requested that Engoron reconsider his finding.
"I am fairly liberal in reconsidering my opinions," Engoron said before Bartov resumed his testimony.
Expert 'found absolutely no fraud,' Trump says
During a short break in testimony, Donald Trump applauded the findings of accounting expert Eli Bartov, who testified that he found no evidence of accounting fraud in Trump's statements of financial condition.
"He reviewed fully the documents that this horrendous attorney general has put forward, and he found absolutely no fraud, accounting fraud of any kind," Trump told reporters.
Trump, however, acknowledged that Judge Engoron might not be swayed by Bartov's testimony.
"We will probably go forward and I'm sure nothing will have any bearing on what this judge does," Trump said.
Trump penthouse misstatement was not fraud, expert says
Donald Trump's overstatement of the value of his Trump Tower penthouse apartment was a mistake, according to accounting expert Eli Bartov -- but not fraud.
"The price was inflated. There is no question about it," Bartov said about Trump more than doubling the value of his triplex apartment on his statement of financial condition, from $80 million to $180 million, between 2011 and 2012.
Bartov chalked up the mistake to the inevitable errors that occur in the process of compiling a statement of financial condition. He said that if Trump meant to commit fraud by inflating the value of his apartment, he would have made some effort to conceal it.
"There is no evidence here of concealment," Bartov said. "It's true this is an error. But it is no fraud."
Bartov instead blamed Trump's external accounting firm for failing to catch the obvious error.
"They submitted to him the supporting documents. Any person that had one year experience in auditing ... will immediately see there is a jump from 80 million to 180 million," he said.
No merit to NY AG's complaint, defense expert says
The New York attorney general's civil fraud complaint against former President Trump lacks merit, a defense expert in accounting testified.
"My main finding is that there is no evidence whatsoever for any accounting fraud," New York University professor Eli Bartov said. "My analysis shows the statements of financial condition for all the years were not materially misstated."
Bartov's testimony bolstered the defense's contention that non-audited financial statements, like Trump's, are unreliable and represent only a first step in analysis.
"You cannot use the raw numbers in the statements as the basis for making decisions," Bartov said. "If you do that, you are likely to reach the wrong decision."
Judge Engoron asked Bartov whether the attorney general's complaint had no merit.
"This is absolutely my opinion," Bartov replied.
"And why is that?" defense attorney Jesus Suarez jumped in to ask.
"There is not a single reference to a specific provision of GAAP that was violated," Bartov said, referring to the generally accepted accounting principles." "If you allege there was an accounting violation, they have to tell us what provision was violated."
State attorneys objected to the relevance of Bartov's opinion, but Judge Engoron denied the objection.
Controller denies keeping documents from outside accountants
Longtime Trump Organization controller Jeffrey McConney, a defendant in the attorney general's case, denied withholding any documents from the company's outside accountants -- appearing to contradict testimony from Mazars USA accountant Donald Bender.
"We provided him everything he needed," McConney said, adding that Bender could request any document he wanted from the Trump Organization.
McConney, testifying for the defense, added that Bender also could directly communicate with individuals in the Trump Organization to directly ask questions during the process of organizing Trump's financial statements that are at the center of the case.
"Bender would come in and talk to anyone he wanted," McConney said.
When Bender testified last month during the state's case, he said that he directly asked McConney if the company had more appraisals, to which McConney responded, "That's all we have."
"They were not giving us all the documents that we needed, potentially, to compile the compilation," Bender testified.
Asked about the allegation on the witness stand, McConney denied he withheld anything from Bender.
"Did you ever hide anything from Donald Bender?" defense attorney Jesus Suarez asked.
"No," McConney responded.