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
For 3rd time, defense asks for directed verdict
Defense attorney Christopher Kise requested Judge Engoron issue a directed verdict at the conclusion of testimony from Deutsche Bank managing director Dave Williams -- marking the third time the defense has asked the judge to stop the proceedings and decide the case in their favor.
"Was an event of default ever declared by Deutsche Bank on the loans to the Trump Organization?" defense attorney Jesus Suarez asked Williams at the end of Williams' testimony.
"No," Williams replied, prompting Kise to jump up and make his request.
"This witness has again testified the bank conducted its own due diligence" and was not defrauded by Trump's statements of financial condition, Kise argued.
"This is a subjective exercise. There isn't a right answer. There isn't an 'Ah-ha, you picked the wrong number,'" Kise said. "The bank is in a relationship whose job it is to make these determinations. It's not the attorney general's job to insert herself into a private transaction ten years later."
Judge Engoron took the defense's motion under advisement but signaled he was unmoved.
"The mere fact that the lenders were happy doesn't mean the statute wasn't violated," Engoron said.
Kevin Wallace, an attorney for the state, took issue with Kise's analysis of the testimony.
"The witness did not say none of this matters. The witness said he expects clients to tell the truth," Wallace said.
Trump easily met Deutsche Bank loan requirements, banker says
Deutsche Bank did its own due diligence to estimate Trump's net worth, landing on a figure that differed from Trump's reported net worth by over $2 billion -- but the difference didn't concern the bank, according to testimony from managing director Dave Williams.
Trump reported a net worth of nearly $5 billion in 2013, according to documents shown at trial. The bank's own Valuation Services Group produced an estimate of only $2.6 billion, a difference that Williams described as "not unusual or atypical."
"My reaction was probably pretty measured," Williams said about learning that the bank determined that Trump's net worth was nearly half the estimate provided by Trump. "We are expected to conduct due diligence and verify information to the extent that is possible."
Even with Deutsche Bank's lower estimate, the former president easily met the bank’s $100 million net-worth requirement for high-net-worth individuals, according to Williams.
“He reported both a net worth and investable assets well in excess of our minimum requirements,” Williams said, confirming that the bank set the interest rate for Trump’s commercial loans between 2%-2.5%.
The testimony also appeared to bolster Trump's arguments that his lenders did their own due diligence, diminishing the importance of his statements of financial condition that are at the center of the case.
Trump never risked breaching loan covenants, banker suggests
Deutsche Bank managing director Dave Williams downplayed the possibility that Donald Trump could have defaulted on the net-worth covenants included in his loans.
While both parties agree that Trump never defaulted on his loans, New York Attorney General Letitia James alleges that had Trump accurately reported the value of his assets, he could have risked defaulting on a loan covenant that required he maintain a net worth of $2.5 billion.
Defense attorney Jesus Suarez pushed back on that allegation by asking Williams about the severity of a covenant default -- i.e., breaching the terms of the loan -- compared to a payment default triggered by a missed payment.
"Generally speaking, a payment default is a more material default than a covenant default," Williams said. "It speaks definitively to the repayment of the loan."
Williams described a loan covenant as a "guardrail," and suggested that breaching the covenant would have brought Trump back to the negotiating table to adjust the loan terms.
Williams also reiterated that he was not aware of any loan or covenant defaults by Trump.
James is expected to request a fine of nearly $400 million for Trump's allegedly ill-gotten gains, including over $140 million based on the potential interest she says was lost by Deutsche Bank. By proving that the loan agreements were lawful, Trump's lawyers could significantly lower the fine Trump faces.
Net worth is subjective, banker says
The managing director of Deutsche Bank, which was Trump's primary lender in the 2010s, testified that it would be impossible for the bank to calculate their client's net worth with mathematical certainty.
"I don't believe that is possible," said Dave Williams, testifying for the defense. "I think an individual's net worth as reported is largely subjective, or subject to the use of estimates."
The assertion bolsters a recurring theme of the defense's case -- that determining the value of Trump's assets was less of a science than an art form.
Williams said that, regardless of what Trump reported, Deutsche Bank made more conservative estimates about the value of his assets.
"I think it's a difference of opinion. We expect clients provide information to be accurate. At the same time, it's not an industry standard that these financial statements are audited," Williams said.
Defense plans to call Trump Organization's independent monitor
Donald Trump's lawyers plan to call former federal Judge Barbara Jones -- who has served as the Trump Organization's independent monitor since 2022 -- as a witness for the defense case, according to defense attorney Clifford Robert.
Jones was installed as the firm's independent monitor last November at the request of New York Attorney General Letitia James.
Though Jones was not originally included in the defense's witness list, Robert flagged the change to the court near the end of the direct examination of Trump Hotels chief operating officer Mark Hawthorn.
Hawthorn testified that he has regularly met with Jones since her appointment, and that the two have a transparent and cooperative relationship.
"We believe everything they deemed as an objection we have responded to diligently and very accurately," Hawthorn said. "No one from that team has ever communicated to us that they have uncovered fraud or any irregularities."
Jones, however, wrote in an August 2023 report that the Trump Organization provided "incomplete" information and did not consistently provide necessary certifications to lenders, prompting Judge Engoron to chastise the defendants in his summary judgment order.
"Even with a preliminary injunction in place, and with an independent monitor overseeing their compliance, defendants have continued to disseminate false and misleading information while conducting business," Engoron wrote.
Robert did not provide a timeline for when Jones might testify, and state attorney Andrew Amer reserved a right to object to the defense team calling Jones as a witness.