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
'Cohen didn't have the guts,' to testify, Trump says
While exiting court for a break, former President Trump took a swipe at his former lawyer Michael Cohen, who delayed his testimony in the ongoing trial.
Cohen was scheduled to testify on Tuesday, but postponed his testimony due to a medical issue.
"Cohen didn't have the guts," Trump told reporters in the hallway outside the courtroom.
Trump also continued his criticism of the law used by New York Attorney General Letitia James to bring the case, which he said "doesn't give me any rights whatsoever."
"I'm the victim here," Trump said.
Trump financials cite phone calls that witness says didn't occur
Doug Larson's name appears across five years of Donald Trump's financial documents, according to records entered into evidence.
A longtime professional appraiser with the real estate firm Cushman & Wakefield, Larson was cited in Trump Organization documents as an expert at valuing properties like 40 Wall Street, Trump Tower, and an adjoining retail space called "Niketown." Spreadsheets entered as evidence explicitly reference multiple phone calls with Larson between 2013 and 2017.
When asked about these phone calls in court, Larson testified that no such conversations occurred.
"Is it fair to say that Mr. Trump valued Trump Tower at $526 million in conjunction with you?" state attorney Mark Ladov asked Larson.
"No, that is incorrect," Larson said.
"Were you aware that Mr. McConney was citing you as a valuation source in his work papers?" Ladov asked.
"No, I was not," replied Larson, who said he did not assist Trump Organization executives in valuing Trump Tower, Niketown, or 40 Wall Street, despite Trump's paperwork referencing him as a source.
Evidence presented by the state instead suggested that the valuations were determined using cherry-picked metrics from a generic email Larson sent clients.
"It's a way to get your name out to clients for potential work," Larson said about one such "email blast" that was used in a Trump Tower valuation.
Larson added that the valuations Trump Organization executives determined based on "consultation" with him used flawed methodologies, such as using capitalization rates related to office buildings to appraise the retail Niketown building.
"It doesn't make sense," Larson said about Niketown's $287 million valuation.
"It's inappropriate and inaccurate," Larson said about the Trump Organization relying on his name to support their valuations. "I should have been told, and appraisals should have been ordered."
CFO wanted fees omitted from ledger, exec says
With former President Trump looking on silently from his seat at the defense table, his civil fraud trial turned to the allegedly fraudulent valuation of his 40 Wall Street property.
The Trump Organization's assistant controller, Donna Kidder, testified that around 2012, the company's then-chief financial officer, Allen Weisselberg, instructed her to omit from a financial ledger some of the fees the company charged to manage the building.
Kidder said Weisselberg described it as money that moved within the Trump Organization from "one pocket to another."
The ledger documents, which were provided to the real estate investment firm Ladder Capital, were related to the refinancing of 40 Wall Street.
"Allen Weisselberg said that since they were affiliated entities, management fees could be omitted," Kidder said.
Lowering expenses would make the building's net operating income higher and, thereby, make the building more valuable, state attorneys said. The move helped the Trump Organization claim 40 Wall Street was worth $540 million when its true appraised value was $260 million, said the state.
Kidder also testified about the value of a penthouse apartment in Trump Park Avenue that was rented by Ivanka Trump and Jared Kushner in 2011. The attorney general's office has alleged the apartment was reported at a value several times higher than the agreed selling price.
Kidder testified that Ivanka Trump had been given an option to buy the unit, Penthouse 28, for $8.5 million. However, on statements of financial condition, the Trump Organization valued the apartment significantly higher, at $20.8 million in 2012 and $25 million in 2013.
'There's no fraud,' Trump says before entering courtroom
Donald Trump is back at the defense counsel's table in the courtroom, seated between his lawyers Alina Habba and Chis Kise.
Speaking to the press before entering the courtroom, Trump railed against the trial, telling reporters that his assets were undervalued, reiterating his desire for a jury trial, and criticizing New York Attorney General Letitia James.
"This is the railroading that's all coming out of the Department of Justice," Trump said without offering proof of the accusation.
Press photographers were briefly permitted to enter the courtroom and take photos before testimony resumed.
"They are the eyes and ears of the public, or at least the eyes in this case," Judge Arthur Engoron remarked as the photographers left the court.
Deutsche Bank expected Trump to value assets fairly, banker says
Former Deutsche Bank managing director Rosemary Vrablic testified on cross-examination by state attorneys that Donald Trump, Ivanka Trump, and Donald Trump Jr. secured private financing using recourse -- meaning they were personally liable for the loan.
"Sorry about the recourse issue -- a dirty word, I know -- but it is a requirement in private banking," Vrablic wrote in a 2011 introductory email to Donald Trump Jr.
Vrablic confirmed that each of the Trumps she worked with -- Donald, Ivanka, and Donald Trump Jr. -- used a personal guaranty to secure better financing terms.
"It gives the flexibility to be creative on some solutions because the person is standing behind it," Vrablic testified.
State attorney Kevin Wallace appeared to focus on the personal guaranty during the cross-examination, with the discussion bringing the focus back on the representation of the value of Trump's assets.
While Vrablic confirmed that she never personally reviewed Donald Trump's statement of financial condition, she said the bank still expected it was accurate.
"You would have had an expectation that a borrower like Mr. Trump would present their financial information fairly?" Wallace asked.
"Yes," Vrablic replied.