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.


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


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Ex-CFO wanted inflated value for Trump Tower, exec says

Trump Organization executive Patrick Birney was once pressured by his former CFO, Allen Weisselberg, to use an unrealistic metric to inflate the value of Trump Tower, Birney testified.

Birney testified that he consulted a generic real estate report to determine a 2.67% capitalization rate to measure the value of Trump Tower -- despite an executive at real estate company Cushman and Wakefield recommending a higher rate, which would have decreased Trump Tower's value.

When Weisselberg and Birney discussed the topic in a Trump Tower restroom, Birney said he encouraged the CFO to use a higher, more realistic capitalization rate that would be more sustainable, in order to maintain the building's value in the future, Birney testified.

"I think he said, just use 2.67%," Birney recalled. "I said I am fine using that capitalization rate, but I am worried that if we are only using 2.67, the building is so old, next year there might not be a cap rate as low as 2.67."

The New York attorney general alleges that Weisselberg "systematically rejected" multiple valuations of Trump Tower in 2019 that would have lowered its value between $161 and $224 million.

Court has adjourned for the day, with Birney scheduled to continue his testimony on Monday morning.


Firm mulled using presidential 'premium' to boost net worth

Trump Organization executives considered adding $144 million to Trump's net worth based on a "premium for presidential property" in 2017, according to testimony of executive Patrick Birney.

The premium, which was applied to draft versions of Trump's financial statements, varied between 15% and 35% for Trump's properties, including his Mar-a-Lago Club, which was described in documents as the "presidential winter residence," according to materials entered into evidence.

The potential adjustment followed a $200 million shortfall between Trump's 2016 and 2017 statements, after a Forbes magazine article prompted executives to revalue the former president's penthouse, state attorneys said.

"Who directed you?" state attorney Eric Haren asked Birney about adding the premium.

"I don't really remember, but probably Allen Weisselberg," Birney said.

Birney testified that the premium was eventually removed from the 2017 statement, according to a document that tracked changes made to the statement. He did not provide additional context about why the premium was removed.


Trump Organization exec to continue testimony

Trump Organization executive Patrick Birney will continue his testimony this morning on Day Nine of the trial.

Roughly 40 years younger than ex-Trump Organization CFO Allen Weisselberg -- his former boss and the previous witness in the trial -- Birney testified yesterday that he largely relied on Weisselberg and controller Jeffrey McConney to put together Trump's annual financial statements.

"I was not the final decision maker," said Birney, who was an assistant VP during that time period.

State attorney Kevin Wallace highlighted Birney's statements during his opening statement as evidence of an alleged conspiracy within the Trump Organization to inflate Trump's net worth.

"He likes to see it go up," Birney said, according to Wallace.

If Birney completes his testimony today, Trump Hotels chief accounting officer Mark Hawthorn is scheduled to testify next.


Trump Organization executive explains valuations

Patrick Birney had been working for the Trump Organization for more than two years when a magazine article prompted him to change Trump's financial statement, the executive testified.

"There was an article written that stated that Mr. Trump's triplex was actually 10,900 or so square feet," Birney said, referring to a 2017 Forbes magazine article that alleged Trump had been lying about the size of his residence. (Judge Engoron decided in his partial summary judgment last month that the size was misrepresented.)

Birney, who was an assistant VP at the time, testified that Trump Organization executives, including former CFO Allen Weisselberg, "verified" the size and adjusted the next year's statement of financial condition. As a result, the penthouse was valued at $116 million in 2017 -- a steep drop from the 2016 valuation of $327 million.

Birney testified that he looked up comparable properties to come up with the value of the apartment going forward.

"I Google searched recent penthouse sales in Manhattan," Birney said, eventually landing on an web article about a penthouse purchased by billionaire Ken Griffin that set the record for most expensive home ever sold in the United States.

A price-per-square-foot for Trump's penthouse was determined based on that record-breaking sale, Birney said.

When Birney was tasked with finding comparable properties to value Trump's Mar-a-Lago Club, he similarly searched for nearby Palm Beach homes. However, Trump signed a deed in 2002 that limited Mar-a-Lago's purpose to a social club, the New York attorney general alleges, making the price of nearby residences irrelevant.

Asked if he was ever told about the deed by anyone at the Trump Organization, Birney replied, "I don't believe I was." Instead, he said he first learned about it during an "interview with the attorney general's office."

Court then adjourned for the day, with Birney's testimony scheduled to resume tomorrow morning.


Judge, clerk subjected to daily threats, official says in gag order filing

An attorney for Judge Arthur Engoron also filed in support of the gag order in Donald Trump's civil fraud trial, arguing that violent threats have increased since the gag order was lifted.

The limited gag order, which prohibited Donald Trump and his attorneys from publicly commenting about Engoron's staff, was issued by the judge last month after Trump posted about the judge's law clerk on social media. Judge David Friedman of the appellate division's First Department stayed the order on Thursday, citing constitutional concerns over Trump's free speech rights.

Engoron's filing includes a report from Charles Hollon of the Judicial Threats Assessment Unit of the New York State Court System's Department of Public Safety. According to the report, Engoron and his principal law clerk, Allison Greenfield, have been inundated with credible, violent and antisemitic threats since Trump began criticizing Greenfield.

"The threats against Justice Engoron and Ms. Greenfield are considered to be serious and credible and not hypothetical or speculative," Hollon wrote in the report.

Greenfield has been the victim of daily doxing of her personal email address and phone number, receiving dozens of calls, emails and social media messages daily, according to Hollon. Approximately half the harassing messages have been antisemitic, according to Greenfield.

In the report, Hollon wrote that Engoron was the subject of credible threats before the trial had started, but Trump's Oct. 3 Truth Social post directed at Greenfield exponentially increased the number of threats directed at her.

The report included multiple examples of voicemails that were left on the telephone in Engoron's chambers.

Hollon said the messages have created an "ongoing security risk" for Engoron, his staff and family, but that the gag order had been effective in lowering the number of threats.

"The implementation of the limited gag orders resulted in a decrease in the number of threats, harassment and disparaging messages that the judge and his staff received," Hollon said in the report. "However, when Mr. Trump violated the gag orders, the number of threatening, harassing and disparaging messages increased."

Engoron's lawyer, Lisa Evans, said the threats detailed in Hollon's affirmation justify the gag order, which functions as a reasonable limit on free speech.

"The First Amendment does not prohibit courts from limiting speech that threatens the safety of the court's staff," Evans wrote.

Trump's reply to the filing is due on Nov. 27, after which the First Department will decide whether to fully lift the gag order.