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
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 fines Trump $354 million
Former President Donald Trump must pay $354 million for fraudulent business practices, Judge Arthur Engoron has ruled.
Trump's sons Donald Trump Jr. and Eric Trump have been fined $4 million apiece, and former Trump Organization CFO Allen Weisselberg has been fined $1 million.
The decision bars Trump barred from serving as an officer of a New York company for three years, and bars his sons for two years apiece.
Regarding the dissolution of Trump's companies, the decision says, "This Court hereby modifies its September 26, 2023, Decision and Order solely to the extent of removing the language ordering the LLCs cancellation en masse. The restructuring and potential dissolution of any LLCs shall be subject to individual review by the Court appointed Independent Director of Compliance in consultation with Judge Jones."
In his decision, Engoron wrote that "Defendants' refusal to admit error -- indeed, to continue it, according to the Independent Monitor -- constrains this Court to conclude that they will engage in it going forward unless judicially restrained."
"Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial," the judge wrote. "His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility."
"The accountants created these 'compilations' based on data submitted by the Trump entities," the decision said. "In order to borrow more and at lower rates, defendants submitted blatantly false financial data to the accountants, resulting in fraudulent financial statements. When confronted at trial with the statements, defendants' fact and expert witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future recurrences."
Of Donald Trump Jr., Engoron wrote, "Despite disclaiming responsibility for or knowledge of the Statements of Financial Conditions' contents, Trump, Jr. still insisted that the Statements of Financial Condition were 'materially accurate.'"
Engoron's decision follows an 11-week civil trial in New York, where Trump and three of his adult children testified.
New York Attorney General Letitia James sued Trump, his two adult sons, and Trump Organization executives in September 2022 for issuing fraudulent financial statements -- including over 200 false and misleading asset values between 2011 and 2021 -- to get better loan terms and business deals.