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
Statements appear to ignore appraisals of undeveloped lots
Cushman & Wakefield executive David McArdle, who was hired to appraise the value of 71 undeveloped residential units at the Trump National Golf Club in Westchester County, New York, testified that he also conducted multiple appraisals for conservation easements at the property in 2014 and 2015.
Signing a conservation easement would allow the Trump Organization to give up their development rights and treat the difference in property value as a charitable donation, according to the New York attorney general.
By giving up the right to develop the 71 residential units, McArdle found that the donation was worth $43 million, according to an April 2014 appraisal. A later appraisal McArdle conducted in 2015 landed on a similar valuation of $45.2 million.
But Trump's financial statements from those years appear to ignore the appraisals, valuing the land from the undeveloped units at $101 million, according to documents entered into evidence.
"Based on the supporting data, the only source for the increase in the number of units and profit per unit were telephone conversations with Eric Trump," the New York attorney general alleged in her complaint.
McArdle also testified that he was consulted to appraise Seven Springs, a New York estate Trump purchased for $7.5 million in 1995.
To value the property, which could be subdivided into 24 to 26 residential lots, McArdle testified that he toured the site, consulted a local expert, and spoke with Eric Trump on multiple occasions.
"He had a very high opinion of the property, which didn't surprise me," McArdle said.
His appraisal ultimately determined the total value for the lots in 2014 was $30-$50 million, McArdle said.
But the New York attorney general alleges that appraisal was ignored in Trump's 2014 financial statement, in favor of a "false and misleading" value of $161 million for a portion of the undeveloped lots.
Eric Trump sought higher valuation of golf course, appraiser says
Eric Trump personally pushed for a higher valuation for 71 undeveloped residential units at the Trump National Golf Club in Westchester County outside New York City, a real estate executive testified.
David McArdle of the real estate firm Cushman & Wakefield said he was hired to appraise the future value of the duplex units to be built along the golf course's 18th hole fairway. McArdle said he personally worked with Trump Organization VP Eric Trump on the project in 2013.
"Eric loved this project. He thought it was very special," McArdle said.
When McArdle eyed a value between $40-$45 million, Eric Trump pushed for a higher value, McArdle said.
In an email that was entered into evidence, McArdle wrote to a colleague regarding Eric Trump: "He continues to call me. I am uncomfortable not replying, please call him."
McArdle testified that he wanted to be "respectful" to Eric Trump, who he hoped to work with on future projects; however, McArdle said he and Eric Trump continued to disagree about the value of the undeveloped units.
"Eric had certain ideas about value. They may have been more lofty than $45 million," McArdle testified.
McArdle said was firm on the $45 million valuation, adding that he did not want to put "Eric in a vulnerable position" because the appraisal could be "under a lot of scrutiny by the IRS or a court."
"We were sort of at the end, and anything beyond $45 million would have put people at risk," he said.
Lender says he partially relied on Trump's financial statement
When Ladder Capital executive Jack Weisselberg worked on a $160 million loan for the Trump Organization, he partially relied on Donald Trump's financial statements, according to his testimony this morning.
"The liquidity was really what we were paying attention to," said Jack Weisselberg in reference to the $302 million in cash and marketable assets Trump claimed in his 2014 statement of financial condition.
Pressed on direct examination, Jack Weisselberg declined to say he fully relied on the statement, which the New York attorney general alleges was fraudulently inflated.
"The net worth was one of many statements we were looking at in the underwriting process. It was a factor," Jack Weisselberg said.
He stepped down from the witness stand at the conclusion of questioning, though defense counsel reserved the right to call him back during their case.
Attorneys spar in sidebar meeting
Lawyers for former President Trump and New York AG Letitia James began court with a 25-minute private sidebar discussion with Judge Arthur Engoron.
Earlier the attorney general's office requested a forensic examination of Trump Organization data after identifying what they said were "likely omissions" of emails related to former CFO Allen Weisselberg.
"Excuse me, be more respectful," state attorney Colleen Faherty audibly said during one point of the heated sidebar.
"No," Trump attorney Chris Kise responded.
McConney says overvaluation of Trump’s penthouse was incorrect
Former Trump Organization controller Jeff McConney, testifying for the defense, said that he overvalued Donald Trump's penthouse apartment by over $100 million because he relied on an incorrect email.
Judge Arthur Engoron determined in his partial summary judgment that the penthouse was overvalued by as much as $200 million because it was falsely listed as being three times larger than its actual size.
To get to that value, McConney said relied on a Trump Organization broker who falsely represented the apartment was 30,000 square feet.
"I would rely on him. I figured he knew the property a lot better than I did," said McConney, who added that he never spent considerable time in the apartment.
The Trump Organization lowered the value of the penthouse by more than $200 million in 2017 after a Forbes magazine article exposed the error.
McConney's testimony came before he broke down on the stand at the end of his direct examination.