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
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.
Trump Organization executive says CFO had final say
Trump Organization executive Patrick Birney testified that CFO Allen Weisselberg and controller Jeffrey McConney had the final say on Trump's financial documents when he worked under them.
"I was not the final decision maker," said Birney, who was an assistant vice president at the time.
Birney joined the Trump Organization in 2015, a few years after he graduated from the University of Michigan. He began helping with Trump's statement of financial condition in 2016 and eventually took over preparing the vital financial document, though he acknowledged in court that he initially lacked some basic knowledge about accounting and finance.
Asked if he ever had valued a property using a capitalization rate, he replied, "I don't think so."
Birney said he would often turn to McConney if he needed specific documents, and that he reviewed drafts of the statement with Weisselberg.
"He would review drafts with me that I would provide him," Birney said. He later added, "Allen Weisselberg had the authority to approve everything."
Trump Organization executive takes the stand
Former Trump Organization CFO Allen Weisselberg has completed his direct examination, although he might be called back to testify by either the attorney general or the defense, Judge Arthur Engoron said.
"I am lifting the prohibition on discussing the case with counsel or anyone else," Engoron said about Weisselberg.
Trump Organization executive Patrick Birney, who as assistant vice president took over managing Trump's statement of financial condition after controller Jeffrey McConney, took the stand following Weisselberg.
Ex-Trump CFO testifies about family members' roles
Ex-Trump CFO Allen Weisselberg, under questioning from state attorney Louis Solomon, addressed the degree to which Donald Trump's three adult children -- Don Jr., Eric, and Ivanka -- were involved in the day-to-day running of the Trump Organization during the period from 2011-2022.
"They wanted to get up to speed on how the business was running," Weisselberg said, noting that Trump's run for president accelerated their engagement in the company.
Emails entered into evidence from around that time suggested that the three Trump children requested financial information about the company's operations.
During one email exchange, Weisselberg directly asked Eric Trump to delay paying off a loan related to Trump's Seven Springs estate so it wouldn't affect the former president's cash balance.
"If we have to pay off the loan I would like to do it post June 30th as that is the date of your dad's annual financial statement ... to keep his cash balance as high as possible," the April 2015 email said.
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.