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 can't say who OK'd statements after Trump became president

Ex-CFO Allen Weisselberg, who testified earlier Tuesday that Trump approved his financial statements before they were finalized during the years between 2011 and 2016, was unable to recall who approved financial statements after Trump was elected president in 2016.

While he recalled discussing some elements of the statements with Trump Organization VP Eric Trump, he declined to say that either Eric or VP Don Jr. had final say regarding the statements.

Court then adjourned for the day.

Court is set to resume Wednesday morning with the testimony of Deutsche Bank risk manager Nicholas Haigh, who is testifying early due to a scheduling conflict.

Weisselberg is scheduled to return to the witness stand later Wednesday.


Ex-CFO OK'd financial documents used to prevent loan default

Ex-Trump CFO Allen Weisselberg testified that he certified that Trump's financial statements were "true, correct and complete" so the documents could be provided to lenders to prevent a breach of contract resulting in a loan default.

"Please see the attached report required per our loan documents, for the above referenced loan," a Trump Organization employee would write to lenders like Wells Fargo, according to examples entered into evidence.

The employee would include a certification, signed by Weisselberg, attesting to the accuracy of Trump's financial documents.

"Did you understand that if you failed to provide this, the Trump organization would be in breach of its obligations under the loan agreement?" state attorney Louis Solomon asked Weisselberg for each email.

"Yes," Weisselberg replied.


Weisselberg says Trump signed off on financial statements

Donald Trump would approve his financial statements before they were finalized between 2011 and 2016, ex-Trump CFO Allen Weisselberg testified.

Weisselberg said that Trump often had feedback about the notes sections of the statements, which contained more detailed descriptions of Trump's properties.

"'Don't use the word beautiful. Use the word magnificent,'" Weisselberg offered as an example of the kind of feedback Trump would provide.

Earlier Tuesday, Weisselberg testified that he did not meet with Trump or attorney Michael Cohen to review the statements. Returning to the topic after the lunch break, Weisselberg described Trump's final review of the document as a regular occurrence before he became president.

"Did you ever send it to the Mazars [accountants] … as a final version before Mr. Trump signed off on it?" state attorney Louis Solomon asked.

"Not that I can remember, no," Weisselberg said.


Ex-CFO suggested 30% 'brand premium' for golf course valuations

Ex-Trump CFO Allen Weisselberg explained the Trump Organization's process for valuing its marquee properties as a complicated, months-long process during which the firm's controller, Jeffrey McConney, would reach out to appraisers and brokers to better determine their value.

"This took months to prepare. It was not a simple task," Weisselberg said, adding that he reviewed McConney's final product at a "30,000-foot level."

But Weisselberg acknowledged that he often intervened in the process to push McConney in a certain direction.

In one example, Weisselberg testified that he suggested McConney add a 30% brand premium for seven of Trump's golf courses -- adding tens of millions of dollars in value without disclosing the reasoning.

"Was the 30% premium you directed Mr. McConney to add to the fixed assets disclosed in the statement of financial condition?" Solomon asked.

"No," Weisselberg said.

During a later portion of his direct examination, Weisselberg testified he sent Trump Organization employee Patrick Birney -- who took over handling Trump's financial statements from McConney -- a newspaper clipping about a nearby Palm Beach property in order to support the valuation of Trump's Mar-a-Lago Club.

"Patrick -- hold for next year DJT f/s, Let's see what it ends up selling for," a handwritten note from Weisselberg on the clipping said.

Weisselberg acknowledged his hesitancy to use that property's asking price to help value Mar-a-Lago.

"Anyone can ask anything for a dollar amount. Doesn't mean it's going to sell," Weisselberg said.


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.