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
Expert 'found absolutely no fraud,' Trump says
During a short break in testimony, Donald Trump applauded the findings of accounting expert Eli Bartov, who testified that he found no evidence of accounting fraud in Trump's statements of financial condition.
"He reviewed fully the documents that this horrendous attorney general has put forward, and he found absolutely no fraud, accounting fraud of any kind," Trump told reporters.
Trump, however, acknowledged that Judge Engoron might not be swayed by Bartov's testimony.
"We will probably go forward and I'm sure nothing will have any bearing on what this judge does," Trump said.
Trump penthouse misstatement was not fraud, expert says
Donald Trump's overstatement of the value of his Trump Tower penthouse apartment was a mistake, according to accounting expert Eli Bartov -- but not fraud.
"The price was inflated. There is no question about it," Bartov said about Trump more than doubling the value of his triplex apartment on his statement of financial condition, from $80 million to $180 million, between 2011 and 2012.
Bartov chalked up the mistake to the inevitable errors that occur in the process of compiling a statement of financial condition. He said that if Trump meant to commit fraud by inflating the value of his apartment, he would have made some effort to conceal it.
"There is no evidence here of concealment," Bartov said. "It's true this is an error. But it is no fraud."
Bartov instead blamed Trump's external accounting firm for failing to catch the obvious error.
"They submitted to him the supporting documents. Any person that had one year experience in auditing ... will immediately see there is a jump from 80 million to 180 million," he said.
No merit to NY AG's complaint, defense expert says
The New York attorney general's civil fraud complaint against former President Trump lacks merit, a defense expert in accounting testified.
"My main finding is that there is no evidence whatsoever for any accounting fraud," New York University professor Eli Bartov said. "My analysis shows the statements of financial condition for all the years were not materially misstated."
Bartov's testimony bolstered the defense's contention that non-audited financial statements, like Trump's, are unreliable and represent only a first step in analysis.
"You cannot use the raw numbers in the statements as the basis for making decisions," Bartov said. "If you do that, you are likely to reach the wrong decision."
Judge Engoron asked Bartov whether the attorney general's complaint had no merit.
"This is absolutely my opinion," Bartov replied.
"And why is that?" defense attorney Jesus Suarez jumped in to ask.
"There is not a single reference to a specific provision of GAAP that was violated," Bartov said, referring to the generally accepted accounting principles." "If you allege there was an accounting violation, they have to tell us what provision was violated."
State attorneys objected to the relevance of Bartov's opinion, but Judge Engoron denied the objection.
Court affirms pausing dissolution of Trump Organization
A panel of five appellate judges has affirmed a judge's Oct. 6 decision that paused the dissolution of the Trump Organization.
Judge Peter Moulton issued a ruling during the first week of the trial pausing the immediate cancellation of Donald Trump's business certificates, as ordered by Judge Arthur Engoron in his partial summary judgment ruling on the eve of the trial.
Trump's attorneys argued in favor of the stay of enforcement action until the end of the trial, and the New York attorney general supported their argument.
Today's ruling formally pushes a decision on the fate of the Trump Organization into the new year, when Engoron issues his final ruling in the case.
Trial is a 'documents case,' state lawyer says
State attorney Kevin Wallace, arguing against the defense's motion for a directed verdict to end the trial early, reiterated that the state's case relies on documents that they say incriminate Donald Trump and his adult sons.
"This is a documents case," Wallace said. "Each of the three defendants signed documents saying they were responsible for the fair presentation of the statements."
While the defendants all testified that they relied on accountants, Wallace said by way of analogy that it's like the defense saying that using an accountant absolves an individual of filing false tax returns.
"I am liable for that fraudulence," Wallace said. "I am not relieved of my responsibility because I handed off to an accountant."