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 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.
Ex-CFO acknowledges firm's fundamental failures of responsibility
Ex-Trump CFO Allen Weisselberg acknowledged under questioning that the Trump Organization failed to fulfill some of the basic promises detailed in letters between the firm and its external accountant, Mazars USA.
"Do you believe the Trump Organization fulfilled that fundamental responsibility?" state attorney Solomon asked Weisselberg regarding a 2017 letter from Mazars that outlined the Trump Organization's responsibility to select the accounting principles used in financial statements.
"No," Weisselberg responded.
Asked about a separate letter outlining the Trump Organization's responsibility to comply with generally accepted accounting principles, or GAAP, Weisselberg initially suggested that the Trump Organization fully relied on Mazars to comply with the accounting standards.
"We relied on Mazars to understand GAAP," Weisselberg said.
"You were relying on Mazars to make a representation back to Mazars?" Solomon said, prompting Weisselberg to reverse his statement.
When questioned about the seemingly boilerplate accounting obligations to which the Trump Organization agreed, Weisselberg appeared to struggle to articulate who at the Trump Organization fulfilled the basic responsibilities as outlined.
Trump financials cite phone calls that witness says didn't occur
Doug Larson's name appears across five years of Donald Trump's financial documents, according to records entered into evidence.
A longtime professional appraiser with the real estate firm Cushman & Wakefield, Larson was cited in Trump Organization documents as an expert at valuing properties like 40 Wall Street, Trump Tower, and an adjoining retail space called "Niketown." Spreadsheets entered as evidence explicitly reference multiple phone calls with Larson between 2013 and 2017.
When asked about these phone calls in court, Larson testified that no such conversations occurred.
"Is it fair to say that Mr. Trump valued Trump Tower at $526 million in conjunction with you?" state attorney Mark Ladov asked Larson.
"No, that is incorrect," Larson said.
"Were you aware that Mr. McConney was citing you as a valuation source in his work papers?" Ladov asked.
"No, I was not," replied Larson, who said he did not assist Trump Organization executives in valuing Trump Tower, Niketown, or 40 Wall Street, despite Trump's paperwork referencing him as a source.
Evidence presented by the state instead suggested that the valuations were determined using cherry-picked metrics from a generic email Larson sent clients.
"It's a way to get your name out to clients for potential work," Larson said about one such "email blast" that was used in a Trump Tower valuation.
Larson added that the valuations Trump Organization executives determined based on "consultation" with him used flawed methodologies, such as using capitalization rates related to office buildings to appraise the retail Niketown building.
"It doesn't make sense," Larson said about Niketown's $287 million valuation.
"It's inappropriate and inaccurate," Larson said about the Trump Organization relying on his name to support their valuations. "I should have been told, and appraisals should have been ordered."