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
Controller denies keeping documents from outside accountants
Longtime Trump Organization controller Jeffrey McConney, a defendant in the attorney general's case, denied withholding any documents from the company's outside accountants -- appearing to contradict testimony from Mazars USA accountant Donald Bender.
"We provided him everything he needed," McConney said, adding that Bender could request any document he wanted from the Trump Organization.
McConney, testifying for the defense, added that Bender also could directly communicate with individuals in the Trump Organization to directly ask questions during the process of organizing Trump's financial statements that are at the center of the case.
"Bender would come in and talk to anyone he wanted," McConney said.
When Bender testified last month during the state's case, he said that he directly asked McConney if the company had more appraisals, to which McConney responded, "That's all we have."
"They were not giving us all the documents that we needed, potentially, to compile the compilation," Bender testified.
Asked about the allegation on the witness stand, McConney denied he withheld anything from Bender.
"Did you ever hide anything from Donald Bender?" defense attorney Jesus Suarez asked.
"No," McConney responded.
Co-defendant Jeffrey McConney returns to stand
Forty-five days after he began his testimony as the third witness in the state's case, former Trump Organization controller and co-defendant Jeffrey McConney has returned to the witness stand for the defense.
When he testified last month, McConney -- who was the primary person responsible for the valuations in Trump's statement of financial statements between 2011 and 2017 -- struggled to recall specific details about the preparation of the financial documents, though he acknowledged he took direction from Eric Trump about the value of a Westchester golf course.
This afternoon, after asking some preliminary questions about McConney's biography, defense attorney Jesus Suarez began asking McConney pointed questions about Mazars USA accountant Donald Bender, another witness in the state's case.
"Whatever he asked for, we would do," McConney said about Bender's role in the process of compiling Trump's financial statement.
Defense expert gave inconsistent testimony, state attorney claims
State attorney Andrew Amer began his cross-examination of defense expert David Miller by highlighting that his testimony appeared to contradict Miller's own expert report.
During his direct examination, Miller was asked if he has ever seen any insurance underwriters rely on media outlets when reviewing their surety programs.
"Prior to this, no," Miller responded, referencing how underwriters at Zurich cited articles from Forbes and USA Today in their 2021 annual review of Trump's policies.
However, Miller's own report acknowledged that "some underwriters do not require financials and instead use their experience and other means (such as Forbes and USA Today) to satisfy their underwriting needs."
When Amer suggested that the finding in Miller's report appeared to directly contradict his testimony, the defense objected.
"It seems completely inconsistent. What am I missing?" Judge Arthur Engoron responded.
Miller clarified that he has seen underwriters cite external sources like media reports; however, the Zurich document was the first time he specifically saw Forbes and USA Today cited as sources.
Insurer backed Trump to guard relationship with broker, expert says
Defense witness David Miller, an expert in insurance underwriting, testified that the Zurich insurance company worked with the Trump Organization largely to protect its relationship with their broker, AON Risk Solutions.
"The relationship with AON was very important, and keeping business intact was very important," Miller said about Zurich, which he said made a "business decision" to insure the Trump Organization's properties.
The testimony appears to be a move to weaken the New York attorney general's allegation that the Trump Organization used their inflated financial statements to get progressively favorable surety terms.
Judge Arthur Engoron was skeptical to qualify Miller as an expert before he relented to the defense's request.
"I don't see why you're an expert in what was just said," Engoron said after Miller spent 20 minutes listing his professional experience.
Both Engoron and state attorney Andrew Amer, who called the testimony a "waste of time," criticized Miller's ability to testify about the decisions made by Zurich and AON.
Trump never risked breaching loan covenants, banker suggests
Deutsche Bank managing director Dave Williams downplayed the possibility that Donald Trump could have defaulted on the net-worth covenants included in his loans.
While both parties agree that Trump never defaulted on his loans, New York Attorney General Letitia James alleges that had Trump accurately reported the value of his assets, he could have risked defaulting on a loan covenant that required he maintain a net worth of $2.5 billion.
Defense attorney Jesus Suarez pushed back on that allegation by asking Williams about the severity of a covenant default -- i.e., breaching the terms of the loan -- compared to a payment default triggered by a missed payment.
"Generally speaking, a payment default is a more material default than a covenant default," Williams said. "It speaks definitively to the repayment of the loan."
Williams described a loan covenant as a "guardrail," and suggested that breaching the covenant would have brought Trump back to the negotiating table to adjust the loan terms.
Williams also reiterated that he was not aware of any loan or covenant defaults by Trump.
James is expected to request a fine of nearly $400 million for Trump's allegedly ill-gotten gains, including over $140 million based on the potential interest she says was lost by Deutsche Bank. By proving that the loan agreements were lawful, Trump's lawyers could significantly lower the fine Trump faces.