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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Bank was concerned DC hotel deal could publicize loan terms

Deutsche Bank managing director Rosemary Vrablic expressed concern about the public nature of Donald Trump's 2012 acquisition of the Old Post Office building in Washington, D.C., fearing the deal might publicize the favorable loan terms offered by the bank, according to evidence presented at trial.

"Will our terms and conditions with you be made public? Not a credit issue, but we want to be prepared if 'other clients' see it and ask for the same deal," Vrablic wrote in a 2013 email shown at trial.

The Trump Organization won the bidding process with the federal government in 2012 for the property, and Deutsche Bank loaned the firm the money for the renovation of the decrepit building.

"We won! We're very very excited!" Ivanka Trump wrote in a 2012 email to Vrablic.

Vrablic, concerned about the loan terms being publicized, said, "We would not talk about that," regarding the importance of keeping the terms private from other high-net-worth clients.

Vrablic could not recall how the loan term details were protected, but she confirmed that Deutsche Bank made $3.3 million from their loan to the Trump Organization related to the property.


Scrutiny over Trump's presidency prompted bank to halt relationship

Deutsche Bank decided to stop doing new business with Donald Trump due to the "increased exposure" and "scrutiny" related to his being elected president, according to testimony from Deutsche Bank managing director Rosemary Vrablic.

"It was an unprecedented situation to have a customer who was going to become president of the United States," Vrablic said.

By the time Trump was elected, the bank had made three profitable loans to Trump, making a projected $6.8 million in revenue from Trump in 2014. Vrablic confirmed that by July 2015, Trump had $31 million in cash deposits with the bank, and his associated entities stored $86 million in cash deposits.

However, the scrutiny of Trump's presidency prompted the bank to decide not to increase its exposure, including declining to offer Trump a loan for his golf course in Turnberry, Scotland.

"He was president of the United States -- going to become president of the United States -- and the bank's position was they did not want to increase its exposure at that time," Vrablic testified.


Deutsche Bank courted Trump for more business, referrals

Deutsche Bank executives courted Donald Trump to attract more business and referrals, viewing the former president as an opportunity to sell services to his family members and other high-net-worth individuals, according to the testimony of former Deutsche Bank managing director Rosemary Vrablic.

"Given the circles this family travels in, we expect to be introduced to the wealthiest people on the planet," Vrablic wrote to colleagues while courting Trump in the early 2010s, according to materials entered into evidence.

Recruiting Trump stemmed from a 2007 effort in the bank to develop a broader commercial real estate financing division for their high-net-worth individuals.

"He would have fit the category of the entrepreneur and investor with a successful track record," Vrablic testified on the stand regarding Trump's profile.

After being introduced to Donald Trump Jr. through Ivanka Trump's now-husband Jared Kushner, Vrablic began pursuing Donald Trump's business.

"We are whale hunting ... Haven't seen him yet. Also maybe Dad will convert like Ivanka did," Vrablic wrote in a 2011 email to a colleague.

"It is a term used when there is a very high-net-worth individual who is a prospect," Vrablic said in explaining why she referred to Trump as a "whale."

Once Trump was on board, leadership from the bank personally courted Trump to do more business with the bank and to connect them to other potential clients. The former CEO of the bank personally met with Trump with the express goal of gaining more deposits from Trump and leveraging Trump's relationships.

CEO Anshu Jain "thought that if Mr. Trump wanted to, there could be additional leverage provided among his world," Vrablic testified.

The effort appeared to work, as the bank made over $3 million in revenue from Trump in 2013, up from only $13,000 in 2011.


Defense cuts short Deutsche Bank VP testimony

Donald Trump's lawyers decided to cut short their direct examination of former Deutsche Bank vice president Emily Pereless.

Trump's team originally said they planned to shorten their direct examination after Pereless appeared reluctant to answer questions yesterday. Returning to court this morning, they decided to forgo the remaining testimony to avoid "prolonging" the proceedings.

Pereless then faced a short cross-examination about her work attempting to value Trump's Doral golf resort.


Trump Organization monitor flags financial misstatements

A report issued Friday by the former judge appointed to serve as the Trump Organization's independent monitor by Judge Arthur Engoron found that the company has been cooperative, implemented some changes, and issued necessary corrections to financial statements; however, the report also outlined multiple errors and misstatements observed by the monitor over her 14 months in the role.

The report, by independent monitor Barbara Jones, was issued at the request of Judge Engoron ahead of his expected ruling in Trump's civil fraud trial.

"It is important to note that the Trump Organization acknowledged the disclosure issues described after I brought them to its attention and has been open to recommendations to improve accuracy and transparency," Jones wrote in her report.

However, Jones wrote, "Absent steps to address the items above, my observations suggest misstatements and errors may continue to occur, which could result in incorrect or inaccurate reporting of financial information to third parties."