Judge orders Trump to pay millions in New York civil fraud case

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Former President Donald Trump and the Trump Organization must pay $354 million in fines and are barred from seeking loans from financial institutions in New York for a period of three years, a judge ruled Friday, issuing his long-awaited judgment in the state’s civil fraud case.

Judge Arthur Engoron handed down his judgment in a 92-page decision on Friday. The ruling is one of the largest corporate sanctions in New York history.

Trump is expected to appeal.

The judge’s decision comes five weeks after the trial in the case concluded

New York Attorney General Letitia James brought the civil suit in 2022, asked the judge to bar Trump from doing business in the state and sought a penalty of $250 million, a figure her office increased to $370 million by the end of the trial. Trump, the Trump Organization and several executives, including his two eldest sons, Donald Jr. and Eric Trump, were named as co-defendants in the suit.

Trump and his legal team long expected a defeat, with the former president decrying the case as “rigged” and a “sham” and his lawyers laying the groundwork for an appeal before the judgment was even issued. 

Even before Friday’s ruling, the judge had largely affirmed James’ allegations that Trump and others at his company inflated valuations of his properties by hundreds of millions of dollars over the course of a decade, and misrepresented his wealth by billions. The scheme, the state said, was meant to trick banks and insurers into offering more favorable deal terms.

Engoron ruled in September that Trump and the other defendants were liable for fraud, based on the evidence presented through pretrial filings.

The trial, which began in October, focused on other aspects of the lawsuit related to alleged falsification of business records, issuing false financial statements, insurance fraud and conspiracy.

The financial penalty James sought, known as disgorgement, is meant to claw back the amount Trump and his company benefited from the scheme. (Under New York law, disgorgement cases are decided by a judge, not a jury.) 

Ivanka Trump, the former president’s daughter and once an executive at the Trump Organization, was originally named as a defendant in the suit, but an appellate court later dismissed allegations against her, citing the state’s statute of limitations.

What were the Trumps accused of?

The lawsuit laid out seven causes of actions — the claims of illegal conduct that James’ office said entitled the state to claw back ill-gotten profits and warranted severe sanctions against the defendants:

  • Persistent and Repeated Fraud
  • Falsifying Business Records
  • Conspiracy to Falsify Business Records
  • Issuing False Financial Statements
  • Conspiracy to Falsify False Financial Statements
  • Insurance Fraud
  • Conspiracy to Commit Insurance Fraud

The claims revolve around financial statements given by Trump and his company to banks and insurers.  The statements were prepared by accounting firms using spreadsheets of underlying data that included vast inflations of Trump property valuations.

The defendants lost on the first claim, persistent and repeated fraud, before the trial even started.

The Sept. 26 fraud ruling

Engoron agreed in September with James’ office that it was beyond dispute, based on evidence presented through pretrial filings, that Trump and his company provided banks with financial statements that misrepresented his wealth by billions.

“The documents here clearly contain fraudulent valuations that defendants used in business,” Engoron wrote in the Sept. 26 ruling.

Engoron found as fact in that ruling that Trump and the company overstated the valuations of many properties by hundreds of millions of dollars. He cited the Palm Beach Assessor valuation of Trump’s Mar-a-Lago club at between $18 million and $28 million for each year between 2011 and 2021 — the values for which he paid local property taxes. During those years, Trump valued the property at between $328 million and $714 million on his annual statements of financial conditions.

Trump seized on the Mar-a-Lago valuation, complaining about it frequently during public appearances, in social media posts, and in his own defense at trial.

Trump’s testimony at the trial

Donald Trump and three of his children testified during the trial, which began on Oct. 2 and ran for more than three months. 

Ivanka Trump and her brothers said they couldn’t recall many of the interactions at the center of the case, including deliberations related to efforts to secure financing and insurance for Trump property developments. Eric and Donald Trump Jr. both sought to pin blame on the company’s accountants, claiming they had little involvement in the preparation of financial statements that misrepresented the values of company properties.

The former president took the stand on Nov. 6, stopping to address the media on his way into court. “It’s a very sad situation for our country,” he said.

Under oath, he gave long-winded answers, seeming to test the judge’s patience. At one point Engoron addressed Trump’s lawyers, saying, “We got another speech,” and urging them to “control him if you can.”

As questioning continued, Trump defended the valuations of various Trump Organization properties said the company’s statements of financial condition included a disclaimer that absolved him of responsibility for inaccuracies.

Lawyers for the Trumps argued that the financial statements were accurate and well done, and also that valuations are subjective. They said that documents James’ lawyers called evidence of fraud were actually evidence of Trump’s “genius.” Any misrepresentations or breaks with accepted accounting practices were his accountants fault, they said.

The former president himself also blamed his accountants, but maintained that his financial statements actually undervalued his properties and net worth.

“I’m worth more than the numbers in the statement,” Trump said.

This is a breaking news story and will be updated.

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