Donald Trump, sons, businesses fined US$364M in NY civil fraud case

Click to play video: 'Trump civil fraud trial: Fallout from $354.9M liability ruling on damages'
Trump civil fraud trial: Fallout from $354.9M liability ruling on damages
WATCH: Former U.S. president Donald Trump was dealt another legal and financial blow in court. Jackson Proskow has more on the fallout from the ruling – Feb 16, 2024

Donald Trump, his adult sons and his New York business entities were fined a total of US$364 million on Friday over what the judge ruled was a years-long scheme to fraudulently inflate the value of their assets to secure favourable loans from banks.

The New York Attorney General’s office, which brought the case against Trump and his real-estate empire, say the total amount owed could climb beyond US$450 million with interest.

Trump will also be barred from serving as an officer or director of any New York state corporation or applying for loans from New York financial institutions for three years, Judge Arthur Engoron ruled. Donald Trump Jr. and Eric Trump, who co-run the Trump Organization, will be barred from New York businesses for two years.

“The frauds found here leap off the page and shock the conscience,” Engoron wrote, who added Trump and his co-defendants “failed to accept responsibility” for their actions or show remorse in a way that he found “pathological.”

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“They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways,” wrote Engoron.

Click to play video: 'Trump’s legal troubles: Business empire at stake as hush money trial date set'
Trump’s legal troubles: Business empire at stake as hush money trial date set

But the ruling also saw Engoron back away from a prior decision that would have dissolved the former U.S. president’s companies in the state. Instead, he said his appointment of an independent director of compliance — who will work with an existing independent monitor to oversee the Trump Organization’s finances — makes the cancellation of Trump’s business licenses “no longer necessary.”

The decision nevertheless marks a serious blow to Trump and his reputation as a successful businessman that he rode to the White House, where he is attempting to return this fall. If he is ultimately forced to pay the penalties after an appeals process plays out, it will also significantly impact his finances as he defends himself from multiple criminal indictments and other legal cases against him.

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Trump’s legal team had said before Engoron’s final ruling that they would appeal.

Trump, co-defendants fined millions

Trump himself was fined US$354.9 million along with his businesses, while Don Jr. and Eric Trump were each fined US$4 million. Allen Weisselberg, the former chief financial officer of the Trump Organization, was fined US$1 million and also barred for serving as an officer or director of a business in New York state for three years.

Weisselberg and Trump’s former corporate controller Jeffrey McConney were also permanently banned from serving as financial controllers for any New York corporation. Engoron said the evidence heard at trial was “overwhelming” that both men “cannot be entrusted with controlling the finances of any business.”

Click to play video: 'Trump blasts civil fraud trial judge’s ‘Trump-derangement syndrome’'
Trump blasts civil fraud trial judge’s ‘Trump-derangement syndrome’

Engoron issued his decision after a nearly three-month trial that saw the Republican presidential front-runner bristling under oath that he was the victim of a rigged legal system.

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The stiff penalty was a victory for New York Attorney General Letitia James, a Democrat, who sued Trump over what she said was years of deceptive practices as he built the multinational collection of skyscrapers, golf courses and other properties that catapulted him to wealth, fame and eventually the White House.

Engoron already ruled in September before the trial began that Trump and his fellow co-defendants had committed fraud with their financial statements. The trial and Friday’s ruling were meant to determine what penalties would be imposed.

“Today, justice has been served,” James said in a statement after the ruling. “This is a tremendous victory for this state, this nation, and for everyone who believes that we all must play by the same rules — even former presidents.”

Engoron noted in his ruling that Trump and his co-defendants have refused to admit they did anything wrong throughout the course of the case, as well as previous legal cases against the Trump Organization and its affiliates accusing them of fraud.

“This is not the defendants’ first rodeo,” he wrote.

“Accordingly, this court finds that defendants are likely to continue their fraudulent ways unless the court grants significant injunctive relief.”

Click to play video: 'Trump lashes out during testimony at NY civil fraud trial'
Trump lashes out during testimony at NY civil fraud trial

Months-long trial

James sued Trump in 2022 under a state law that authorizes her to investigate persistent fraud in business dealings.

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The suit accused Trump and his co-defendants of routinely inflating his financial statements to create an illusion his properties were more valuable than they really were. State lawyers said Trump exaggerated his wealth by as much as US$3.6 billion one year.

By making himself seem richer, Trump qualified for better loan terms, saved on interest and was able to complete projects he might otherwise not have finished, state lawyers said. The lawsuit sought disgorgement of what James said were “ill-gotten gains” earned by Trump and his businesses.

Trump, one of 40 witnesses to testify at the trial, said his financial statements actually understated his net worth and that banks did their own research and were happy with his business.

“There was no victim. There was no anything,” Trump testified in November — an argument frequently echoed by Trump’s lawyers.

The defence also said any blame should instead be put on the outside accountants that helped prepare the statements, who Trump’s lawyers said should have flagged any discrepancies. Additionally, they noted the documents came with disclaimers that the figures were subject to change and interpretation, which they said shielded Trump and his businesses from liability.

Click to play video: 'Trump claims judge is part of corrupt system in fraud case appeal, calls it ‘election interference’'
Trump claims judge is part of corrupt system in fraud case appeal, calls it ‘election interference’

Engoron noted in his ruling that Trump “rarely responded to the questions asked” during his testimony, “and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial.”

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“His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility,” the judge wrote.

More legal headaches, penalties

The suit is one of many legal headaches for Trump as he campaigns for a return to the White House. He has been indicted four times in the last year — accused in Georgia and Washington, D.C., of plotting to overturn his 2020 election loss to U.S. President Joe Biden, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid to porn actor Stormy Daniels on his behalf.

On Thursday, a judge confirmed Trump’s hush-money trial will start on March 25 and a judge in Atlanta heard arguments on whether to remove Fulton County District Attorney Fani Willis from his Georgia election interference case because she had a personal relationship with a special prosecutor she hired.

Those criminal accusations haven’t appeared to undermine his march toward the Republican presidential nomination, but civil litigation has threatened him financially.

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On Jan. 26, a jury ordered Trump to pay US$83.3 million to writer E. Jean Carroll for defaming her after she accused him in 2019 of sexually assaulting her in a Manhattan department store in the 1990s. That’s on top of the $5 million a jury awarded Carroll in a related trial last year.

In 2022, the Trump Organization was convicted of tax fraud and fined US$1.6 million in an unrelated criminal case for helping executives dodge taxes on extravagant perks such as Manhattan apartments and luxury cars.

—With files from the Associated Press

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