New York Civil Fraud Case: Donald Trump and the Trump Organization Ordered to Pay $453.5 Million in Penalties

The New York civil fraud case against former President Donald Trump and the Trump Organization has reached a significant milestone. On February 16, 2024, Judge Arthur Engoron handed down a judgment ordering the defendants to pay a total of $453.5 million in penalties. This ruling, one of the largest corporate sanctions in New York history, follows years of investigation and litigation.

The judgment includes fines of $354 million for Trump and the Trump Organization, which jumps to $453.5 million when pre-judgment interest is factored in. The ruling also imposes restrictions on Trump’s business activities. He and his two oldest sons, Eric Trump and Donald Trump Jr., are banned from serving as an officer or director of any New York corporation or legal entity for specified periods. They are also required to pay substantial penalties.

The judge’s decision was based on evidence that Trump and his associates submitted “blatantly false financial data” to accountants to secure more favorable loan terms. Engoron determined that the defendants refused to admit error despite the extensive investigation and litigation. He described their lack of contrition as “borderline pathological.”

The New York Attorney General, Letitia James, hailed the decision as a victory for the state, the country, and those who believe in an even playing field. She emphasized that “there simply cannot be different rules for different people.” Trump, however, dismissed the ruling as a “witch hunt” and vowed to appeal.

Trump’s attorneys, Alina Habba and the Trump Organization spokesperson, denounced the decision and criticized the attorney general for her handling of the case. They argued that the ruling represented a gross miscarriage of justice and a threat to New York businesses.

The civil suit was initiated in 2022, with the attorney general seeking to bar Trump from doing business in the state and imposing a penalty of $250 million. The defendants were expected to lose, with Trump decrying the case as rigged and his legal team preparing for an appeal before the judgment was issued.

The trial, which began in October 2023 and concluded in January 2024, focused on allegations that Trump and his company inflated property valuations and misrepresented their wealth to secure more favorable financing and insurance terms. The defendants lost on the first claim, persistent and repeated fraud, before the trial even started.

The financial penalty, known as disgorgement, is intended to recover the ill-gotten profits from the fraudulent scheme. Under New York law, disgorgement cases are decided by a judge, not a jury.

Ivanka Trump, Trump’s daughter and a former executive at the Trump Organization, was originally named as a defendant in the suit but was later dismissed due to the statute of limitations.

The lawsuit’s seven causes of action revolve around financial statements provided to banks and insurers. The statements, prepared by accounting firms using underlying data with vast inflations of Trump property valuations, were found to contain fraudulent valuations.

The defendants’ loss on the first claim, persistent and repeated fraud, before the trial began set the stage for the financial penalty. Trump may have a chance to reduce the damages on appeal, but he will need to post an appeal bond of $350 million in this case and $83 million in another case. This will be a costly endeavor.

The September 26, 2023 fraud ruling found that Trump and the company provided banks with financial statements that misrepresented their wealth by billions. Engoron agreed that the documents contained fraudulent valuations used in business transactions. Trump seized on the Mar-a-Lago valuation, which he frequently criticized during public appearances, social media posts, and his defense at trial.

During the trial, which ran for over three months, Trump and his children testified. Ivanka Trump and her brothers claimed they couldn’t recall many interactions related to efforts to secure financing and insurance for Trump property developments. Eric and Donald Trump Jr. attempted to blame the company’s accountants for the misrepresented financial statements. However, Engoron determined that there was sufficient evidence that Eric and Donald Trump Jr. intentionally falsified business records.

The New York civil fraud case against Donald Trump and the Trump Organization has resulted in a significant financial penalty and restrictions on their business activities. The defendants have vowed to appeal, but the judgment will take a toll on their finances during the appeals process.