$450M blow to Trump's finances and his identity
“We have a lot of cash,” Donald Trump boasted 10 months ago, under oath, claiming that the number was “going up very substantially every month.”
But whatever cash he had soon may be gone.
On Friday, the judge overseeing Trump's civil fraud case issued a final ruling that inflicted a staggering financial penalty. With interest, the former president has been ordered to pay New York state about $450 million, a sum that threatens to wipe out a stockpile of cash, stocks and bonds that he amassed since leaving the White House, according to a New York Times review of Trump's financial record. He will have only 30 days or so to either come up with the money or persuade an outside company to post a bond.
The judge, Arthur Engoron, also imposed several new restrictions on Trump and his family business. For three years, Trump cannot run any New York company, including portions of his own, nor can he obtain a loan from a New York bank. The same restrictions apply to his adult sons for a two-year period. And the family business will be under the thumb of a watchful outsider, a court-appointed monitor who can hamstring the company if she does not like what she sees.
All told, the judge's decision poses unprecedented threats to Trump's finances, his family business and his ego at a critical time for the former president. Although Trump will not go bankrupt and the Trump Organization will not go out of business, the company's loudest hype man could for now become a silent partner in his hometown properties. The organization will be another real estate company in a city full of them — this one facing unusual new constraints that could impede its ability to compete.
“Justice Engoron's order could impose several years of paralysis at the Trump Organization,” said Jim Wheaton, a professor at William & Mary Law School who focuses on legal issues involving corporate entities and has studied Trump's finances. The ruling, he added, could even “freeze the ability to make legitimate business decisions.”
One of Trump's lawyers, Christopher Kise, called the financial penalty “draconian and unconstitutional” and said that the decision “will cause irreparable damage to both the business community and the rule of law in our country.”
The punishments facing Trump and his company, some hard-hitting and some symbolic, could serve as a harrowing prelude to his criminal trials, the first of which is scheduled to begin next month. In those trials, for the first time, he faces the threat of prison.
But the Friday ruling, in which Engoron found that the former president orchestrated a conspiracy to
deceive lenders about the value of his assets, is a twofold attack on Trump's very identity.
The judge, siding with the New York attorney general, Letitia James, told the world that Trump had inflated his net worth — a cornerstone of his billionaire public persona — and then personally deflated it to the tune of several hundred million dollars.
Cash crunch
The nearly $450 million penalty that James might collect poses the most immediate threat to Trump.
While Trump appeals the financial penalty, he will have to either come up with the money or secure a bond within 30 days of when the court enters a judgment against him. If he obtains it from a bonding company — rather than posting the bond himself — he will not have to pay the penalty until his appeal is resolved.
The company providing the bond essentially assures the state that Trump has the money to pay the judgment and prevents it from collecting while appeals are heard. The bond company will require Trump to pledge collateral and pay a premium.
His lawyers already are contacting companies that might post the bond, according to two people with knowledge of the matter, although it is unclear if and when they will reach a deal.
If the penalty is upheld on appeal, the money most likely will come out of Trump's own pocket, rather than from political contributions. In his post-presidential life, Trump sold two prominent properties, reaping a windfall that he pocketed and can tap in a hurry. He also reached new deals with foreign partners, including a Saudi-backed golf venture and a Saudi-based real estate company, for a housing and golf complex to be built in Oman.
The reserves were a bulwark against misfortune for the former president, preparing him for a moment like this one.
As of last year, Trump was sitting on more than
$350 million in cash and cash equivalents, a New York Times review of his financial records showed. In an interview under oath with James' office last year, Trump said the number was above $400 million, although the Times was unable to verify that amount.
Either way, Engoron's ruling should empty Trump's cash coffers.
The penalty in Friday's decision, when combined with an $83.3 million judgment Trump is facing from a defamation trial involving writer E. Jean Carroll, adds up to more than half a billion dollars, eclipsing his current collection of cash. That sum could leave Trump more financially vulnerable than he has been in decades.
Brought to heel
If Engoron's decision is upheld on appeal, nothing will come easily for the Trump Organization. The ruling will bring significant changes to a privately held — and unorthodox — family business.
The company is in fact hundreds of separate companies that Trump ran by instinct and whim. He consolidated control among a few family members and trusted allies, without a formal compliance department or oversight from a board of directors.
The company runs a handful of hotels and office buildings, as well as 15 golf clubs, around the country, all with the Trump name plastered across the front. It is synonymous with Trump: He was its chair, its dealmaker and its cheerleader in chief.
Engoron's ruling, which bans Trump from serving as an officer or director of any New York company for three years, means that might no longer be possible. The order suggests that Trump might be severed from its operations, but many of his corporate entities are based elsewhere, leaving an open question about the practical outcome of that particular punishment.
At the onset of his presidency, Trump already had turned over the day-to-day running of his company to his sons, Donald Jr. and Eric, although there was an intermingling of Republican and campaign activities at his properties. But the company's main New York properties might now have to operate without Eric Trump, its de facto CEO. Engoron banned him and Donald Jr. from being an officer or director of any New York business for two years.
Engoron's other punishments took more direct aim at the Trump Organization's way of doing business — most notably, extending the appointment of the independent monitor, Barbara Jones. A former federal judge, Jones will be the equivalent of a corporate babysitter for the next three years. Engoron granted her additional authority and asked her to recommend an independent compliance director who will oversee the company's financial reporting from within its ranks.
Trump Tower politics
Trump's company — which he made his soapbox decades before he formally entered politics — underpinned his transformation into a cultural and political juggernaut.
Trump has always made his business and his claims of being a jet-setting billionaire the basis of his public image. The Trump Organization was the launchpad for his reality television show “The Apprentice,” where he introduced his brand to a national audience. And Trump Tower, his company's midtown Manhattan headquarters, served as a backdrop for his 2015 announcement that he was seeking the presidency.
“I'm proud of my net worth,” Trump declared then, claiming that he was worth more than $9 billion.
For years, however, news accounts described him as inflating his net worth. Trump himself even said in a deposition that the value of his assets went up and down with his “feelings.”
In 2019, James, the attorney general, began investigating that conduct. Three years later, she filed the lawsuit that led to the penalties Trump is now facing.
The former president has sought to turn such legal liabilities into political assets, falsely portraying the cases against him as a coordinated witch hunt. He has been excoriating James and Engoron since before the trial began, and Friday, he attacked them both at a Mar-a-Lago, Florida, news conference, calling them “corrupt.”
His grievances have resonated with his base, and the Trump campaign has melded the legal cases with his political messaging. The campaign has already used Engoron's ruling to raise money. Still, the myth of the successful businessperson who gave it all up to serve the American people as president is a staple of Trump's campaign speeches. Those lines may land differently if his company is broadly understood not as a gilded business empire, but as a troubled real estate company.