Donald Trump hit with $453.5 million penalty in New York real estate fraud lawsuit
A New York judge ordered Donald Trump and his namesake company to pay $453.5 million, with additional penalties against two of his sons, and barred them from conducting business in the state after fraudulently over-valuing his real estate empire.
"The frauds found here leap off the page and shock the conscience," Justice Arthur Engoron wrote in a decision released Friday.
"In order to borrow more and at lower rates, defendants submitted blatantly false financial data to the accountants, resulting in fraudulent financial statements," Engoron said in a 92-page ruling.
The judge called the refusal of Trump and the others to admit errors in the financial statements “pathological.” Engoron cited the tripling of the size of Trump’s penthouse at Trump Tower as one example.
“Their complete lack of contrition and remorse borders on pathological,” Engoron wrote. “Defendants did not commit murder or arson. 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.”
Dig deeper: 'Cashflow crunch': How Donald Trump could feel the pinch of $536.8 million in legal losses
Trump blasts 'crooked' judge and attorney general
The civil case marks an enormous financial blow to the former president, whose namesake buildings dot the globe, and a major victory for state Attorney General Letitia James, who filed the lawsuit.
Trump has now been hit with a stunning total of $536.8 million in court damages in the last three weeks after an $83.3 million judgement in a civil defamation case.
The 2024 Republican presidential frontrunner railed against Friday's decision on his social media site, Truth Social.
"A Crooked New York State Judge, working with a totally Corrupt Attorney General who ran on the basis of 'I will get Trump,' before knowing anything about me or my company, has just fined me $355 Million based on nothing other than having built a GREAT COMPANY," he wrote. "ELECTION INTERFERENCE. WITCH HUNT."
"We will appeal," Trump told reporters Friday night at his private Florida club. "We'll be successful."
Trump’s lawyer, Alina Habba, also assailed the ruling on social media.
“This verdict is a manifest injustice – plain and simple,” Habba said. “It is the culmination of a multi-year, politically fueled witch hunt that was designed to ‘take down Donald Trump,’ before Letitia James ever stepped foot into the Attorney General’s office.”
Habba added that “if this decision stands, it will serve as a signal to every single American that New York is no longer open for business.”
A massive financial blow to Donald Trump
Friday's decision ? penalizing Trump more than a third of a billion dollars ? comes three weeks after a federal jury ordered the former president to pay $83.3 million to writer E. Jean Carroll for civil defamation.
“Judge Engoron levied the financial death penalty on Trump,” Neama Rahmani, a former federal prosecutor and president of West Coast Trial Lawyers, told USA TODAY. “Even for someone with Trump’s net worth, this decision inflicts a serious blow to Trump’s financial health, especially when he has to spend more and more money on legal fees in his many criminal cases.”
Engoron had already ordered the business halted by ruling last year that the Republican presidential frontrunner committed fraud from 2011 through 2021 through "pure sophistry" and a "fantasy world" of real-estate valuations that "can only be considered fraud." But an appeals court put the order on hold while Engoron presided over a fall trial to determine damages.
The judge found Trump and his Donald J. Trump Revocable Trust liable for $354.9 million, his sons Eric and Donald Trump Jr. liable for $4 million each and former chief financial officer Allen Weisselberg for $1 million ? for a total of $364 million in penalties. Engoron also barred Trump from doing business in New York State for three years.
Engoron also ordered Trump and his trust to pay interest on the damages, which started from different times for different properties. The total with interest that Trump owes is $453.5 million and the total for all the defendants is $463.9, according to the attorney general’s office.
Trump still faces a plethora of cases while campaigning again for the White House.
He has pleaded not guilty in an unprecedented four criminal cases: a federal election interference trial pending in Washington, a federal trial alleging he mishandled classified documents, an election racketeering trial in Georgia and a trial over falsifying business records in New York.
Outbursts, gag orders, and a question of perjury
The civil fraud trial in Engoron’s courtroom featured fiery testimony by Trump, attacks by the former president on the judge and his chief law clerk, and $15,000 in fines levied on the 2024 Republican frontrunner for violating gag orders.
Trump complained during the trial and while testifying that Engoron wasn’t listening to him. But the judge described in his decision how he weighed the testimony of Trump and Weisselberg, who is reportedly in plea negotiations with the Manhattan district attorney over possible perjury on the witness stand.
“This Court listened carefully to every witness, every question, every answer,” Engoron wrote. “Witnesses testified from the witness stand, approximately a yard from the Court, who was thus able to observe expressions, demeanor, and body language."
"The Court," Engoron wrote, referring to himself, "has also considered the simple touchstones of self-interest and other motives, common sense, and overall veracity.”
Engoron said he found Trump an unreliable witness.
"Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial," Engoron wrote. "His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility."
James celebrated the ruling. "Today we proved that no one is above the law ? no matter how rich, powerful, or politically connected you are," the state attorney general said. "Donald Trump may have authored 'The Art of the Deal', but he perfected the art of the steal."
More: Lawyers on both sides in Donald Trump fraud case urge judge to ignore reported perjury inquiry
Judge singles out Eric Trump and Donald Trump Jr.
Trump’s sons, Eric and Donald Trump Jr., were also barred from doing business in New York State for two years. The sons testified several times that they would have relied on their accountants to find any errors in financial statements they signed.
But Engoron found that “Eric Trump’s credibility was severely damaged when he repeatedly denied” knowing about his father’s financial statements “until this case came into fruition.”
When confronted with “copious documentary evidence,” Eric Trump conceded he knew about the paperwork, Engoron wrote.
Donald Trump Jr., who helped run the company with Eric when their father became president, was confronted in March 2017 by Forbes magazine about the size of Trump’s penthouse being reported as three times too large. Donald Jr. testified he couldn’t recall doing “anything” in response.
At another point, he testified: “I don’t recall who I relied on,” when certifying management documents.
More: Who is Lara Trump? Trump's daughter-in-law and nominee for new RNC co-chair.
Judge: Trump's valuations 'a fantasy world'
Trump companies often valued properties far higher than appraisers or tax assessors, Engoron found. Trump testified that a disclaimer on property values given to lenders meant the banks knew the estimates were “worthless."
“This is a fantasy world, not the real world,” Engoron wrote in September.
The judge outlined several glaring disputes over Trump property values:
A 200-acre Westchester County property called Seven Springs LLC was appraised by Royal Bank of Pennsylvania in 2006 at $30 million if converted to residential homes. A Cushman & Wakefield appraiser estimated the value in 2014 at $30 million. Trump reported the value at $261 million to $291 million during that period.
Trump Park Avenue, a residential building, had rent-controlled apartments that Engoron ruled had been overvalued by 700%. Trump’s lawyers argued the units could eventually become market-rent units, but Engoron ruled the numbers are supposed to represent “current" values, not “someday, maybe” values.
A lease at 40 Wall St. in New York was appraised in 2010 by Cushman & Wakefield as worth $200 million. But the Trump Organization valued the property at $525 million in 2011 and at $735 million in 2015. Trump said the differences were irrelevant because his lender, Ladder Capital, made $40 million in interest on a loan for the property. Trump has maintained throughout the trial that James is persecuting him for a victimless crime.
Mar-A-Lago, Trump’s Florida resort, had a market value ranging from $18 million to $27.6 million during the decade ending 2021, according to the Palm Beach County assessor. Trump valued the property at up to $612 million during that period.
Trump’s own apartment in Trump Tower is 10,996 square feet, but he submitted claims it was 30,000 square feet, according to Engoron. The difference resulted in an overvaluation of between $114 million and $207 million, the judge wrote.
“A discrepancy of this order of magnitude by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Engoron wrote of the Trump Tower apartment.
Contributing: David Jackson, USA TODAY
This article originally appeared on USA TODAY: Judge orders Donald Trump to pay $453.5 million in civil fraud lawsuit
