Dive Brief:
- Judge Arthur Engoron Friday ordered the Trump Organization, former president Donald Trump and other named defendants to collectively pay nearly $364 million in penalties as part of his long-awaited ruling in the New York Attorney General’s civil fraud case, according to a statement from the NY AG’s office.
- In his 92-page ruling, Engoron also barred the former president from serving as an officer or director of a New York company for three years, and permanently banned the organization’s ex-CFO and ex-controller from serving in the financial control function of any New York corporation. He also found the organization’s ex-CFO, Allen Weisselberg, liable for the funds he has received as part of his severance agreement with the company as “ill-gotten gains.”
- “There is substantial evidence that Allen Weisselberg’s $2 million separation agreement was negotiated to compensate him for his continued non-cooperation with any entities with any legal interests ‘adverse’ to defendants,” the judge wrote in the ruling. Weisselberg, whose severance agreement came under scrutiny during the trial, was also “a critical player in nearly every instance of fraud,” and it would be “inequitable to allow him to profit from his actions by covering up defendants’ misdeeds,” the judge said. Accordingly, Weisselberg will need to disgorge the $1 million he has presently received as part of his $2 million severance package as ill-gotten gains.
Dive Insight:
Engoron came down hard on the Trump Organization following a two-and-half-month trial with testimony from 40 witnesses, including the former president, Weisselberg and his two eldest sons, Donald Trump Jr. and Eric Trump. The $364 million in fines detailed throughout the ruling, which includes penalties levied against the Trump Organization, the former president himself, his sons, and ex-financial leaders, comes close tothe $370 million figure requested by the NY AG.
This amount was raised when the trial concluded from the original $250 million targeted by Letitia James’ office when it brought the case in 2022, alleging the former president and key Trump Organization officials had fraudulently inflated Trump’s net worth.
“Today, justice has been served. 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,” NY AG Letitia James said in a statement following the ruling. “For years, Donald Trump engaged in massive fraud to falsely inflate his net worth and unjustly enrich himself, his family, and his organization...now, Donald Trump is finally facing accountability for his lying, cheating, and staggering fraud. Because no matter how big, rich, or powerful you think you are, no one is above the law.”
The judge appeared to be unmoved by many of the arguments made by the Trump Organization throughout the trial. Referring to the Trump defense attorneys’ argument that the organization’s external accountants were at fault for the misstatements in valuation for key properties at the heart of the trial, Engoron wrote in the ruling that there is “overwhelming evidence from both interested and non-interested witnesses, corroborated by documentary evidence, that the buck for being truthful in the supporting data valuations stopped with the Trump Organization, not the accountants.”
Engoron also decried the organizaiton’s refusal to admit to wrongdoing, pointing to English poet Alexander Pope’s quote that, “‘to err is human, to forgive is divine.’ Defendants apparently are of a different mind,” he wrote. “After some four years of investigation and litigation, the only error (‘inadvertent,’ of course) that they acknowledge is the tripling of the size of the Trump Tower Penthouse, which cannot be gainsaid.”
The ruling could have a significant impact on the future of the Trump Organization and the former president as they face challenges of liquidity. The $364 million judgement comes close to the total amount of cash Trump may have on hand, according to January Bloomberg reports. Trump and his family members were found personally liable for certain financial penalties in the case; Trump, alongside the Trump Revocable Trust, and the Trump Organization are liable for $126 million for “ill-gotten profits” related to the sale of the organization’s Old Post Office property, Engoron said in his Friday ruling.
Meanwhile, Engoron found Eric Trump and Donald Trump Jr. liable for over $4 million each in association with the Old Post Office property sale; and, alongside their father’s three-year ban, both Trump sons are also banned from holding executive positions at a New York corporation for a period of two years, putting the future leadership of the Trump Organization and financial status in question.
Though Trump and members of his family were found liable for the fraud, Engoron placed near-equal stock in the actions and responsibilities of the organization’s former financial leaders.
“The evidence is overwhelming that Allen Weisselberg and Jeffrey McConney cannot be entrusted with controlling the finances of any business,” Engoron wrote in the ruling regarding the decision to permanently ban the ex-CFO and former controller from serving in the financial control position for New York entities.
