Overview of the Case:
In addition to his four criminal indictments, a judge has ordered Donald Trump to pay a $454 million penalty, ruling in a civil fraud lawsuit that he lied about his wealth for years as he built the real estate empire that vaulted him to stardom and the White House.
Trump is appealing Judge Arthur Engoron’s Feb. 16 decision. The judge found that Trump, his company and executives including his sons Eric and Donald Trump Jr. schemed to pad his net worth by billions of dollars on financial statements given to banks, insurers and others to make deals and secure loans.
Former President Donald Trump speaks outside the courtroom after testifying in his New York civil fraud trial on Nov. 6, 2023.
Until the appeal is resolved, the total will increase by $111,984 per day because of interest. Trump denies wrongdoing. He does not have to pay the full amount right away. A court said it will pause enforcement while Trump appeals – preventing the possible seizure of his assets – if he puts up $175 million.
Engoron’s decision, after a 2½-month trial in New York Attorney General Letitia James’ lawsuit, also set strict limitations on his company’s ability to do business, but he rescinded his earlier decision to strip Trump of his companies. An appeals court has lifted many of the restrictions, at least for the duration of Trump’s appeal.
The verdict cut to the heart of Trump’s image as a wealthy and successful businessman as he campaigns to retake the White House. Before the appeals court lowered the amount Trump was required to put up immediately, his lawyers said it was proving impossible for him to post a bond covering the full judgment -- suggesting his legal losses had put him in a serious cash crunch.
Trump denies wrongdoing. He decried the verdict as “weaponization against a political opponent” and complained he was being penalized for “having built a perfect company, great cash, great buildings, great everything.”
James’ office estimated that Trump exaggerated his wealth by as much as $3.6 billion. Engoron found that Trump’s inflated financial statements allowed him to get lower insurance premiums and save at least $168 million by obtaining lower loan interest rates.
Because it is a civil case, there was no possibility of prison time.
The lawsuit went to trial in New York in October 2023. Trump testified on Nov. 6, 2023. His three eldest children, Don Jr., Eric and Ivanka, also testified. Trump attended closing arguments in January and ended up giving a six-minute diatribe after his lawyers spoke.
The ALLEGATIONS:
James, a Democrat, sued Trump under a New York statute known as Executive Law 63(12). The law, passed in 1956, gives the state’s attorney general broad power to investigate allegations of persistent fraud and illegality in business dealings.
James alleged that Trump, his company and top executives routinely puffed up his annual financial statements to create an illusion that his properties were far more valuable than really were.
By making himself seem richer to banks, insurers and others, Trump qualified for better loan terms, saved at least $168 million with lower interest rates and was able to complete projects he might otherwise not have finished, state lawyers said.
Among other things, according to James’ lawsuit, Trump claimed his Trump Tower penthouse in Manhattan was nearly three times its actual size and worth $327 million, more than the sales price of any other New York City apartment.
Trump Tower in Manhattan.
Trump also valued his Mar-a-Lago estate in Florida based on the idea that the property could be developed for residential use, when he had signed an agreement surrendering rights to develop it for any uses but a club, the lawsuit said.
CASE STATUS:
Judge Arthur Engoron decided the case on Feb. 16, ruling against Trump and ordering him to pay $454 million. The judge issued his searing 92-page decision after a 2½-month trial that saw testimony from 40 witnesses, including Trump.
Trump appealed the verdict on Feb. 26. Rather than having to post the full judgment while he appeals, Trump got the court's OK to put up $175 million, or a little more than 38% of what he owes. Most of the other sanctions Engoron imposed have since been paused while the process plays out.
Engoron found that Trump and the other defendants were liable on claims of falsifying business records, conspiracy to commit insurance fraud, conspiracy to falsify business records and issuing false financial statements.
Two former longtime Trump Organization executives, Allen Weisselberg and Jeffrey McConney, were also found liable for insurance fraud.
Engoron decided the top claim in James’ lawsuit in a pretrial phase known as summary judgment, ruling that Trump and his co-defendants committed fraud by inflating his financial statements.
In all, Engoron ordered Trump and his co-defendants to pay $363.9 million in penalties, or about $464 million with interest.
WHAT DO TRUMP AND HIS LAWYERS SAY?
Trump denies wrongdoing. He called the $454 million fraud decision “weaponization against a political opponent” and complained that he was being penalized for “having built a perfect company, great cash, great buildings, great everything.”
Trump lawyer Christopher Kise said the former president “remains confident the Appellate Division will ultimately correct the innumerable and catastrophic errors made by a trial court untethered to the law or to reality.”
Trump claims he’s worth far more and that his properties are much more valuable than what was reflected on his financial statements. He and his lawyers contend that the outside accountants who helped prepare the statements should’ve flagged any problems and that a disclaimer on the documents insulates Trump from liability.
“There were no victims because the banks made a lot of money,” Trump said after Judge Arthur Engoron issued the decision on Feb. 16.
Trump testified Nov. 6 that he’d built a “a very, very successful company” and that it’s “a disgrace that a case like this is going on.” He derided James as a “political hack,” accusing the Democrat of targeting him to hurt his chances as Republican presidential front-runner. He called Engoron an “extremely hostile judge.”
Former President Donald Trump sits with lawyers Alina Habba and Christopher Kise at his New York civil fraud trial
Trump testified that regardless of what his financial statements said, banks did their own due diligence and would’ve qualified him for the loans anyway. He said there’s no evidence that the terms or pricing would have been any different.
THINGS TO WATCH:
The biggest thing to watch is Trump’s appeal.
The former president appealed the $454 million judgment on Feb. 26.
On March 25, an appeals court said it would halt enforcement of the judgment – meaning Trump won’t have to pay the full amount while the process plays out – if he puts up $175 million.
The appeals court said it will hear arguments in September. A specific date has not been set. But if the schedule holds, it will fall in the final weeks of the presidential race.
Trump has vowed to fight the verdict “all the way up to the U.S. Supreme Court if necessary.”
Because the fraud case was tried in state court, Trump would likely have to exhaust the state appeals process first or ask a federal court to take up the case to even have a chance bring his fight to the U.S. Supreme Court.
A litigant who loses in a federal appeals court or in a state’s high court — in New York, called the Court of Appeals — may then file a petition for a writ of certiorari, which is a document asking the Supreme Court to review the case.
