The $355 Million Trump Fraud Fine Is Even Worse Than It Sounds

The New York state judge presiding over the civil fraud trial against Donald Trump brought down the hammer with an appropriately harsh $354,868,768 judgment against him for a decade’s worth of lies at the Trump Organization. With interest, that total is over $435 million–and the total sum awarded surpasses $450 million when damages against the other defendants are included. This is the latest blow against the former president and current Republican front-runner as his legal problems crescendo. That is because the steep financial penalty was combined with the court in effect banishing Trump from conducting business in New York for three years, as well as his sons Don Jr. and Eric Trump from doing so for two years. Both sons are also on the hook for over $4 million each. Engoron’s ruling was a staggering defeat for Trump, forcing him to relinquish the legal reins of his eponymous company, though it fell short of a complete victory for New York Attorney General Letitia James because Judge Arthur Engoron refused to apply the corporate death penalty. That is, he did not order the cancellation of the Trump businesses’ certificates of doing business. That imperfect outcome for James’ office, however, may be a blessing in disguise. It demonstrates Engoron’s careful analysis of the evidence and will help rebut attacks on his objectivity in both the appellate court and the court of public opinion.

Let’s review how we got here. In September 2022, following an extensive three-year investigation, James filed a complaint against Donald Trump, various companies known collectively as the Trump Organization, and five of its senior executives: his children Eric, Don Jr., and Ivanka, along with Allen Weisselberg and Jeffrey McConney. Ivanka was later dismissed as a defendant, but in September 2023, the court granted partial summary judgment finding that each of the five remaining individual defendants was responsible for persistent and repeated fraud at the Trump Organization through their preparation and certification of financial statements that indefensibly (and sometimes comically) overvalued company assets. The court set the case for trial against the five defendants on several unresolved issues. It also appointed an independent monitor to oversee the Trump Organization and canceled its business certificates and those of any other entity controlled or owned by the defendants—meaning those companies could no longer operate. An appellate court, however, delayed canceling the certificates pending the outcome of the trial. Taking the hint, Judge Engoron has now reversed himself.

The 44-day trial, which began on Oct. 2 and wrapped up with final argument on Jan. 11, focused on six remaining causes of action—falsifying business records, falsifying financial statements, insurance fraud, and three counts of conspiracy, one for each of these three offenses—and the appropriate penalties. The three core legal issues at the heart of the trial were whether each defendant was responsible for the misrepresentations about the Trump Organization’s financials, the misrepresentations were intentional, and the misrepresentations mattered. The attorney general’s argument boiled down to “the myriad deceptive schemes [the defendants] employed to inflate asset values and conceal facts were so outrageous that they belie innocent explanation.” In response, each of the five defendants sought to blame outside accountants for preparation of the financial statements and establish the inherent imprecision and subjectivity of valuing real estate. While each defendant individually argued there was insufficient evidence proving his respective intent to defraud, they collectively argued that this was a victimless fraud.

Although the defendants scored several points during trial, it was difficult if not impossible to justify the overinflated financial statements, effectively forcing Trump (and the other defendants) into a “we lied but so what” defense. That argument was doomed to fail because—whether phrased as Trump’s shouts of “No victims, No Fraud, No Crimes, Happy Banks and Insurance Companies” or his lawyer’s more sophisticated wording that the financial (mis)statements caused “no harm to the public … or implicated the public market in any way”—victim loss is not legally required. Ultimately, Engoron appropriately found that, as one commentator put it, “breaking the law is breaking the law.”

The court’s verdict ruled against Trump, Eric, and Don Jr. on five of six counts, but did not hold them liable for committing insurance fraud. The verdict found Weisselberg and McConney liable on all six counts. The evidence was thin connecting Trump and his sons to the negotiations with the insurance companies and the representations made to obtain those policies, whereas Weisselberg and McConney systematically presented fraudulent information to insurers. Some may question the attorney general’s charging the three children, but the verdict against the sons validates the decision. That the court found no liability against the Trump family on one count demonstrates that Judge Engoron evaluated the evidence fairly and credited specific arguments made by the defense—which will protect the record on an appeal likely to challenge the sufficiency of the evidence and lob baseless allegations of judicial bias.

The nearly $355 million disgorgement was, as the law requires, based on the Trump Organization’s ill-gotten gains, including reduced interest rates on loans and profits from two deals that would not have occurred without Trump having lied about his financials. The office of the attorney general had requested $370 million plus interest which, compounded at the state statutory rate of 9 percent, could have been hundreds of millions more. As importantly, the judgment includes injunctive relief barring Trump from serving as an officer or owner for three years and keeping the Trump Organization under the control of an outside monitor for three years to ensure that it starts telling the truth about its assets. Judge Engoron stopped short of dissolving the Trump Organization, a punishment that would have appeared incongruous with the history of New York’s corporate death sentence.

Trump has vowed to appeal, but nothing in the record stands out that would overturn the judgment. Additionally, for Trump to delay enforcement of the judgment requires posting a bond in an amount equal to the judgment (called an “undertaking” under New York law). In light of the recent $83 million judgment in the E. Jean Carroll defamation case, the immediate question is whether Trump has the liquidity to post a $355 million bond. If not, the judgment will go into effect, and Trump may have to sell assets to raise the cash needed to pay it.
Trump cannot easily turn to his political donations to pay the judgment. It is illegal to use campaign funds to pay an expense that is totally unrelated to a campaign, and although Trump super PACs spent approximately $50 million of donor money on legal bills in 2023 defending the four criminal indictments, those cases are all connected to his candidacy for or tenure as president. It would be trickier for a super PAC to pay for this business debt, especially because Trump cannot legally control those funds. But it would be naïve to think Trump wouldn’t try to violate the spirit, if not the letter, of campaign finance law. And he could always make a direct appeal to his massive donor base to help pay this judgment, although this amount is a huge sum to raise, even for Trump.

In addition to the personal financial squeeze and beginning of the end for the Trump Organization, the judgment is the latest omen of looming legal problems that bear political significance. Trump’s inability to control himself is hurting his cause. In the Carroll trial, Trump’s courtroom behavior helped seal his fate with the jury. In the fraud trial, Trump ignored Judge Engoron’s instructions and ranted about how he should receive damages from the “political witch hunt.” This type of absurd argument has begun to surface in the criminal cases. Despite Trump constantly whining about being a political victim, three independent and objective fact-finders—two juries and a judge—have ruled against Trump in the three cases that have gone to trial: the recent Carroll defamation suit, the earlier 2023 case in which a jury found Trump sexually abused Carroll, and the New York civil fraud case. Those verdicts are based on the evidence and the law in a courtroom where, unlike a political rally, facts matter but conspiracy theories and baseless claims do not.

This judgment, along with the Carroll verdicts before it, could hurt Trump’s political brand. He rode to the 2016 nomination and eventually the White House as a rich, successful businessman who wins, but he is now being exposed as a fraud who keeps losing. Although his legal woes have strengthened his standing among the Republican electorate, his image is not as impervious with the broader American public. Polling has shown that a criminal conviction could severely damage his chances in the general election, and while this judgment is not going to put Trump in handcuffs, his team is certainly not celebrating. His reelection chances may depend on surviving the upcoming prosecutorial barrage, but this legal defeat was a painful blow to his campaign as well as his pocketbook.