Donald Trump fined $10,000 for second gag order violation in civil fraud case

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By Jack Queen and Luc Cohen

NEW YORK (Reuters) - Donald Trump was fined $10,000 on Wednesday after the New York judge overseeing his civil fraud trial said the former U.S. president for a second time violated a gag order barring him from disparaging court staff.

Justice Arthur Engoron had imposed the order on Oct. 3 after Trump shared on social media a photo of the judge's top clerk posing with U.S. Senate Majority leader Chuck Schumer, a Democrat, and falsely called her Schumer's "girlfriend."

During a break on Wednesday in the case brought by New York Attorney General Letitia James concerning Trump's business practices, Trump told reporters in a hallway, "This judge is a very partisan judge, with a person who's very partisan sitting alongside of him, perhaps even much more partisan than he is."

Engoron, surmising that Trump was referencing his clerk, called the comments a "blatant" gag order violation.

Trump's hallway remarks came as Michael Cohen, his onetime lawyer and fixer, testified for a second day against him.

Before being fined, Trump briefly took the witness stand and told Engoron he was referring to "you and Cohen" during his remarks. The judge rejected the idea, echoed by Trump's lawyer Christopher Kise, that the "partisan" person Trump mentioned was Cohen.

"The idea that that statement would refer to the witness, that doesn't make sense to me," Engoron said. "Don't do it again or it will be worse."

Trump, the frontrunner for the Republican nomination to challenge Democratic President Joe Biden in the 2024 U.S. election, walked out of the courtroom after being fined.

On Oct. 20, Engoron fined Trump $5,000 after finding he had not taken down a post disparaging the clerk, warning that future transgressions could bring "far more severe" sanctions including jail. In originally imposing the gag order, Engoron said comments against his staff were "unacceptable, inappropriate and will not be tolerated under any circumstances."

Engoron's clerk has sat next to the judge during the trial, standard practice in a New York state court.

Alina Habba, one of Trump's lawyers, told Engoron she saw the clerk appear to roll her eyes during Cohen's testimony, and that this was "completely inappropriate."

COHEN DEFENDS CREDIBILITY

The trial concerns allegations that Trump and his family business, the Trump Organization, unlawfully manipulated asset values and his net worth to dupe lenders and insurers. The case could break up Trump's business empire.

Cohen's two days of testimony marked his first face-to-face encounters with Trump in five years. Trump "arbitrarily" inflated the value of real estate assets to secure favorable insurance premiums, Cohen testified on Tuesday.

Since cutting ties and becoming one of Trump's fiercest critics, Cohen has written two books and created a political podcast.

Cross-examined by Habba on Wednesday, Cohen acknowledged having a financial incentive to criticize Trump, but defended his credibility. He rejected Habba's contention that he has "made a career" of attacking Trump and embellishing criticism for personal gain.

"The more outrageous your stories are about President Trump, the more money you make," Habba said. "Is that accurate, Mr. Cohen?"

"No," Cohen responded.

A lawyer for Trump's adult son Eric Trump - also a defendant in the case - asked Engoron to immediately enter a verdict in the defense's favor based on what he called Cohen's contradictory testimony.

Cohen said on Tuesday Trump told him to inflate his asset values but said during 2019 congressional testimony he did not recall whether he received such a directive.

Engoron denied the request, saying it would be "absurd" to rule in the defense's favor midway through trial based on an "equivocal" statement by one witness.

"There's enough evidence to fill this courtroom," Engoron said.

Trump has denied wrongdoing in the case. Trump separately has pleaded not guilty in four criminal cases this year.

Cohen's testimony could bolster the attorney general's case though his admitted record of deceit could undermine his credibility before Engoron, who alone will decide the outcome of the bench trial. In 2018, Cohen pleaded guilty to tax fraud, campaign finance violations and perjury and was sentenced to three years in prison.

Before the trial's Oct. 2 start, Engoron found that Trump fraudulently inflated his net worth, and ordered that companies that control crown jewels of his real estate portfolio, including Trump Tower in Manhattan, be dissolved. That ruling is on hold while Trump appeals.

The trial largely concerns damages. James wants at least $250 million in fines, a permanent ban against Trump and sons Eric and Donald Jr. from running businesses in New York and a five-year commercial real estate ban against Trump and the Trump Organization.

(This story has been refiled to replace the word 'violence' with 'finance,' in paragraph 23)

(Reporting by Jack Queen and Luc Cohen in New York; Editing by Will Dunham and Noeleen Walder)