Judge Expected to Issue Verdict in Trump NY Civil Fraud Case

Former President Donald Trump sits in New York State Supreme Court during the civil fraud trial against the Trump Organization, in New York City on January 11, 2024. Peter Foley/AFP via Getty Images

New York Supreme Court Justice Arthur Engoron is set to issue written judgment in the civil fraud case brought by New York Attorney Letitia James against Trump Organization executives including former President Donald Trump, potentially dissolving his real estate empire.

The trial, which ended in early January, was a bench trial as the relief sought by the state can only be granted by a judge. Judge Engoron said he hoped to issue a ruling by Jan. 31.

Former Trump Organization CFO Allen Weisselberg, former Trump Organization comptroller Jeff McConney, and Trump Organization executive vice presidents Eric Trump and Donald Trump Jr. were charged as codefendants.

The attorney general had outlined a long list of penalties, and the judge had already partially ruled in favor of the state. This is what President Trump could face.

$370 Million Disgorgement

When the attorney general brought the case in September 2022, the petition sought $250 million in disgorgement, or the difference in what the state argues the Trump Organization would have paid if its statements of financial condition (SFCs) from 2011 to 2021 were adjusted.

The state is now seeking $370 million with 9 percent annual interest.

The SFCs are at the center of the case: The Trump Organization produced them annually as a marketing piece used during deals, and they are not a standard or required financial document.

The organization executives would summarize the values of Trump Organization assets, adding up to a total net worth figure for President Trump.

The attorney general argued that these figures were routinely inflated, some years up to $2.2 billion, and are the basis for the civil fraud claims.

“Disgorgement focuses on the gain to the wrongdoer as opposed to the loss to the victim,” the attorney general’s office argued in a court filing.

The $370 million figure breaks down to $139 million in profit from the sale of the Old Post Office in Washington, $60 million from the sale of the Ferry Point gold development, and $2.5 million in bonuses paid to Mr. Weisselberg and Mr. McConney, and about $168 million in interest savings.

The state also asked that Donald Trump Jr. and Eric Trump be individually liable for $4 million from the Old Post Office sale, and Mr. Weisselberg and Mr. McConney pay the sums of their severance packages.

5-Year Ban

The state sought five-year bans on defendants Eric Trump and Donald Trump Jr. from holding executive posts in New York, less than the lifetime ban the state seeks for the other defendants.

It is also seeking to bar all defendants for five years from applying for any loans from any New York-based lending institutions, and from entering into any New York-based commercial real estate acquisitions.

Lifetime Ban From Business

The state argued that all Trump Organization executives perpetuated fraud on a purposeful and repeated basis, and “have proven themselves incapable, time and again, of following the law,” thus requiring permanent injunctions in several regards.

It asks the court to order safeguards on Trump Organization’s internal rules regarding finances and to prohibit all defendants from creating new financial records.

The state also seeks to permanently bar President Trump, Mr. Weisselberg, and Mr. McConney from “participating in the real estate industry” or serving as an officer or director in any New York corporation or legal entity.

In a supplemental letter, state attorneys compared the situation to former pharmaceutical executive Martin Shkreli’s lifetime ban from the pharmaceutical industry.

Ongoing Monitorship

A court-appointed third party has already monitoring Trump Organization for the past 14 months, and the state asked that this continue for at least five years.

Justice Engoron had requested the monitor, retired Judge Barbara Jones, to issue a report ahead of his decision, and Judge Jones recommended ongoing monitorship of Trump Organization, characterizing its financial reporting as inconsistent with room for errors and misrepresentation.

Trump attorneys blasted Judge Jones in a response letter, accusing her of seeking a paycheck.

If the judge grants this, he would also set the authority of monitor, address whether she would continue as a monitor or if another would be appointed, and address whether orders may be pending depending on the future reports of the monitor.

Cancelled Business Certificates

Justice Engoron had issued a summary judgment in the state’s favor in September 2023, about a week before the trial began, finding President Trump liable for fraud.

Trump Organization is not a corporation, but a collection of several companies holding various properties and projects.

The judge had swiftly ordered the cancellation of these business certificates for the Trump Organization Inc, Trump Organization LLC, DJT Holdings LLC, DJT Holdings Managing Member LLC, Trump Endeavor 12 LLC, 401 North Wabash Venture LLC, Trump Old Post Office LLC, 40 Wall Street LLC, and Seven Springs LLC.

The order proved ambiguous as defense attorneys asked during a pre-trial hearing whether this would mean the sale of properties held by these companies under bankruptcy law by a third party, and noting that some of these hold only one property, in one case the personal home of one of the Trumps.

The judge said he did not know during the hearing and would respond at a later time, but the enforcement of the cancellations was paused before the start of trial by an appeals court.

After the trial court’s final judgment is issued, the stay is likely to be lifted, although defense attorneys have said they will appeal the final ruling, potentially pausing some or all of the penalties.