Judge Gives Trump Lifeline in NY Fraud Case: Law Professor

Former President Donald Trump and his lawyers Christopher Kise and Alina Habba attend the closing arguments in the Trump Organization civil fraud trial at New York State Supreme Court in New York City on Jan. 11, 2024. Seth Wenig/Getty Images

Former President Donald Trump and his two sons can borrow money and can continue to conduct business in New York as they appeal a judge’s civil fraud verdict, although the judgment against the former president, which is over $450 million, will remain in effect.

State Appellate Court Judge Anil Singh handed down a partial stay in the fraud verdict, blocking a several-year ban on business operations and applications for loans in New York. While the Trump lawyers have not commented on whether or not they will try to get a loan, it could allow the former president to borrow money and post the full bond amount.

The judge handed down an “interim stay” on the order that blocked the defendants from “applying for loans from any financial institution charged and registered” in the state of New York, according to the Wednesday ruling.

Judge Arthur Engoron’s Feb. 16 verdict had barred President Trump, his company, and co-defendants from borrowing money from New York financial institutions. The Republican presidential front-runner’s lawyers had told the appellate court earlier Wednesday that the lending ban had made it impossible for him to secure a bond for the full amount.

Professor’s Response

George Washington University law professor Jonathan Turley wrote it could mean that he still has “an astronomical bond burden but gives him more leeway in financing this critical deposit” with loans.

But he noted later that “a bond would still cost Trump a considerable amount even if he prevails” in the appeal. Meanwhile, he faces other problems because he faces another payment for his appeal in a separate case involving writer E. Jean Carroll, he wrote.

“The problem with the full deposit demand is that there is limited time remaining and the added $90 million for the Carroll case appeal. It is not clear if or how Trump can collateralize his properties for a loan to avoid a distress price sale of properties,” Mr. Turley wrote.

“Banks may have to weigh the merits of a novel case to judge the risk. Ordinarily, such risk or unknowns impact the conditions of the loan,” he continued to say.

President Trump’s lawyers warned he may need to sell some properties to cover the penalty and would have no way of getting them back if he is successful in his appeal. State lawyers said those disclosures suggested the former president was having trouble coming up with enough cash to foot the bill. The penalty is increasing by nearly $112,000 each day because of interest and will eclipse $455 million on Saturday.

“The exorbitant and punitive amount of the judgment coupled with an unlawful and unconstitutional blanket prohibition on lending transactions would make it impossible to secure and post a complete bond,” Trump lawyers Clifford Robert, Alina Habba, and Michael Farina wrote in court papers detailing the $100 million bond offer.

Lawyers for New York Attorney General Letitia James, who brought case against President Trump and his company, argued the court should reject his request, saying he “has insufficient liquid assets to satisfy the judgment.”

In response, the judge denied President Trump’s request to halt the massive financial penalties against him and rejected his offer for a $100 million bond.

“The interim stay is denied as to the enforcement of the monetary judgment and the installation of an Independent Director of Compliance,” he wrote Wednesday.

Judge Singh’s decision is temporary. A five-judge appellate panel will consider President Trump’s request on an expedited basis, with a ruling expected in a few weeks. State lawyers must submit paperwork by March 11. The former president’s lawyers have until March 18 to respond.

President Trump maintains that he is worth several billion dollars and testified last year that he had about $400 million in cash, in addition to properties and other investments, but his legal bills are piling up. In all, the former president has at least $543.4 million in personal legal liabilities from Judge Engoron’s ruling and two other civil court judgments in the last year.

In January, a jury ordered the former president to pay $83.3 million to writer E. Jean Carroll for allegedly defaming her after she accused him in 2019 of sexually assaulting her in the 1990s. President Trump was also ordered to pay Ms. Carroll $5 million a jury awarded her in a related trial last year.

He denies the allegations and also denied wrongdoing in the civil fraud case, arguing that both cases are politically motivated.

Outside of the fraud case, President Trump faces criminal charges in Atlanta, Washington, New York City in Florida. He has pleaded not guilty to all the charges.

In New York City, a judge set a March 25 trial date for a case alleging that President Trump falsified business records for payments he made toward the end of the 2016 campaign. This week, Manhattan District Attorney Alvin Bragg, a Democrat who brought the charges, requested the judge to hand down a gag order on the former president before the trial starts.

“Those remarks, as well as the inevitable reactions they incite from defendant’s followers and allies, pose a significant and imminent threat to the orderly administration of this criminal proceeding and a substantial likelihood of causing material prejudice,” prosecutors wrote.

A Trump campaign spokesman told news outlets that the request is “an unconstitutional infringement on President Trump’s First Amendment rights, including his ability to defend himself, and the rights of all Americans” to hear from the former president, a leading Republican presidential candidate.

The Associated Press contributed to this report.