Trump's Real Estate Empire Shaken: Former US President Banned From New York Biz, Hit With $365 Mn Fine

Former US President Donald Trump and his real estate empire, a New York judge, Justice Arthur Engoron, has handed down a major defeat in a civil fraud suit. The verdict, a 92-page ruling, not only bars Trump from running any business in the state for three years but also imposes a penalty of $365 million, a figure that New York Attorney General Letitia James claims surpasses $450 million with interest.

This legal setback, coming from Justice Engoron in Manhattan, is a significant victory for Attorney General James, who took to social media to express her satisfaction with the decision. The ruling poses a serious threat to Trump's real estate empire and adds complexity to his political ambitions as a frontrunner for the Republican party's candidacy in the next presidential election.

The verdict also affects Trump's two eldest sons, Donald Trump Jr. and Eric Trump, who were found liable and banned from holding officer positions in a New York company for two years. The legal battle, spanning three months, saw James accusing Trump of inflating asset values on annual financial documents over a decade, allegedly deceiving lenders, including Deutsche Bank AG, to secure more favourable loan terms amounting to hundreds of millions of Dollars.

Justice Engoron expressed his dismay at the defendants' lack of contrition, stating that their actions border on pathological. He emphasized that, despite the serious financial misconduct, Trump is not to be compared to infamous figures like Bernard Madoff.

While Trump is expected to appeal the ruling, the judge's decision could potentially prolong the resolution of the case, extending well beyond the upcoming November election. Even if an appeal is filed, Trump may be required to put up a substantial amount of the damages in the form of an escrow or bond.

The judgment also found former Trump Organization chief financial officer Allen Weisselberg and former company comptroller Jeffrey McConney liable in the suit. The $365 million fine closely aligns with the $370 million sought by Attorney General James, who additionally requested interest repayment on the illegal profits. The figure exceeds the initial $250 million mentioned in the original complaint, based on new evidence presented during the trial.

Breaking down the fine, it is revealed that $168 million was attributed to the money Trump saved by securing lower interest rates on four loans through the alleged misrepresentation of his wealth. The sum also includes $127 million in profit from the Old Post Office hotel deal in Washington and $60 million from the sale of the Ferry Point golf course in New York. The state contends that these transactions would not have been possible without the inflated valuation of Trump's assets. The fine also covers the return of bonuses paid to employees involved in the fraudulent activities.

Trump's attorney, Alina Habba, denounced the verdict as a "manifest injustice," labelling it the outcome of a politically fueled witch hunt. The Trump campaign swiftly seized on the opportunity to fundraise, appealing to supporters for donations, claiming "undeniable election interference." The former president, who has been depleting his war chest for legal fees, is reportedly on track to run out of funds mid-year.

This financial setback follows closely on the back of another blow to Trump's pocketbook, with a federal jury recently ordering him to pay $83.3 million in damages to writer E. Jean Carroll for defamation. These dual financial hits threaten to deplete most, if not all, of the cash Trump claims to have on hand. In a deposition last year, he stated he had over $400 million in cash, but the Bloomberg Billionaires Index estimates his net worth at $3.1 billion, with around $600 million in total liquid assets.

The judge had previously held Trump liable for fraud ahead of the trial, ordering the cancellation of his business certificates, thereby endangering his future control over the vast real estate empire. In the recent verdict, the judge modified his earlier order, allowing an independent compliance officer to determine whether the cancellation should be renewed based on substantial evidence, in consultation with an external monitor. This order had been temporarily put on hold in October by an appeals court while Trump contested it. The ongoing legal battles are undeniably casting a long shadow over Trump's business and political future.

*Inputs from Bloomberg*