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NEW YORK — Donald Trump won’t face the corporate death penalty after all.
A New York judge on Friday ruled against the former president in a civil lawsuit alleging he fraudulently falsified financial numbers to obtain cheaper loans and other benefits, sparing him from punishment in the worst cases. It was.
Still, Mr. Trump faced heavy criticism, facing hefty fines, no oversight from his own company, and borrowing limits.
In a pretrial ruling last year, the same judge called for the “dissolution” of the corporation that holds many of the Republican presidential candidate’s most significant assets and threatened to shut down many of his businesses. That raised concerns that Trump Tower, Wall Street skyscrapers and other real estate could be sold off.
However, New York State Supreme Court Justice Arthur Engoron halted the dissolution.
Instead, he said the court will appoint two monitors to ensure the Trump Organization does not continue to submit false numbers.
“It’s a complete reversal,” said real estate lawyer Adam Reitman Bailey. “There’s a big difference between having to sell your assets and having a supervisor looking over your shoulder.”
In his ruling, Mr. Engoron barred Mr. Trump from serving as an officer or director of any New York company for three years, prohibited him from receiving loans from New York banks, and ordered that Mr. Trump’s companies and other defendants be subject to several He said he must pay a $1 billion fine. .
Here’s how this decision could affect his business.
cash drain
This is perhaps the biggest blow from this ruling.
Trump’s sons, Eric Trump Jr. and Donald Trump Jr., who help run the business, have been told that Trump and his companies must pay $355 million for “unjust enrichment.” were each ordered to pay $4 million. He was ordered to pay $1 million, bringing the total judgment to $364 million.
“I don’t see any way that Mr. Trump can continue with business as usual,” said Gregory Germain, a law professor at Syracuse University. “That’s a lot of money.”
The fine would hit Trump’s finances at a time when he faces other costly legal charges stemming from several criminal cases. Separately, Trump was awarded $88 million in damages in a sexual abuse and defamation lawsuit filed by author E. Jean Carroll.
becomes terrible.
Trump will also be required to pay interest from the date he received the proceeds of the alleged fraud. The so-called prejudgment interest will add an additional $100 million to Trump’s claim, according to the New York attorney general.
But don’t expect him to dig into your pocket right away.
President Trump’s lawyers said they would appeal. That means he doesn’t have to hand over the entire amount yet, but he will have to post bail or escrow, which could leave the cash in his hands while he awaits an appeal.
In any case, assuming Trump is telling the truth about his finances, he already has enough cash to pay most of that fine. In a deposition in the fraud case, he said he had more than $400 million in cash.
Sale of Trump real estate prohibited
The judge’s summary judgment in September was vague on what exactly “dissolution” of President Trump’s businesses meant. But multiple legal experts told The Associated Press that a worst-case scenario could lead to the sale of not only the New York property, but also the Mar-a-Lago club in Florida, a hotel and condominiums in Chicago, and several golf courses. He said it was possible. Including clubs in Miami, Los Angeles and Scotland.
Christopher Kise, one of Trump’s lawyers, said the potential outcome is “corporate death penalty.”
Even the New York attorney general who filed the lawsuit against Trump has not called for a “dissolution.”
An Associated Press investigation confirmed how unusual such a punishment would be if carried out at all. Trump’s case would have been the only major business in nearly 70 years of similar cases to be shut down with no clear victims showing significant financial loss. Deutsche Bank, which is said to be the main victim of the real estate mogul’s fraud, has not claimed to have suffered any losses.
But Engoron backed off Friday, arguing that the oversight was sufficient, essentially handing down New York Attorney General Letitia James most of what she had sought: a ban, oversight and a huge fine.
3 year ban
The ban on Mr. Trump from serving as an officer or director of a New York company signals major changes to come at the Trump Organization, but the actual impact is unclear.
Trump may be removed from his corner office, but his right as a business owner to appoint someone to represent him has not been revoked.
“It’s not that he can’t have influence in these companies, it’s just that he can’t actually hold an appointed position,” said William Thomas, a law professor at the University of Michigan.
But Thomas added that much will depend on how the monitor handles Trump’s attempts to run the company by proxy.
“He may want to go into the office and tell them what to do, but there will be pushback. That could limit the levers of control he has,” he said.
Two obvious candidates who would help Trump stay in power, including his two adult sons, are already off limits. The judge’s ruling barred Donald Jr. and Eric from serving as directors of New York companies for two years.
business loan
President Trump is also prohibited from obtaining loans from New York-chartered banks, a potentially devastating blow since so many major financial institutions are based in New York.
Fortunately for Trump, he has reduced his debt by hundreds of millions of dollars in recent years, so he doesn’t need to refinance much. He also pushed back the maturities of many loans still on the books by several years.
However, it can have a devastating impact on future business financing. Without access to banks, he may be forced to use cash to finance new ventures, something the real estate mogul doesn’t like and is difficult to do given the cash payments. right.
Still, the ruling says only banks are prohibited, leaving Mr. Trump free to borrow from the burgeoning alternative lenders such as private equity and hedge funds that make up the so-called shadow banking world.
“I can’t imagine a private equity fund with very few prospects sitting on a pile of dry powder and saying, ‘Hey, we’ll lend you $300 million,'” said Eric Talley, a professor at Columbia Law School. “We can do it,” he said, adding: Saudi Arabia loaned him $300 million. ”
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