A whopping $355 million judgment and other punitive measures in the New York civil fraud trial against former president Donald Trump, his sons and the Trump Organization will deal a very big — but maybe not fatal — blow to their New York State-based businesses.
At least not directly or immediately.
There is still a lot to parse from the ruling and its potential impact on Trump’s business empire, but here’s what we know so far.
Trump and his sons Donald Jr. and Eric will not be allowed to hold officer or director roles at their New York-based businesses for the foreseeable future — Trump for three years, his sons for two. That’s thanks to a ruling Friday from Judge Arthur Engoron in a case brought by New York State Attorney General Letitia James against Trump and his businesses for filing fraudulent financial statements to obtain loans and insurance at favorable rates. Nor will Trump or the Trump Organization be allowed to borrow money from financial institutions chartered or registered in New York State for three years.
“Trump still owns his businesses. But he and his family are really cut off from running and maintaining them,” said Will Thomas, assistant professor of business law at the University of Michigan’s Ross School of Business. “Their avenues for control have shrunk dramatically.”
The ruling on paper, Ross added, “strikes me as a really dramatic lock on his ability to access capital.”
It could have been worse.
They also had been facing the possibility of losing their state business certificates, which would have prevented them from operating their many limited liability corporations in New York. And Trump himself might have been permanently barred from the New York state real estate industry, something James had requested.
“The bottom line is the New York attorney general’s office got the money but not the permanent bans [on the Trump businesses] that they wanted,” said David Cay Johnston, a Pulitzer Prize-winning journalist and the author of three books on Trump.
Instead, the final ruling calls for the Trump Organization to be run essentially by an independent monitor, who was court appointed in 2022, and a new independent compliance director.
The ruling extended the monitor’s role “for no less than three years.”
That new governance structure is the reason Judge Engoron cited for not cancelling the Trumps’ business certificates. “(A)s going forward there will be two-tiered oversight, (by) an Independent Monitor and an Independent Director of Compliance, of the major activities that could lead to fraud, cancellation of the business licenses is no longer necessary,” he wrote in the ruling.
Trump is expected to appeal the judgment. But the fact that Engoron did not effectively dissolve his businesses and instead called for independent oversight may hurt his chances of winning. “The court’s decision to impose governing requirements [on Trump’s businesses] makes the injunction more likely to survive appeal,” Thomas said.
The $355 million that Trump and his companies must pay is a disgorgement of ill-gotten gains from the fraudulent practices for which Engoron found him liable. And coupled with the interest that will be charged retroactively to dates the judge specified in the ruling, the total amount may top $450 million, according to estimates from the NYAG’s office.
Trump is expected to appeal the judgment. He has two avenues to do so. First, at the Appellate Division and then at the New York State Court of Appeals. That will take time and could mean the case won’t be put to bed until 2025 at the earliest.
But he can’t put off paying the $355 million plus interest. It will essentially need to be kept in escrow during the appeals process to ensure the plaintiff gets the money Engoron ordered if his full judgment is upheld.
It’s not clear where it will come from. Trump, who claimed last year to have $400 million in cash, could put it up himself if his assertion is true.
But it’s also the case that he is facing another hefty $83.3 million verdict in the civil trial he recently lost to E. Jean Carroll.
So he could seek to borrow money and use a big asset (e.g., one of his buildings) as collateral.
Given that Engoron’s ruling bars him from getting a loan from any financial institution registered in New York — which likely rules out most major international banks with offices in New York, Thomas noted — that may mean he would need to get a personal loan from a non-financial institution or an unregistered financial company.
Or he might need to get help from a very high net worth individual, who also may seek a Trump business asset as collateral to secure the loan.
But lending to Trump carries its own special risks.
“Who would lend to Donald Trump after this ruling and given that he’s got four criminal trials?” asked Johnston.
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