(NEW YORK) — With a 92-page order issued late Friday, Judge Arthur Engoron dealt Donald Trump a legal and financial blow that could permanently damage the business empire that propelled him to the presidency.
Beyond the staggering $355 million Trump was ordered to pay – likely to climb to over $450 million with interest – Engoron stripped Trump and his sons of the ability to lead their own businesses or apply for financing for two or three years.
The penalties – which New York Attorney General Letitia James applauded as effective ways to “ensure this fraud cannot continue” – leave the Trump Organization in legal, financial, and personnel limbo, as the former president embarks on a costly presidential campaign amid his ongoing legal battles.
“We will get back to work,” Trump vowed Friday. “We’ll appeal, we’ll be successful, I think because frankly, if we’re not successful, New York State is gone.”
Trump’s lawyers plan to appeal the ruling, vowing that higher courts would reverse Engoron’s ruling.
“If allowed to stand, this ruling will only further expedite the continuing exodus of companies from New York,” a Trump Organization spokesperson said in a statement.
Lengthy appeal
Trump and his lawyers have already vowed to appeal Engoron’s ruling to New York’s Appellate Division, First Judicial Department.
That same court handed Trump an early victory in his case last year by pausing the cancellation of Trump’s business certificates, which Engoron ordered in his September summary judgment ruling. On Friday, Engoron reversed course on that penalty – nullifying part of his past order – but placed the Trump Organization under an independent monitor for at least three years.
“That was a very carefully crafted remedy that the judge put in place,” said former federal prosecutor Josh Naftalis, who said the early penalty was likely vulnerable to an appeal.
“It’s also much harder for the president to get [the new ruling] thrown out on appeal,” Naftalis said.
Engoron’s lengthy opinion also leaned heavily on the facts of the case – including lengthy portions on the testimony from each witness – in a manner that could strengthen the case on appeal, according to trial attorney Ryan Saba.
“This court sat one yard away from the witnesses on the stand, had a clearer view of the witnesses and was able to assess their credibility,” Saba said about Engoron’s role as a factfinder during the jury trial. “The findings in this opinion, if the appeal is based upon a factual challenge, are going to be very difficult to overturn.”
Even if the initial appeal is unsuccessful, Trump could ask New York’s Court of Appeals – the state’s highest court – to weigh in, possibly making the appeal a yearslong process. While that approach would give Trump more time to find money for the fine, the penalty will accrue annual interest and only becomes pricier over time.
Trump’s lawyers have expressed confidence in their future appeal, lauding the First Department’s past rulings limiting the statute of limitations for conduct in the case.
“President Trump will of course appeal and remains confident the Appellate Division will ultimately correct the innumerable and catastrophic errors made by a trial court untethered to the law or to reality,” Trump’s attorney Chris Kise told ABC News.
Not-so-family business
While Trump’s lawyers fight Engoron’s opinion in court, the former president’s namesake business faces its own challenges — beginning with a lack of leadership.
Currently run by senior vice presidents Donald Trump Jr. and Eric Trump, the Trump Organization lost its top executives on Friday when Engoron banned them from leading New York corporations for two years. Engoron also barred Trump from applying to loans from any New York banks, severely limiting Trump’s access to capital.
“He’s being choked on a personnel level, and he’s being choked on a capital level,” Naftalis said.
According to Trump’s most recent financial disclosure, the former president still owes money to Deutsche Bank but took new loans from California-based Axos Bank, potentially offering the president a workaround from the penalty.
Moreover, Engoron’s decision presents a red flag for potential lenders who might distrust any financial statement prepared by the Trump Organization, according to Naftalis.
“I think practically what this means is that a bank is not going to want to do business with them because he effectively has a scarlet letter on his chest,” Naftalis said.
Engoron ordered Judge Barbara Jones to continue monitoring the company as well as appoint a director of compliance for the company, increasing the independent oversight of the company. In addition to Jones’ past responsibilities, Engoron ordered that the Trump Organization would need to get prior approval from Jones before issuing any financial disclosure to a third party.
Potential cash crunch
If Trump’s appeal is unsuccessful in limiting the fines imposed by Engoron, the former president might be unable to find the cash to cover the fine, potentially forcing him to sell off some of his prized buildings. Trump also was ordered to pay columnist E. Jean Carroll $83.3 million last month in a civil suit, adding to his financial obligations.
“That’s a pretty significant hit towards anybody’s overall liquidity, regardless of the total amount of money that you have,” Saba said.
Even if Trump is elected president in nine months, he faces no way out of the disgorgement if his fraud trial appeal fails — and declaring bankruptcy would be unlikely to resolve the financial troubles since legal fines are generally not dischargeable, according to Illinois College of Law Professor Robert Lawless.
“There are remedies the person holding the judgment can do to force payment, everything from, you know, seizing property to taking the wages of the person that owes the money,” Lawless said.
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