Trump Ordered To Pay $364 Million for Inflating His Assets in Civil Fraud Trial
Despite brazenly lying on financial documents and inventing valuations seemingly out of thin air, Trump's lender did not testify that it would have valued his loans any differently.
On Friday afternoon, New York County Supreme Court Justice Arthur Engoron ordered Donald Trump, his companies, and some executives to pay $364 million. The former president is also barred from serving as an officer or director of any New York business for three years. Trump's lawyers indicated even before the judgment came down that they planned to appeal.
The judgment, part of New York Attorney General Letitia James' civil fraud lawsuit against Trump and his business, the Trump Organization, concerned fraudulent statements made on loan applications that allegedly allowed the former president to get more favorable terms than he would otherwise have qualified for.
For example, in statements submitted to financial institutions, Trump routinely overstated the market value of his properties—including Trump Tower and his Mar-a-Lago beach resort, among others—as Engoron determined in a September ruling. For example, Trump listed Mar-a-Lago's value as high as $612 million, even though the Palm Beach County tax assessor listed its value between $18 million and $27.6 million. Trump Park Avenue contains 12 apartments, whose value Trump reported to lenders at over $3.8 million apiece. But Engoron noted in his September ruling that the units are rent stabilized; taking this into account, the actual appraised value of the apartments is $62,500 per unit.
Most brazenly, Trump reported the size of his penthouse apartment in Trump Tower at 30,000 square feet, when the actual size was just under 11,000 square feet—inflating its valuation by over $200 million.
"The case centered on financial statements that Trump submitted to lenders to help him acquire hundreds of millions of dollars in financing that he used to expand his portfolio of hotels and golf resorts," Jacob Gershman reported at The Wall Street Journal. "Trump borrowed the money at bargain rates after promising to maintain a net worth of at least $2.5 billion."
Key to this net worth, of course, were the documents at issue that routinely overstated the value of Trump's assets. James alleged in her lawsuit that Trump overstated his net worth by as much as $2.2 billion.
While Trump's fabrications were audacious, it's not clear who was actually harmed by them. "Trump never defaulted on the loans, and no one from Deutsche Bank, his principal lender, testified that they would have priced the loans any differently had they known of the alleged inaccuracies," Gershman wrote. "The bank came up with its own, much lower value estimates of Trump's properties using his financial statements as a starting point for its own credit-risk analysis." Trump's lawyers argued that "lenders made a profit and never alleged any breach of contract."
