After 40 witnesses and 43 days of testimony, here's what we learned at Trump’s civil fraud trial
NEW YORK — After hearing from 40 witnesses over two and a half months, Judge Arthur Engoron sounded almost wistful as he presided over the final day of testimony in Donald Trump's civil case fraud trial.
“In a strange way, I'm going to miss this process,” he said Wednesday.
Things are not over in the case, in which New York Attorney General Letitia James has accused Trump of inflating his wealth based on financial statements used to secure loans and close deals.
Closing arguments are scheduled for early January. The judge has already ruled that Trump is liable for making fraudulent statements, but other claims and a possible final sentence have yet to be decided. Trump denies all allegations. He says the financial documents actually understate his net worth and contain caveats that should protect him from liability.
The trial has provided new insight into Trump's finances, his dealings with lenders, his ambition to become an NFL owner, and some of the fuzzy math — faulty or intentional — at issue in the case.
The trial also provided a glimpse into Trump's political and legal strategies as his court and campaign calendars increasingly overlap. The first of his four criminal trials is scheduled for March.
One thing is clear: So far, Trump's legal troubles have not affected his standing in the Republican presidential race. He remains the leader by a wide margin in the national and early polls. In fact, his lead is stronger than it was before his first criminal indictment in March.
Here are some other things we learned from the trial:
Trump was not required to be in court except on the one day he testified, but he showed up as a spectator eight times.
Each time, he turned his appearance into a de facto campaign stop, complaining outside the courtroom that he was being persecuted. He had the same message during his often challenging appearance on the witness stand on November 6.
“This is a very unfair process, very unfair. And I hope the public watches it,” Trump said. His testimony prompted a frustrated Engoron to warn: “This is not a political rally.”
Trump did not go to court last year when his company was convicted of tax fraud. He also failed to appear for a civil trial in which a jury found him liable for sexually assaulting writer E. Jean Carroll and ordered him to pay her $5 million.
Why participate in the fraud process? “Because I want to point out to the press how corrupt it is,” Trump said.
Outside the court he regularly insulted the judge and even the chief clerk of Engoron. After Trump made a false, disparaging comment on social media about the clerk's personal life, Engoron imposed a silence order, banning trial participants from further commenting on court staff.
The judge later ruled that Trump had repeatedly violated the order and fined him $15,000.
Much of the trial focused on the hundreds of millions of dollars that Deutsche Bank had loaned to Trump's company starting in 2011.
The state says Trump talked his way into financing, at attractive interest rates, by increasing his wealth. The defendants say no and claim the bank was happy with the loans. All were paid off, the last during the trial.
Several Deutsche Bankers said they expected unaudited financial statements like Trump's to be generally accurate, but interpreted them as estimates and made internal “haircuts” that sometimes removed billions from Trump's wealth, leaving it still well over $2 billion remained.
Dueling experts debated whether these adjustments showed that the bank did not rely on Trump's numbers and that he was still wealthy enough to qualify for the loans (as the defense claims) or whether the “haircuts” in were essentially standard deductions that did not compensate for his alleged inflation (according to the state).
Would Deutsche Bank have done anything differently if it had received lower grades to begin with? The bankers' answers were often oblique.
For example, when retired Deutsche Bank risk management officer Nicholas Haigh was asked whether the loans were a good lending decision, he countered that it was “a subjective question” but said the bankers had done a good job analyzing the information they had. But he also said the bank needs a realistic picture of the risk to set the interest rate.
What was clear was that Deutsche Bank's private wealth management division, which caters to wealthy people, was eager to make loans to Trump.
Testimony and internal documents showed that the bankers courted him as a “whale” of a client who could put them in touch with “the richest people on earth.” In addition to the loan deals, Trump also received millions of dollars in bank deposits, and bankers provided him with cross-selling of lucrative fee-based services such as estate planning.
There was little mention during the trial of Trump's tempestuous previous relationship with another part of Deutsche Bank. During the 2008 financial crisis, Trump defaulted on a loan made by Deutsche's commercial real estate division for a hotel and apartment skyscraper in Chicago. He sued, accusing the bank of “predatory lending.” Deutsche has contradicted. They settled and the bank forgave much of the loan.
Not long after, Trump's company again approached Deutsche's commercial real estate group with an offer to purchase the Doral golf resort near Miami.
But the Trump Organization found a significantly lower rate through Deutsche's private wealth management bankers, who were introduced to the Trumps by the former president's son-in-law, Jared Kushner. The private bankers eventually made loans to Doral, a Washington hotel, and even to the same Chicago skyscraper that had sparked the lawsuit.
The deals required guarantees that Donald Trump would pay personally if necessary, so conditions were placed on his assets and sometimes on his liquidity. Hence the audit of his financial statements, which he often had to submit annually.
Before vying for the White House, Trump tried to buy the Buffalo Bills, offering $1 billion for the NFL franchise in 2014. Emails aired during the trial shed new light on how Trump was viewed behind the scenes.
Investment bankers involved in shopping the team said Trump's history of owning Atlantic City casinos and his leadership role, as owner of the New Jersey Generals, in the rival USFL's 1980s antitrust lawsuit against the NFL gave him “little chance of being cleared” by the league. .
“That said, his strong statement of support does not harm the process,” then-Morgan Stanley managing director K. Don Cornwell wrote to colleagues in April 2014.
“He probably has the money,” another Morgan Stanley banker, Jeffrey Holzschuh, wrote back, adding, “but with him you never know the real facts.”
Trump claimed in an initial offering letter that his net worth was more than $8 billion, but never provided his financial statements. Trump's then-lawyer Michael Cohen told the bankers that the financial data would not be released until Trump was “the final bidder.”
Instead, during a presentation to the bankers, Trump handed out copies of one of Forbes magazine's lists of wealthy celebrities, Cornwell testified.
Trump offered $1 billion in cash for the bills. The owners of the National Hockey League's Buffalo Sabers, Terry and Kim Pegula, eventually purchased the Bills for $1.4 billion.
When he ran for president in 2016, Trump told the AP that if he had bought the Bills, “I wouldn't be doing what I'm doing.”
He built it. He lived in it. Yet the former president's triplex penthouse in Trump Tower was valued in his 2012-2016 financial statements as if it were 2,800 square feet, nearly three times its actual size.
How did this happen, especially since Trump signed a 1994 document that correctly stated 1,022 square feet?
Former Trump Organization controller Jeffrey McConney said he got the 30,000-square-foot figure from Kevin Sneddon of the company's real estate sales department. Sneddon said he got it from former Trump Organization chief financial officer Allen Weisselberg, who said he didn't “walk around knowing the size” of the apartment.
As for Trump, he claimed that “they just made a mistake.” He also suggested that the high number is “not that far off” if we take into account his access to the building's roof.
“As we sit here now, do you know how big your apartment is?” asked State's Attorney Kevin Wallace.
“Obviously because of the process I've heard them say 11 to 12 to 13,000 feet,” Trump responded.
After Forbes publicly reported the discrepancy in 2017, the Trump Organization adjusted the size and lowered the estimated value from $327 million to about $117 million.
The lawsuit includes six claims, including allegations of conspiracy and insurance fraud. James is demanding fines of more than $300 million and wants Trump to stop doing business in New York.
Both sides have until January 5 to submit written arguments. They will return to the courthouse for arraignments on Jan. 11, just four days before the Iowa caucuses begin.
Engoron said he hopes to have a decision by the end of January.
Meanwhile, Trump's lawyers are appealing Engoron's pretrial fraud ruling and preparing to appeal if the judge rules against them again on the remaining issues.
When Trump's lawyers said this week they were laying the groundwork for that, the judge joked: “Are you going to appeal?”
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Associated Press writers Jill Colvin and John Wawrow contributed to this report.