NEW YORK — Donald Trump will not risk the corporate death penalty after all.
A New York judge spared the ex-president that harshest punishment Friday when he ruled in a civil case alleging that Trump fraudulently misrepresented financial figures to get cheaper loans and other benefits.
Yet Trump was hit hard, facing large fines, outside scrutiny of his companies and restrictions on his loans.
Last year, in a preliminary ruling, the same judge threatened to shut down much of the Republican presidential candidate’s business by calling for the “dissolution” of corporate entities that own many of his major properties. That raised the specter of possible fire sales of Trump Tower, a Wall Street skyscraper and other properties.
But New York Supreme Court Justice Arthur Engoron called off the rescission.
Instead, he said the court would appoint two monitors to monitor the Trump Organization to ensure it does not continue to submit false figures.
“It’s a complete turnaround,” said real estate attorney Adam Leitman Bailey. “There is a big difference between having to sell your assets and a supervisor looking over your shoulders.”
In his ruling, Engoron banned Trump from serving as an officer or director in a New York company for three years, barred him from taking out loans from New York banks and said his company and other defendants must pay hundreds of millions of dollars in fines. .
Here’s how the decision will likely impact his business:
This is possibly the hardest blow of the ruling.
Trump and his companies were told to pay $355 million for “ill-gotten gains.” Trump’s sons, Eric and Donald Trump Jr., who help run the company, were ordered to pay $4 million each. The Chief Financial Officer was ordered to pay $1 million, totaling $364 million.
“I don’t think there’s any way Trump can continue his business as usual,” said Gregory Germain, a law professor at Syracuse University. ‘It’s a lot of money.’
The penalties will put pressure on Trump’s finances at a time when he faces other major legal bills stemming from several criminal cases. Trump separately was hit with $88 million in judgments in sexual abuse and defamation lawsuits brought by writer E. Jean Carroll.
Getting worse.
Trump must also pay interest from the dates he received benefits from his alleged fraud. That so-called bias interest adds another $100 million to Trump’s bills, according to New York’s attorney general.
But don’t expect him to dig into his pocket anytime soon.
Trump lawyers have said they will appeal. That means he doesn’t have to hand over the entire amount yet, although he will have to pay a bond or bond, which could tie up money pending the appeal.
In any case, Trump already has enough cash to pay much of that fine, assuming he tells the truth about his finances. In a deposition in the fraud case, he said he had more than $400 million in cash.
The judge’s summary judgment in September was vague in what exactly he meant by a “dissolution” of Trump businesses. But several legal experts told The Associated Press that, in a worst-case scenario, this could have led to the sale of not only his New York properties, but also his Mar-a-Lago club in Florida, a hotel and condominium building in Chicago and several golf clubs. clubs, including those in Miami, Los Angeles and Scotland.
One of Trump’s lawyers, Christopher Kise, called that possible outcome a “corporate death penalty.”
Even New York’s attorney general, who filed the lawsuit against Trump, had not asked for a “dissolution.”
An Associated Press investigation confirmed how unusual such a sentence would have been had it been carried out: Trump’s case would have been the only major case in nearly 70 years in which similar cases have been closed without any apparent victims showing major financial had suffered losses. The main alleged victim of the real estate magnate’s fraud, Deutsche Bank, had itself not complained of suffering losses.
But Engoron backed down on Friday, saying the monitors were good enough, essentially giving New York Attorney General Letitia James most of what she demanded: bans, monitors and a huge penalty.
The ban on Trump as an officer or director of a New York company signals a major shake-up at the Trump Organization, but the actual impact is unclear.
Trump may be removed from the corner office, but as the company’s owner, his right to appoint someone to act on his behalf has not been revoked.
“It’s not that he can’t influence these companies,” said William Thomas, a law professor at the University of Michigan. “He simply cannot hold actual appointed positions.”
Thomas added that much depends on how the regulator will handle Trump’s attempt to run his company by proxy.
“He may want to walk into the office and tell them what to do, but there will be resistance,” he said. “It could limit the avenues through which he can exercise control.”
Two obvious candidates to help Trump maintain control, his two adult sons, are already off limits. The judge’s ruling banned Donald Jr. and Eric for two years to be officers of New York companies.
Trump is also banned from getting loans from New York-chartered banks, a potentially devastating blow given that so many major lenders are based in the city.
Fortunately for Trump, he has reduced his debt by hundreds of millions in recent years, so he doesn’t need to refinance as much. He has also postponed the maturity of many loans still on the books by several years.
However, the impact on the financing of future companies could be crushing. Without access to banks, he may be forced to use cash to finance new ventures, something real estate tycoons are reluctant to do and won’t be easy given his cash payments.
Yet only banks appear to be banned in the ruling, giving Trump the freedom to borrow from fast-growing alternative financiers, the private equity and hedge funds that make up the so-called shadow banking world.
“I imagine there’s a lot of private equity funds with very little prospects sitting on a pile of dry powder and saying, ‘Hey, we’ll lend you $300 million,’” Columbia Law School professor Eric Talley added. adding “I can imagine the Saudis lending him $300 million.”