With Donald Trump’s legal liabilities mounting and a presidential campaign to run, the loss of control of his company couldn’t have come at a worse time.
After a New York judge ordered the Trump Organization to pay $364 million in fines and barred the former president from any role in running a business in New York State for three years, Trump now finds himself further in a financial angle with fewer options on how to do it. maneuver.
“It will have a huge impact on how he runs his business,” said Randy Zelin, a law professor at Cornell University and a veteran criminal defense lawyer with experience in complex financial matters. “But it will also provide a solid basis for an appeal.”
New York Attorney General Letitia James had asked New York State Supreme Court Justice Arthur Engoron to impose a $370 million financial penalty against the Trump Organization and also to ban Trump and his children Ivanka, Donald Jr. .and Eric Trump to run any business in New York state, where his real estate empire has long been based.
Engoron’s ruling banned Donald Trump Jr. and Eric Trump from being involved in operating any business in the state for two years. The judge also ordered that former U.S. District Court Judge Barbara Jones, who has served as an independent monitor of the Trump Organization since 2022, continue in that role with expanded powers for the next three years. The ruling also ordered the appointment of an independent compliance officer within 30 days.
“The Trump Organization will be required to obtain prior approval – and not, as things now stand, a subsequent review – from Judge Jones before making any financial disclosure to third parties, so that such disclosure can be reviewed in advance payment for any material misrepresentations,” reads the ruling. Light.
The ruling also barred the Trump Organization from applying for loans from a New York financial institution for three years.
In a statement, Trump called the ruling “a complete and utter SHAME” and suggested he would appeal.
“The justice system in New York State, and in America as a whole, is under attack by partisan, deluded and prejudiced judges and prosecutors. Racist and corrupt prosecutor Tish James has been obsessed with “getting Trump” for years and has used corrupt New York State Judge Engoron to obtain an illegal and un-American judgment against me, my family and my enormous business.” , the statement reads.
James said in a statement that the decision represents “a tremendous victory for this state, this nation and for all who believe we all play by the same rules, even former presidents.”
“Now, Donald Trump finally faces accountability for his lies, cheats and staggering frauds. Because no matter how big, rich or powerful you think you are, no one is above the law,” his statement read.
The outcome of the civil trial was solely in Engoron’s hands, and in September, he issued a summary judgment that ruled substantially in favor of James’ arguments that the Trump Organization had engaged in fraud for years, repeatedly misrepresenting the value of the assets to financiers and insurance companies. .
The ruling is the latest in a series of legal and financial blows the former president has faced that have already impacted his presidential campaign.
Trump has incurred $76 million in legal fees over the past two years stemming from the wide array of criminal and civil cases he faces. According to campaign finance documents, more than $27 million of the money raised in the final six months of 2023 to support his presidential campaign was instead used to cover legal fees.
A Bloomberg report earlier this week suggested that Trump could be facing a liquidity crisis caused by his soaring legal bills as soon as this summer, just as the presidential race heats up.
Last month, a federal jury ordered Trump to pay $83.3 million in damages for defaming writer E. Jean Carroll, whom he attacked online after she accused him of raping her in a department store dressing room in the 90’s. He previously received a $5 million judgment in a state case on similar charges.
Trump has promised to appeal the verdicts and has denied raping Carroll, but to appeal he will be required to post bail for the full amount of the award. This means he would need to have a bank back him or pledge collateral – such as real estate – to secure the bond.
But without full control of his real estate empire, Trump will likely find it harder to obtain financing or use his assets as freely as before.
Under the terms of Engoron’s ruling, Trump will no longer be able to make any moves involving assets held by the Trump Organization without the approval of the court-appointed monitor.
Pledging his assets as collateral for the bond he would be required to post to appeal would also be complicated by the imposition of scrutiny.
“When you lose control of your company, you lose control of who gets paid and how much they get paid. All the money will, first and foremost, be used to run the business, and how much will go to Trump and his children will become a secondary concern,” Zelin said.
Added to this are mounting legal costs from the multiple criminal cases brought against him – with charges relating to January 6, as well as allegations of mishandling of confidential documents, election fraud, racketeering and illegal hush money payments to women who claimed to have had relationships. with him – and Trump finds himself in increasingly serious financial trouble.
So far, the former president has managed to cover many of his legal expenses through donations from his political supporters, but that means there will be no money to finance his presidential campaign. At the end of the year, President Joe Biden’s reelection campaign had about $46 million in cash, while Trump’s campaign had $33 million, Federal Election Commission records show. About $50 million held by Trump’s political action committees has already been used to cover his legal fees.
As for properties held by the Trump Organization, while Trump has been able to refinance many of the loans underlying his major real estate holdings, postponing their maturity dating back several years, he still has a stake in some high-profile buildings that have debts due in the next few years.
With the court-appointed monitor part of the equation, it may now be harder for Trump to secure new debt to refinance those buildings, and that could also technically trigger defaults, depending on how the loan covenants were written.