The future of Donald Trump’s family business could be decided Friday when a New York judge is expected to rule in his civil fraud trial. The former president, his grown sons and his eponymous company have already been found liable for misrepresenting property values in statements to lenders.
Prosecutors asked the judge to fine Trump $370 million and limit his ability to do business in the state.
That’s a lot of money, even for a billionaire. Legal experts told the BBC that such a large fine, along with a potential final judgment that could heavily affect his property empire, could deal a serious blow to Trump’s finances. “He’s not going to suddenly become working class,” says former federal prosecutor Diana Florence. “But that’s a lot of money. His wealth will be greatly reduced.”
New York State Attorney Letitia James told the court that $370 million is the appropriate amount the Trumps should pay as so-called disgorgement, i.e. a financial penalty that includes the return of money obtained by fraud. She calculated the sum based on three factors: the money Trump allegedly earned in savings on loan interest rates due to misrepresentation of assets; “bonuses” paid to Trump Organization employees who participated in the scheme; and profits from two real estate deals that plaintiff James alleges were obtained fraudulently.
It is up to Judge Arthur Engoron to determine the amount of the financial penalty when he delivers his verdict.
Regardless of the amount, Trump would also have to pay annual interest on that penalty, which dates back several years to when the alleged violations occurred. New York’s 9% interest rate means Trump may have to pay an additional nine-figure sum in addition to the fine.
Trump denies committing fraud and says there was no crime because the banks made money on his investments. He is expected to appeal, which would put the ruling on hold until a higher court hears the case. But if he wants to avoid paying a fine or seizing personal property while the appeals process is pending, he must still pay the full amount, which will be held in court within 30 days.
According to one calculation by Forbes magazine, Trump’s total net worth is $2.6 billion. The New York State Attorney’s Office estimated his annual net worth at $2 billion in 2021. Based on those estimates, a $370 million fine would cost Trump roughly 15-18 percent of his wealth.
On top of this sentence, however, he already owes E Jean Carroll $83.3 million in damages from a separate defamation case that was settled in January. His legal fees are also mounting as he fights four federal and state criminal cases.
These combined financial burdens may represent more money than Trump has at his disposal. Legal experts say he has several potential options.
To avoid paying upfront, Trump could try to secure a third-party guarantee that he can pay the full fine. That would cost him many more millions, plus interest and fees. He would probably also be required to post collateral.
To secure such a thing, a person usually needs to pay about 10% of the total amount owed, explained Steven Cohen of the New York School of Law.
So, if Trump owes 370 million dollars for the so-called disgorgement, may have to pay a bond company $37 million to issue the bond. And he won’t be able to get that money back. In a deposition in the case, Trump said he had $400 million in cash. However, with his other legal obligations and fees, that would not be enough to cover the new $370 million fine.
“He’s going to have to figure out what to do with his assets, how to liquidate businesses to get that money,” said Sara Kristof, a former federal prosecutor.
Much of Mr. Trump’s fortune is tied to his real estate businesses. Forbes revealed that his New York real estate empire is valued at $490 million, including his flagship condominium skyscraper, Trump Tower, worth $56 million. His portfolio includes many other properties across the country, with golf courses, condominium towers, hotels and even a winery.
“Something will have to be sold or realized to get the money to pay those kinds of costs,” said William Thomas, a professor at the University of Michigan’s Ross School of Business.
Trump could also turn to the massive fundraising engine he uses to pay his tens of millions in legal fees. According to the New York Times, 10% of every dollar raised by his supporters goes to pay for his defense in civil and criminal trials.
He used two political action committees – Save America, which was his main vehicle for paying legal fees, and Make America Great Again, which financed his presidential bid – to raise to cover the costs of these trials, although such structures are usually used for political purposes. These entities are separate from his official presidential campaign account.
From his first indictment in March 2023 through the end of the year, his Save America political action committee has spent nearly $40 million on lawyers and other related fees, Forbes calculated.
Under federal campaign finance rules, Trump could potentially use Save Aerica to pay the court-ordered fine, said Shanna Ports, senior counsel at the Campaign Legal Center. However, he would not be allowed to make this payment with official campaign funds, she added. But fundraising may not be practical in Trump’s case anyway, lawyers told the BBC.
A large fine would “create a real cash flow problem for him to get to nine figures in cash in a very short period of time,” said former federal prosecutor Michel Epner. He added that it would be an extraordinary amount to raise funds from his supporters in a short period of time.
His Save America PAC started the new year with $5 million in cash, according to Federal Election Commission filings.
Trump will only get a clearer picture of what this means for his business and personal fortunes when Judge Engoron makes his final ruling. But regardless of how he chooses to pay, any larger fine is likely to cause serious financial headaches for the former US president.
“Trump, despite all his misrepresentations and lies about his wealth, is a really rich person,” said Thomas, a business professor. “But most people don’t have $400 million in cash sitting around,” BBC writes.