With Donald Trump's legal responsibilities increasing and the presidential campaign underway, losing control of his company could not 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 New York state business for three years, Trump now finds himself further backed into a financial corner with fewer options for how to do so. To maneuver.
“It will have a tremendous impact on the management of his business,” said Randy Zelin, a law professor at Cornell University and a veteran criminal defense attorney with experience in complex financial matters. “But it will also provide a strong basis for appeal.”
New York Attorney General Letitia James asked New York State Supreme Court Justice Arthur Engoron to impose a $370 million fine on the Trump Organization, as well as ban Trump and his children Ivanka, Donald Jr. and Eric Trump from running any company in the state. New York, where his real estate empire has long been based.
Engoron's ruling prohibited Donald Trump Jr. and Eric Trump from participating in the management of any business in the state for two years. The judge also ordered that former US District Judge Barbara Jones, who has served as an independent monitor of the Trump Organization since 2022, to 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 now, post-review — from Judge Jones before making any financial disclosure to a third party, so that such disclosure can be reviewed in advance for any material misstatements,” the ruling said. is reading.
The ruling also prohibited the Trump Organization from applying for any loans from a New York financial institution for three years.
In a statement, Trump called the ruling a “complete and complete hoax” and suggested he would appeal.
“New York State's judicial system, and America as a whole, is under attack by partisan, misguided, and biased judges and prosecutors. The corrupt and racist Attorney General Tish James has been obsessed with 'getting Trump' for years, and used crooked New York State Judge Engoron to obtain an illegal and unjust ruling. An American against me, my family, and my enormous business.
James said in a statement that the decision represents “a tremendous victory for this state, this nation, and for everyone who believes we should all play by the same rules — even former presidents.”
“Now, Donald Trump finally faces accountability for his incredible lying, cheating, and fraud. Because no matter how big, rich, or powerful you are, no one is above the law.
The outcome of the civil trial was solely in Engoron's hands, and in September, he granted summary judgment in favor of James's arguments that the Trump Organization had engaged in fraud for years by repeatedly misrepresenting the value of assets to lenders and insurers. .
The ruling is the latest in a series of legal and financial blows the former president has faced that have already had an impact on his presidential campaign.
Trump has incurred $76 million in legal costs over the past two years stemming from the wide array of criminal and civil lawsuits he faces. Instead, more than $27 million of money raised in the last six months of 2023 to support his presidential campaign was used to cover his legal costs, according to campaign finance filings.
A report from Bloomberg earlier this week suggested that Trump could face a cash crunch stemming from his ballooning legal costs as early 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. Jane Carroll, whom he attacked online after she accused him of raping her in a supermarket dressing room in the 1990s. He had previously been sentenced for $5 million in a government case on similar charges.
Trump has vowed to appeal the rulings and has denied raping Carroll, but for the appeal he will be required to post bonds for the full restitution amounts. This means that he will need to either obtain bank backing or pledge collateral – such as real estate assets – to secure the bonds.
But without full control of his real estate empire, Trump will likely find it more difficult to raise 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 regarding assets held by the Trump Organization without the approval of the court-appointed controller.
Even pledging his assets as security for the bond he would be required to provide in order to file the appeal would be complicated by the imposition of a monitor.
“When you lose control of your company, you lose control over who gets paid and how much they get paid. All the money will be used, first and foremost, to run the business, and the amount that goes to Trump and his kids becomes a secondary concern,” Zelin said.
Add to that the mounting legal costs of several criminal cases against him — on charges related to January 6, as well as accusations of mishandling classified documents, election fraud, extortion, and illegal payments to women who claimed to have affairs. With him – and Trump finds himself in a worsening financial predicament.
So far, the former president has been able to cover many of his legal costs through donations from his political supporters, but this means the money will not be available to fund 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 filings show. About $50 million held by Trump's political action committees has already been used to cover his legal bills.
Regarding properties held by the Trump Organization, while Trump has been able to refinance many of the loans underlying his larger real estate holdings, pushing back their due dates by several years, he still has a stake in some high-profile buildings with debt. scheduled in the next few years.
With court-appointed oversight in the equation, it may now be more difficult for Trump to secure new debt in order to refinance those buildings, and this could even technically lead to a default, depending on how the loan covenants are written.
