Tue. Jun 18th, 2024

Trump could soon face over $400 million in legal penalties. Can he afford it?

By 37ci3 Feb6,2024

Former President Donald Trump says his brand alone is valuable More than 10 billion dollarsbut a pair of civil judgments could spell financial ruin for him, legal experts say.

Trump was slapped last month $83 million prize E. Jean Carroll faces the possibility of another sentencing in the defamation case in the coming days. example of this — and his fortune comes from dismantling the company’s parts.

The merger would be a “devastating financial blow” and could have a “significant impact” on his fortune, said Chris Mattei, a lawyer who handles similar cases.

Trump’s campaign spokesman, Steven Cheung, said Trump had “built the world’s largest estates and an extremely successful, unparalleled business” and called the cases against him a “witch hunt.”

“The unjust verdicts will be appealed and all the frauds will be defeated because President Trump did nothing wrong and the truth will prevail,” Cheung said.

Consider the rapidly approaching financial tsunami facing Trump.

How much does Trump owe Carroll?

Trump earned $83.3 million judgment Jan. 26 for repeatedly defaming Carroll, and he said he plans to appeal as soon as possible. He is already appealing $5 million verdict Carroll won a sexual assault and defamation lawsuit against him last year.

Will Trump have to pay when he applies?

While the appeal could delay Carroll’s collection of his money for years while it goes through the court process, that doesn’t stop Trump from having to come up with that money and then some. Under federal court rules, civil defendants must post security for awards when filing an appeal, and New York includes interest at a rate of 9% per annum.

For the $5 million award, Trump had to deposit $5.5 million into the court fund — 111% of the judgment amount.

Given the size of the new award, Trump could try to use a bond instead of posting the full amount — but that could still be very costly, as surety companies can demand up to 5% of the judgment amount. For Trump, that nonrefundable payment would be about $4 million, and he would still need to put up a large amount of cash and collateral to secure the bond.

“No one is going to write Donald Trump an $83 million bond,” said Ron Kuby, a veteran lawyer in New York. “That would be crazy.”

How much might he owe in the New York attorney general’s civil fraud case?

In 2022, when New York Attorney General Letitia James first sued Trump, his company and top executives, he was wanted. $250 million in damage for “repeated fraud” based on Trump’s financial statements. Last month he increased the amount $370 mln. Trump and the company deny any wrongdoing and claim the case is politically motivated.

Judge Arthur Engoro is expected to speak let him decide How much Trump has to pay in the next week, but he’s already seen Trump and his leaders commit. repeated and persistent fraudthis does not bode well for team Trump.

What will happen if Trump applies?

Trump has already said he will appeal if Engoron rules against him, but if he does, he will likely still be on the hook for the full amount.

David Slarskey, a business trial lawyer, said New York state court, like federal court, requires surety or bond, and given the likely size of the award, Trump will likely move to obtain a bond.

If James gets the full $370 million he’s seeking, it could pay Trump a nonrefundable fee of up to $18 million to the surety company. And the amount of money to be invested at 9% interest rate would be in the range of $400 million.

Mattei, who represented the families of victims of the mass shooting at Sandy Hook Elementary School in Connecticut in a successful defamation suit against a far-right conspiracy theorist Alex Jonessaid that if Trump and his company were hit with an insolvency judgment, the company “could file for bankruptcy protection.”

Another possibility would be to liquidate assets to raise cash, Mattei said, with the AG’s office overseeing it to make sure it doesn’t siphon off assets “for its own use and not for creditors.”

Adam Leitman Bailey is a New York real estate attorney He sued Trump before, he said he would likely have to put up 10% of the judgment in cash and use the property as collateral for the rest. “He’s running for the presidency of the United States. He’s not going anywhere.”

Kuby said any bond company would also want a full bond for that application. “It would be about four times as crazy to do it for $83 million without collateral,” he said.

If he loses his appeals, Carroll and the AG will be entitled to their full judgment, plus pre-appeal interest.

If Trump wins, he would be able to get back the money he put in plus interest, but he would lose out on whatever he had to pay the bond company.

How much money does Trump have?

As of 2021 statement of financial position Trump had about $293.8 million in “cash and cash equivalents,” which became evidence in the fraud case. The AG’s office said that figure was artificially high and included $93 million in illiquid assets.

The statement, put together during the pandemic, put his net worth at $4.5 billion, far below the figure Trump maintains.

“We didn’t include billions of dollars in brand value,” Trump said of the October 2022 financial statements. collapse. “If I wanted to give you a good quote, I’d add maybe $10 billion or something for the brand.”

A report Engoron, the monitor appointed last month to oversee the Trump Organization’s financial operations, said the trust that holds the company’s assets has quietly transferred a lump sum of cash to Trump. “Until my team reviewed the bank statements of the Trust account, there were no reports of cash transfers from the Trust, totaling more than $5 million each and $5 million each to Donald J. Trump,” Monitor Barbara Jones said. In a January 26 letter to the judge.

Kuby said that given the allegations in the AG’s case, bond companies will likely want to do their own assessment and review of Trump’s financial records.

Can Trump use campaign money to pay off court orders?

Trump has used money from political action committees supporting his re-election campaign to pay off legal debts — more than $50 million in the past year alone, he said. recent campaign documents.

One of those PACs, Save America, started 2024 with just $5 million, which would not affect either award. Mattei said if Trump wants to use more money from his campaign or donors, or if he wants to create a legal defense fund, he needs to be transparent about what he’s doing.

“What’s important is that he tells his donors how the money can be used. Money given to PACs that support him can be used for legal defense purposes, but whether they can be used for personal prosecution is questionable.” he said.

What does the decision mean for the Trump Organization?

The company intertwined with Trump is made up of hundreds of smaller companies. Monitoring stated in its court application that it consists of 415 different business entities.

The AG’s lawsuit sought to revoke the certificates of an unspecified number of businesses controlled or owned by Trump that benefited from the fraudulent scheme. Engoron signed this request judgment before the trial and applied it to other current and former top executives of the company, including Donald Trump Jr., Eric Trump, former CFO Allen Weisselberg and former senior vice president Jeff McConney. It also ordered the appointment of a supervisor to oversee the liquidation of limited liability companies (or LLCs).

It is not clear whether the order applies only to LLCs or to properties affiliated with them. The judge said he would consider the matter in a later order.

Slarskey said the liquidation “could effectively be a death sentence for the corporation” and would “probably lead to liquidation proceedings.”

Foreclosures, coupled with the lack of available cash, can trigger defaults on properties that still have loans, and “it can take on a life of its own. It triggers a default, which triggers another default, which triggers another default.” he said.

Trump has already appealed Engoro’s order on the certificates, and the appeals court has stayed the revocations pending Trump’s case.

Trump: My finances are strong

In a post for him Truth Social On Monday, Trump said on his social media platform that he has solid financial stability.

“With loans PAID IN FULL, no defaults, excellent and strong Financial Statements with a strong protective clause, and commercial properties all over the world are in DEFAULT and LIEN AGREEMENT except for my properties that I have been sued by NYSAG for debts. from very happy lenders,” he wrote. “For the sake of the welfare of our country, this case should be terminated.”

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By 37ci3

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