‘Pathological’ lack of remorse: Key revelations from Donald Trump’s fraud trial ruling

A crushing final judgment in a sprawling fraud case against Donald Trump and his real estate empire will force the former president, his adult sons, their chief associates and the entities under his control to pay more than $364m to the state of New York.

The 92-page ruling from New York Justice Arthur Engoron follows a three-year investigation from state prosecutors and 11 weeks of testimony in a closely watched trial in a lower Manhattan courtroom.

The former president, his companies and his trust face more than $350m in financial penalties, plus interest, in a total amount that could exceed by another $100m, among other sanctions that could imperil his ability to do business in the state for at least three years. Should he appeal, he will have to pay a significant amount of that total to post a bond.

The total “disgorgement” owed back to the state among all the defendants – money that is effectively forfeited as “ill-gotten gains” – amounts to roughly $364m, or nearly $464m with likely interest.

According to the New York attorney general’s office, those figures will continue to increase every day until they are paid.

The defendants were also found liable for intentionally falsifying business records, conspiring to do so, and “repeatedly and persistently” issuing false financial statements.

Former Trump Organization executives Allen Weisselberg and Jeffrey McConney were also found liable for “repeatedly and persistently committing insurance fraud,” while all defendants were found liable for conspiracy to commit insurance fraud.

The judge banned Mr Trump from serving in top roles at any New York company, including his own, for three years. His adult sons – including Eric Trump, who effectively is running the Trump Oorganization – face two-year bans, throwing into doubt the Trump family’s ability to run a vital part of its empire.

The state statute invoked by Attorney General Letitia James’s lawsuit requires the plaintiffs – the attorney general’s office – to prove that the defendants’ were deceptive, allowing a judge to impose severe financial penalties and to effectively forfeit the money they received through that fraud.

A decades’ worth of fraudulently inflated statements of financial condition – which have at the heart of the case – were submitted to banks and insurers to obtain favourable terms for his brand-building properties that Mr Trump and his entities would not otherwise have received with statements that accurately reflected his financial state.

An expert witness for the attorney general’s office calculated the differences between interest rates and determined the following “ill-gotten” interest savings, which Judge Engoron adopted:

More than $72m for the Trump National Doral resort in Florida, more than $53m from a loan for the Old Post Office in Washington DC loan, more than $17m from a loan for the Trump International Chicago, and more than $25m for a loan on his 40 Wall Street property.

“In total, defendants’ fraud saved them approximately $168,040,168 in interest, which shall be imposed, jointly and severally, among Donald Trump and the defendant entities that he owns and controls, as the misconduct at issue was committed by the Trump Organization’s top management,” according to Judge Engoron.

When Mr Trump sold the Old Post Office hotel in Washington DC, he paid off the Deutsche Bank loan, among financing terms that relied on Mr Trump’s statement of financial condition that included grossly inflated valuations of his net worth and assets.

Mr Trump earned more than $126m through that sale, with Donald Trump Jr and Eric Trump each earning more than $4m.

In his ruling, the judge determined that Mr Trump, the Donald J Trump Revocable Trust and the Trump Organization are “jointly and severally liable” for the more than $126m in those so-called “ill-gotten gains”.

Similarly, Mr Trump and his entities are “jointly and severally liable” for the windfall of profits attributed to the $60m sale of the Ferry Point golf course to Bally’s.

When he spent hours on the witness stand last year, Donald Trump “rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial,” according to the judge.

“His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility,” he added.

Eric Trump had taken over the Trump Organization’s daily business but repeatedly denied knowing anything about the statements of financial condition that are central to the case when he testified in the case last year. His “credibility was severely damaged” through his repeated denials, and only when “confronted with copious documentary evidence conclusively demonstrating otherwise, he finally conceded” that he knew about those statements, according to the judge.

“Begrudgingly acknowledging: ‘It appears that way, yes,” the judge noted.

Ivanka Trump, who was removed as a defendant in the case last year, was a comparatively “thoughtful, articulate, and poised witness,” but the judge found her “inconsistent recall, depending on whether she was questioned by [attorney general] or the defense, suspect.”

“In any event, what Ms Trump cannot recall is memorialized in contemporaneous emails and documents; in the absence of her memory, the documents speak for themselves,” he wrote.

Donald Trump was sitting with his attorneys while his former “fixer” Michael Cohen was testifying against him.

On the stand, Cohen described how his former boss would call on him to “increase the total assets based upon a number that he arbitrarily elected” for his statement of financial condition.

Cohen and now-convicted former Trump Organization chief financial officer Allen Weisselberg – who is also a defendant in the fraud case – were instructed to “reverse engineer the various different asset classes” in order to “achieve the number that Mr Trump had tasked us with,” Cohen said.

Asked by counsel for the attorney general’s office what that number was, Cohen replied: “Whatever number Mr Trump told us to.”

Mr Trump and his attorneys have insisted that the testimony from the “star witness” for the attorney general’s office was unreliable and amounted to perjury, enough to toss the case completely. The judge rejected that motion.

Under questioning from Mr Trump’s attorneys, Cohen agreed that his former boss never asked him to “inflate” the figures at the centre of the case, but that his commands were implicit rather than explicit.

“Donald Trump speaks like a mob boss,” Cohen said. “He tells you what he wants without specifically telling you … That’s what I was referring to.”

“Michael Cohen was an important witness on behalf of the plaintiff, although hardly the linchpin that defendants have attempted to portray him to be,” the judge wrote in his final ruling.

The judge “found his testimony credible, based on the relaxed manner in which he testified, the general plausibility of his statements, and, most importantly, the way his testimony was corroborated by other trial evidence,” he added.

“A less-forgiving factfinder might have concluded differently, might not have believed a single word of a convicted perjurer,” he wrote. “This factfinder does not believe that pleading guilty to perjury means that you can never tell the truth. Michael Cohen told the truth.”

In their testimonies, Donald Trump, Donald Trump Jr and Eric Trump suggested that any blame for the statements of financial condition should rest with the expert accountants they hired, not with them.

But the judge determined that “the buck for being truthful in the supporting data valuations stopped with the Trump Organization, not the accountants.”

“Moreover, the Trump Organization intentionally engaged their accountants to perform compilations, as opposed to reviews or audits, which provided the lowest level of scrutiny and rely on the representations and information provided by the client; compilation engagements make clear that the accountants will not inquire, assess fraud risk, or test the accounting records,” he added.

Judge Engoron eviscerated “another great red herring” in the defence’s argument, which appeared to suggest that different appraisers can come up with different amounts for the same property, which doesn’t amount to fraud but encompasses the “art” of real estate.

“True enough, as appraising is an art as well as a science,” he wrote. “However, the science part cannot be fraudulent. When two appraisals rely on starkly different assumptions, that is not evidence of a difference of opinion, that is evidence of deceit.”

Trump Organization subsidiaries and Weisselberg already were convicted in separate but parallel criminal cases targeting the former president’s businesses, convictions that Judge Engoron noted in his ruling on 16 February.

He pointed to a history of malfeasance within the Trump Organization, followed by the findings in the sprawling fraud case, to determine that Mr Trump and his co-defendants are “likely to continue their fraudulent ways unless the Court grants significant injunctive relief.

“Their complete lack of contrition and remorse borders on pathological,” he wrote.

“They are accused only of inflating asset values to make more money. The documents prove this over and over again. This is a venial sin, not a mortal sin,” he added. “Defendants did not commit murder or arson. They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways.”