A New York judge on Friday ordered former President Donald Trump to pay $364 million in damages for fraud he committed by inflating his net worth to obtain favorable treatment from banks and insurers.
The blistering 92-page ruling from Judge Arthur Engoron was replete with references to the brazen nature of the misdeeds of Trump, his adult sons and his business organization.
Here are nine key quotes from Engoron’s ruling.
On the scope of Trump’s misdeeds:
“United States Supreme Court Justice Potter Stewart famously, or infamously, declared that he could not define pornography, but that he knew it when he saw it. The frauds found here leap off the page and shock the conscience.”
On the reaction of Trump and his adult sons:
“Their complete lack of contrition and remorse borders on pathological. 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. 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. Instead, they adopt a ‘See no evil, hear no evil, speak no evil’ posture that the evidence belies.”
On being confronted with their misdeeds:
“In order to borrow more and at lower rates, defendants submitted blatantly false financial data to the accountants, resulting in fraudulent financial statements. When confronted at trial with the statements, defendants’ fact and expert witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future recurrences.”
On the severity of the penalty:
“In considering the need for ongoing injunctive relief, this Court is mindful that this action is not the first time the Trump Organization or its related entities has been found to have engaged in corporate malfeasance. Of course, the more evidence there is of defendants’ ongoing propensity to engage in fraud, the more need there is for the Court to impose stricter injunctive relief. This is not defendants’ first rodeo.”
On Trump’s credibility:
“Donald Trump professed to ‘know more about real estate than other people’ and to be ‘more expert than anybody else.’ He repeatedly falsified business records with the intent to defraud.”
On Trump as a witness:
“Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial. His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility.”
On Ivanka Trump’s “suspect” memory lapses:
On direct examination by plaintiff, Ivanka Trump had no recollection of any of the events that gave rise to this action; no number of emails or documents with her signature served to refresh her recollection. Notably, on cross-examination by defendants’ counsel, Ms. Trump suddenly and vividly recalled details of the projects and her interactions with [Deutsche Bank’s Rosemary] Vrablic.”
Ivanka Trump was a thoughtful, articulate, and poised witness, but the Court found her inconsistent recall, depending on whether she was questioned by OAG 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.
On the climate of fraud in New York real estate:
In mid-twentieth century New York, to judge by contemporary press reports and judicial opinions, fraudsters were having a field day.
On the “everybody does it” defense.
“Timely and total repayment of loans does not extinguish the harm that false statements inflict on the marketplace. Indeed, the common excuse that ‘everybody does it’ is all the more reason to strive for honesty and transparency and to be vigilant in enforcing the rules. Here, despite the false financial statements, it is undisputed that defendants have made all required payments on time; the next group of lenders to receive bogus statements might not be so lucky. New York means business in combating business fraud.”
On defense expert witness Eli Bartov’s assessment of what’s a lot of money:
“Indeed, Bartov insisted that the misrepresentation of the Triplex [property], resulting in a $200 million overvaluation, was not intentional or material (leading the Court to wonder in what universe is $200 million immaterial).”
On the defense team’s costly “expert” witnesses:
“John Shubin is a lawyer called by the defense as an expert in ‘land use planning, entitlement, and Zoning.’ Mr. Shubin had never been qualified as an expert witness before. He was compensated between $1,395 and $1,595 per hour and has billed approximately 80-100 hours for his work on this engagement. He also had two colleagues assisting him who billed between $735 and $935 per hour and have billed approximately 100-110 hours.
“Defense witness Robert Unell was an expert in ‘commercial real estate finance and banking.’ Mr. Unell was compensated at a rate of between $900-950 per hour, but he could not recall with any specificity how many hours he had billed, estimating ‘a couple hundred probably.’”
On inflating property values because Trump was president:
“Indeed, there was such an effort to conceal the loss in value from the accurately reported Triplex that in a draft version of the 2017 [Statement of Financial Condition], dated October 10, 2017, Birney had added a 15-25% premiums to many of Donald Trump’s properties, calling them ‘premium for presidential personal residence’; ‘premium for presidential property’; ‘premium for presidential winter residence’; and ‘premium for presidential summer residence.’ In total these various versions of ‘presidential premiums’ amounted to an extra $144,680,601 for the year.
On blaming the accountants:
“As an initial matter, the Court notes that neither Mazars, nor Whitley Penn, nor Donald Bender, is a defendant in this action, nor did defendants ever attempt to implead them as third party defendants. More significantly, however, this defense is wholly undercut by the overwhelming evidence adduced at trial demonstrating that Mazars and Whitley Penn relied on the Trump Organization, not vice versa, to be truthful and accurate, and they had a right to do so.
On the Trump team’s argument that no one was hurt by the overvaluations:
“Materiality has been one of the great red herrings of this case all along. Faced with clear evidence of a misstatement, a person can always shout that ‘it’s immaterial.’ Absolute perfection, including with numbers, exists only in heaven. If fraud is insignificant, then, like most things in life, it just does not matter. As an ancient maxim has it, de minimis non curat lex, the law is not concerned with trifles. Neither is this Court.”
On the argument that different appraisers have different opinions on the value of a property:
“[A]ppraising is an art as well as a science. 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.”
On why Trump employee Allen Weisselberg doesn’t get to keep the money he was paid to keep quiet:
“There is substantial evidence that Allen Weisselberg’s $2 million separation agreement was negotiated to compensate him for his continued non-cooperation with any entities with any legal interests ‘adverse’ to defendants. Moreover, as Weisselberg was a critical player in nearly every instance of fraud, it would be inequitable to allow him to profit from his actions by covering up defendants’ misdeeds.”
On why the Trump Organization will be under continued oversight:
“[T]he Trump Organization does not have the ability to operate with a functional financial reporting structure that would protect against fraud in the future. The fact that there are virtually no internal controls in place at the Trump Organization, ‘creates an atmosphere conducive to Fraud.’”
