- Written by Nada Tawfik, Madeline Halpert, Kayla Epstein
- BBC News, New York
image source, Getty Images
Former President Donald Trump spoke to reporters before closing arguments in his civil fraud trial in New York.
The future of Donald Trump's family business could be decided on Friday, when a New York judge is scheduled to issue a verdict in his civil fraud trial.
The former president, his adult sons and a company that bears his name have already been found liable for fraudulently inflating asset values in reports to lenders.
Prosecutors asked the judge to fine Mr Trump $370 million (£291 million) and impose limits on his ability to conduct business in the state.
That's a lot of money even for a billionaire. Legal experts told the BBC that such a hefty fine and a final judgment that could have major implications for Trump's real estate empire could be a serious blow to Trump's finances. He said there is.
“He doesn't suddenly become working class,” said Diana Florence, a former federal prosecutor. “But it's just going to be a lot of cash. His wealth will be significantly reduced.”
Why could Mr. Trump be fined $370 million?
New York Attorney General Letitia James said in court that the appropriate amount the Trumps should pay in disgorgement, a penalty for repaying money obtained through fraudulent means, is $370 million.
She calculated the amount based on three factors. The amount of money Mr. Trump allegedly earned by saving interest on loans by misrepresenting his assets. “Bonuses” paid to Trump Organization employees who participated in the scheme. Profits from two real estate transactions that Mr. James claims were obtained fraudulently.
It will be up to Judge Arthur Engoron to decide on the fine when sentencing.
Whatever the amount, Mr. Trump must also pay annual interest on the fine, which goes back several years from when the alleged violation occurred. New York's 9% interest rate means Trump could have to pay an additional nine-figure sum on top of the fine.
Mr. Trump has denied any fraud and maintains there was no crime because the banks were profiting from his investments. He is expected to begin an appeal, and the ruling will be put on hold until a higher court reconsiders the case.
But even if Mr. Trump wants to avoid paying the fine or have his personal assets seized during the appeal process, he must deposit the entire amount held by the court within 30 days.
A punitive amount, but not a devastating amount
Trump's total net worth is $2.6 billion, according to calculations by Forbes magazine. The New York Attorney General's Office estimates his annual net worth in 2021 to be $2 billion.
Based on these estimates, a $370 million fine would cost Trump roughly 15% to 18% of his assets.
But in addition to this looming fine, he already owes author E. Jean Carroll $83.3 million in damages in a separate defamation lawsuit that concluded in January. His legal fees are mounting as he fights four criminal cases at the federal and state levels.
Together, these financial burdens could exceed Mr. Trump's available cash. Legal experts say he has several potential options.
image source, Shannon Stapleton – Pool/Getty Images
Judge Arthur Engoron
Trump may be able to secure bonds, but it will come at a high cost.
To avoid paying the full amount upfront, Trump may seek to secure bail, a guarantee from a third party that he will be able to pay the entire fine. That would cost millions more in interest and fees. It is also likely that collateral will be required.
Stephen Cohen of New York Law School explained that securing bail from a bonding company typically requires paying about 10% of the total amount owed.
So if Mr Trump owes $370m in disgorgement, he may have to pay $37m (£29m) to the bond company for the bond issue. And he never gets that fee back.
President Trump may sell assets to raise enough cash
In a deposition in the case, Trump said he had $400 million in cash on hand (the BBC could not independently confirm that amount). But given his other legal responsibilities and fees, he likely won't have enough to pay the new $370 million fine.
“He's going to have to figure out what to do with his assets, maybe liquidate his business and come up with the money,” said former federal prosecutor Sarah Kristoff.
Much of Mr. Trump's fortune is tied to his real estate business. Forbes found that his New York real estate empire was worth $490m (£384m), including $56m (£44m) worth, according to the outlet's tally. His flagship condominium skyscraper, Trump Tower, is also included.
His portfolio includes many properties across the country, including golf courses, high-rise condominiums, hotels, and even wineries.
“To get the money to pay those costs, you have to sell something or realize something,” said William Thomas, a professor at the University of Michigan's Ross School of Business.
image source, Seth Wenig Pool/Getty Images
New York Attorney General Letitia James sits behind Donald Trump in court during closing arguments.
Trump may demand money from loyal supporters
Mr. Trump could also turn to the large-scale fundraising tools he has used to pay tens of millions of dollars in legal fees. According to the New York Times, 10% of every dollar raised by his supporters will be used to pay for his defense in civil and criminal trials.
He used two political action committees, Save America and Make America Great Again, his main vehicles for legal fees, to raise money to cover the costs of these trials. used for political purposes. These organizations are separate from his official presidential campaign account.
Forbes magazine estimates that between his first indictment in March 2023 and the end of the year, his Save America political action committee spent nearly $40 million in legal fees and other related costs.
Under federal campaign finance rules, Trump could use Save America to pay court-ordered fines, said Shanna Portes, senior counsel at the Election Legal Center. She added that it is not acceptable to make this payment with official campaign funds.
However, lawyers told the BBC that fundraising may not be practical in Mr Trump's case anyway.
Michelle Epner, a former federal prosecutor, said a large fine would “lead to a nine-figure cash outlay in a short period of time, creating a real cash-flow crisis.” He added that the amount of money raised from supporters in a short period of time would be extraordinary.
His Save America PAC started the new year with $5 million in cash, according to filings with the Federal Election Commission.
Trump will have a clearer understanding of what this means for his business and personal fortunes only after Judge Engoron issues a final ruling. But no matter how he chooses to pay, a hefty fine would leave the former president in serious financial trouble.
“For all the falsehoods and lies Trump has told about his wealth, he is truly a wealthy man,” said Thomas, a business professor. “But most people don't have $400 million.”