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Explained | How will Trump pay his $355 million civil fraud judgment?

Here is an explanation for how the Friday order by a New York state judge could affect Trump's finances as he seeks the Republican nomination to challenge Democratic President Joe Biden in the Nov. 5 US election.
Last Updated 17 February 2024, 02:30 IST

Donald Trump's $355 million civil fraud judgment could squeeze the former US president's cash reserves in the coming months and sharply limit his ability to obtain credit.

Here is an explanation for how the Friday order by a New York state judge could affect Trump's finances as he seeks the Republican nomination to challenge Democratic President Joe Biden in the Nov. 5 US election.

What was the ruling?

Justice Arthur Engoron found that Trump fraudulently inflated his net worth to obtain better loan terms. In addition to imposing monetary penalties, he barred Trump from running a corporation in New York for three years, and also ordered that no bank chartered or registered in the state lend to Trump and several of his businesses and entities for three years.

Trump has denied wrongdoing and called the case a political vendetta by New York Attorney General Letitia James, a Democrat.

How will the decision impact Trump's real estate empire?

Trump's holdings consist of a global network of roughly 500 entities spanning real estate, licensing and other business ventures.

The former president's finances are opaque, but Forbes estimates his net worth at $2.6 billion, most of it tied up in real estate.

Trump testified in an April deposition that he had roughly $400 million in cash.

Though he could sell parts of his portfolio to satisfy the judgment, it is unclear how much his property holdings are worth, given the headwinds in the commercial real estate sector.

Is Trump financially able to pay the full judgement?

The ban on applying for loans from banks registered or chartered in New York could severely restrict Trump's ability to raise cash.

In addition to the $354.9 million judgment in the civil fraud case, Trump must pay $83 million in damages to writer E. Jean Carroll after a jury found he defamed her when he denied raping her in the 1990s.

Another Manhattan jury in May 2023 ordered Trump to pay Carroll $5 million in damages after a trial in a separate defamation and sexual assault case that she brought.

Trump has denied raping Carroll. He is appealing the first verdict and has said he will appeal the second.

Trump's portfolio could see a major windfall if he were to sell his stake in his social media platform Truth Social, the value of which has soared as his bid to return to the White House gathers steam.

Trump's stake in the company, Trump Media & Technology Group, is now worth about $4 billion, based on trading in the shares of a black-check acquisition vehicle that has agreed to merge with it. If the deal closes, Trump would be able to sell his shares in the combined company six months later.

US financial regulators gave the deal a green light this week, raising the prospect it could close in the first half of 2024.

Can Trump use campaign funds to pay the judgement?

No, because unlike many of Trump's legal troubles, the case brought by James was not related to his campaign or his conduct as a president or political candidate.

Some legal experts have said damages awards are strictly personal expenses, regardless of assertions by Trump and his lawyers that the case brought against him was politically motivated.

When will Trump have to pay?

Trump's lawyers have vowed to appeal the decision.

He could be required to deposit the full amount of the judgment against him plus interest during any appeal, which is standard practice in similar cases.

Trump could also post a smaller amount with collateral and interest by securing a type of loan called an appeal bond. But he could have trouble finding a lender after Engoron ruled that he lied to banks about his wealth.

The appeal could take more than a year, and it is not yet clear whether an appellate court would put Engoron's Friday decision on hold during the process.

What happens if Trump fails to pay?

If he exhausts his appeals and refuses to pay in the civil fraud case, Trump could be held in contempt of court and hit with additional fines. The state could also seek to garnish Trump's wages. Imprisonment would be possible but extremely unlikely.

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(Published 17 February 2024, 02:30 IST)

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