“We have a lot of cash,” Donald J. Trump boasted 10 months ago, under oath, claiming that the number was “going up very substantially every month.”
But whatever cash he had may soon be gone.
On Friday, the judge overseeing Mr. Trump’s civil fraud case issued a final ruling that inflicted a staggering financial penalty. With interest, the former president has been ordered to pay New York State about $450 million, a sum that threatens to wipe out a stockpile of cash, stocks and bonds that he amassed since leaving the White House, according to a New York Times review of Mr. Trump’s financial records. He will have only 30 days or so to either come up with the money or persuade an outside company to post a bond.
The judge, Arthur F. Engoron, also imposed several new restrictions on Mr. Trump and his family business. For three years, Mr. Trump cannot run any New York company, including portions of his own, nor can he obtain a loan from a New York bank. The same restrictions apply to his adult sons for a two-year period. And the family business will be under the thumb of a watchful outsider, a court-appointed monitor who can hamstring the company if she does not like what she sees.
All told, the judge’s decision poses unprecedented threats to Mr. Trump’s finances, his family business and his ego at a critical time for the former president. Although Mr. Trump will not go bankrupt and the Trump Organization will not go out of business, the company’s loudest hype man could for now become a silent partner in his hometown properties. The organization will be another real estate company in a city full of them — this one facing unusual new constraints that could impede its ability to compete.
“Justice Engoron’s order could impose several years of paralysis at the Trump Organization,” said Jim Wheaton, a professor at William & Mary Law School who focuses on legal issues involving corporate entities and has studied Mr. Trump’s finances. The ruling, he added, could even “freeze the ability to make legitimate business decisions.”
One of Mr. Trump’s lawyers, Christopher M. Kise, called the financial penalty “draconian and unconstitutional,” and said that the decision “will cause irreparable damage to both the business community and the rule of law in our country.”
The punishments facing Mr. Trump and his company, some hard-hitting and some symbolic, could serve as a harrowing prelude to his criminal trials, the first of which is scheduled to begin next month. In those trials, for the first time, he faces the threat of prison.
But the Friday ruling, in which Justice Engoron found that the former president orchestrated a conspiracy to deceive lenders about the value of his assets, is a twofold attack on Mr. Trump’s very identity. The judge, siding with the New York attorney general, told the world that Mr. Trump had inflated his net worth — a cornerstone of his billionaire public persona — and then personally deflated it to the tune of several hundred million dollars.
The ruling, in combination with the looming criminal trials, will only intensify the chaos that has long swirled around Mr. Trump. In the coming months, the former president will be running for the White House while the law tries to catch up with him.
Mr. Trump, who will appeal Justice Engoron’s ruling, lashed out at the judge and the attorney general, Letitia James, both Democrats.
“She campaigned on the fact that ‘I will get Trump, I will get Trump,’” he said of the attorney general.
Cash Crunch
The nearly $450 million penalty that Ms. James might collect poses the most immediate threat to Mr. Trump.
While Mr. Trump appeals the financial penalty, he will have to either come up with the money or secure a bond within 30 days of when the court enters a judgment against him. If he obtains it from a bonding company — rather than posting the bond himself — he will not have to pay the penalty until his appeal is resolved.
The company providing the bond essentially assures the state that Mr. Trump has the money to pay the judgment, and prevents it from collecting while appeals are heard. The bond company will require Mr. Trump to pledge collateral and pay a premium.
His lawyers are already contacting companies that might post the bond, according to two people with knowledge of the matter, though it is unclear if and when they will reach a deal.
If the penalty is upheld on appeal, the money will most likely come out of Mr. Trump’s own pocket, rather than from political contributions.
In his post-presidential life, Mr. Trump sold two prominent properties, reaping a windfall that he pocketed and can tap in a hurry. He also reached new deals with foreign partners, including a Saudi-backed golf venture and a Saudi-based real estate company, for a housing and golf complex to be built in Oman.
The reserves were a bulwark against misfortune for the former president, preparing him for a moment like this one.
As of last year, Mr. Trump was sitting on more than $350 million in cash and cash equivalents, The Times’s review of his financial records showed. In an interview under oath with Ms. James’s office last year, Mr. Trump said the number was above $400 million, though The Times was unable to verify that amount.
Either way, Justice Engoron’s ruling should empty Mr. Trump’s cash coffers.
The penalty in Friday’s decision, when combined with an $83.3 million judgment Mr. Trump is facing from a defamation trial involving the writer E. Jean Carroll, adds up to more than half a billion dollars, eclipsing his current collection of cash. Even for someone who measures his net worth in the billions, that sum could leave Mr. Trump more financially vulnerable than he has been in decades.
The former president derives much of his net worth from his properties, and if he runs out of cash, he might have to sell or mortgage one. Although he will not go bankrupt, because the value of those buildings far exceeds the penalty imposed by Justice Engoron, selling any real estate would be a personal affront to the former president, who glories in his properties. It also might not be easy: It often takes time to find a buyer willing to pay a good price.
Brought to Heel
If Justice Engoron’s decision is upheld on appeal, nothing will come easily for the Trump Organization. The ruling will bring significant changes to a privately held — and unorthodox — family business.
The company is in fact hundreds of separate companies that Mr. Trump ran by instinct and whim. He consolidated control among a few family members and trusted allies, without a formal compliance department or oversight from a board of directors.
The company runs a handful of hotels and office buildings, as well as 15 golf clubs, around the country, all with the Trump name plastered across the front. It is synonymous with Mr. Trump: He was its chairman, its deal maker and its cheerleader in chief.
Justice Engoron’s ruling, which bars Mr. Trump from serving as an officer or director of any New York company for three years, means that might no longer be possible. The order suggests that Mr. Trump might be severed from its operations, but many of his corporate entities are based elsewhere, leaving an open question about the practical outcome of that particular punishment.
At the onset of his presidency, Mr. Trump had already turned over the day-to-day running of his company to his sons, Donald Jr. and Eric, although there was an intermingling of Republican and campaign activities at his properties. But the company’s main New York properties might now have to operate without Eric Trump, its de facto chief executive. Justice Engoron barred him and Donald Trump Jr. from being an officer or director of any New York business for two years.
Justice Engoron’s other punishments took more direct aim at the Trump Organization’s way of doing business — most notably, extending the appointment of the independent monitor, Barbara Jones.
A former federal judge, Ms. Jones will be the equivalent of a corporate babysitter for the next three years. Justice Engoron granted her additional authority — he called it “enhanced monitorship” — and asked her to recommend an independent compliance director who will oversee the company’s financial reporting from within its ranks.
Already, Ms. Jones has been an irritant for the Trump Organization, reviewing its transactions and keeping an eye out for fraud. The company has paid her millions of dollars for her work and will have to pay millions more.
Ms. Jones could second-guess any new deals for the business and her presence could scare away potential partners, further constraining a company that has been stuck in neutral since Mr. Trump ascended to the White House in 2017.
Justice Engoron also choked off the company’s access to the New York banking system, prohibiting it from obtaining loans from banks chartered in the state for the next three years. The company already has loans from out-of-state lenders, but this restriction will nonetheless undermine any hopes of growth in the near future.
There was a moment last year when Justice Engoron came down even harder on the former president and his company. In a pretrial ruling that appeared to pose an existential threat to the Trump Organization, Justice Engoron moved to tear up some of Mr. Trump’s New York business certificates, suggesting that doing so would dissolve a part of the company. But legal experts took issue with that punishment, and on Friday, the judge ratcheted it back.
Trump Tower Politics
Mr. Trump’s company — which he made his soapbox decades before he formally entered politics — underpinned his transformation into a cultural and political juggernaut.
Mr. Trump has always made his business and his claims of being a jet-setting billionaire the basis of his public image. The Trump Organization was the launchpad for his reality television show “The Apprentice,” where he introduced his brand to a national audience. And Trump Tower, his company’s Midtown Manhattan headquarters, served as a backdrop for his 2015 announcement that he was seeking the presidency.
“I’m proud of my net worth,” Mr. Trump declared then, claiming that he was worth more than $9 billion.
For years, however, news accounts described him as inflating his net worth. Mr. Trump himself even said in a deposition that the value of his assets went up and down with his “feelings.”
In 2019, Ms. James, the attorney general, began investigating that conduct. Three years later, she filed the lawsuit that led to the penalties Mr. Trump is now facing.
The former president has sought to turn such legal liabilities into political assets, falsely portraying the cases against him as a coordinated witch hunt. He has been excoriating Ms. James and Justice Engoron since before the trial began, and on Friday he attacked them both at a Mar-a-Lago news conference, calling them “corrupt.”
His grievances have resonated with his base, and the Trump campaign has melded the legal cases with his political messaging. The campaign has already used Justice Engoron’s ruling to raise money.
Still, the myth of the successful businessman who gave it all up to serve the American people as president is a staple of Mr. Trump’s campaign speeches. Those lines may land differently if his company is broadly understood not as a gilded business empire, but as a troubled real estate company.
As Mr. Trump’s legal woes have mounted in recent years, his political fund-raising has paid the legal tab.
He used a political action committee that he controls, seeded with contributions raised after the 2020 election with false claims of widespread fraud, to pay for lawyers for himself and witnesses connected to the legal cases. But that committee had roughly $5 million at the start of the year. Even with new donations and other cash infusions the group is expecting, it could cover only a fraction of the judgments Mr. Trump is facing from Justice Engoron and Ms. Carroll.
Separate from his political action committee, there is a super PAC supporting his candidacy. But it legally cannot coordinate with him and so cannot pay for judgments.
The Times review of Mr. Trump’s reserves included his most recent financial disclosure, which shows him having anywhere from $256 million to $936 million in cash as well as stocks, bonds and other investments that he could convert into cash. The actual number is on the lower end of that range, somewhere in excess of $350 million, according to other records and people knowledgeable about his finances.
Mr. Trump’s plan to secure a bond so that he need not immediately pay either the state or Ms. Carroll could prove challenging — and expensive. Mr. Trump must find a company willing to write one in spite of his polarizing presidential run and mounting legal woes. His lawyers would negotiate a deal with the company, which would charge a premium and could demand that Mr. Trump pledge cash and other liquid assets as collateral, legal experts said. Under New York law, he will also owe 9 percent interest until the appeal is resolved, meaning the size of the bond could reach $500 million or more.
If history is a guide, Mr. Trump will argue that he is good for it, playing up his cash on hand. When boasting about his wealth under oath, 10 months ago, he added one footnote:
“My biggest expense is probably legal fees, unfortunately,” he said. “That’s OK.”
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