9 months ago
NEW YORK — A seven-figure verdict, an eight-figure verdict and, now, a nine-figure verdict.
Donald Trump has been hit with all three in the past nine months, with Friday’s $354 million penalty for New York business fraud by far the most massive.
He is now on the hook for over $440 million in civil judgments as he heads toward the Republican nomination — and as he prepares for one or more criminal trials this year.
Those criminal cases could put him in jail. And in the meantime, his escalating troubles in his civil cases are packing a devastating financial punch.
Even for a man who claims to be a billionaire, $440 million is a potentially crippling amount of cash to turn over. Can Trump afford the judgments? When does he have to pay them? And what happens if he says he can’t — or if he outright refuses?
Here’s a look at what comes next.
Can Trump afford to pay?
Trump’s company isn’t public, and he has famously refused to disclose his tax returns, so his cash flow situation is shrouded in mystery.
Even if he has $440 million in cash on hand — and it’s far from clear that he does — paying the judgments could wipe out his accounts, since Trump himself has placed his cash reserves in the ballpark of that amount.
Trump claimed in a deposition last year that he had “substantially in excess” of $400 million in cash on hand.
“We have, I believe, 400 plus and going up very substantially every month,” he said, adding: “My biggest expense is probably legal fees, unfortunately.”
But it’s unclear whether that number is accurate. That deposition, after all, was part of the very lawsuit in which a judge found that Trump has repeatedly inflated his net worth.
If he doesn’t have enough cash on hand, would he have to sell properties?
Trump would likely have to sell something, although it wouldn’t necessarily have to be property. He could sell investments or other assets.
What happens if he resists paying?
In the civil fraud case, which is in New York state court, if Trump can’t post the funds or get a bond, then the judgment would take effect immediately and a sheriff could begin seizing Trump’s assets.
The rules are slightly different in federal court, which is the venue for the $83.3 million judgment that Trump owes for defaming the writer E. Jean Carroll after she accused him of raping her. (He also owes Carroll an additional $5 million from a separate verdict last year.) Carroll could pursue post-judgment discovery under the jurisdiction of the judge who oversaw the trial. Through that process, the judge could order Trump to produce his bank account records, place liens or garnish his wages.
“I think he’s going to have to pay. And whether it requires him to sell or to put a lien on something to get a loan, that’s his problem, not ours. He’s going to pay,” Carroll’s attorney Roberta Kaplan said on CNN last month.
The judge, Kaplan added, will use “judgment enforcement mechanisms” to “make sure that he pays.”
If Trump truly can’t afford the judgments, he would have to declare bankruptcy.
Can Trump delay payment by appealing the verdicts?
No. In all three cases, he has to put money in an escrow account with the court or get a bond while he’s appealing the verdicts.
With the civil fraud verdict, which Trump has vowed to appeal, the amount to be posted or bonded is set by the court. It is typically about 120 to 125 percent of the judgment amount, to account for additional post-judgment interest that accrues during the appeal.
With last year’s Carroll verdict, which Trump has appealed, he turned over $5.5 million to the court, which was worth 111 percent of the judgment.
For the more recent Carroll verdict, which Trump has also vowed to appeal, 111 percent of the judgment would be $92.46 million. Trump has a 30-day window after the Jan. 26 verdict to either pay cash into the court’s escrow or get a bond while he appeals. If he chooses to file a bond, he will likely have to pay a 20 percent deposit ($16.66 million) and put up collateral, but it could come with fees and interest, making it more expensive in the long run. And it would require Trump to find a third party willing to take on the risk of loaning him money.
Does he personally have to pay the verdicts? Could he get his campaign or PAC or the RNC to pay?
The courts don’t have restrictions on the sources of funds used to pay judgments, and Trump would surely like to tap other funds than whatever money is in his own personal accounts.
He could transfer assets from the Trump Organization to himself in order to help satisfy the judgments.
Using his political vehicles to pay would be far trickier. There is a general ban on using campaign donations for personal uses unrelated to a campaign or the official duties of an officeholder. And as for his political action committees, Richard Pildes, a professor of constitutional law at New York University law school, said they can’t pay Trump’s judgments.
“Campaign funds cannot be used for that purpose regardless of whether the PAC is the decision-maker,” he wrote in an email.
Besides, Trump’s PACs may not be able to afford the judgments, since he has been using them to pay the many lawyers defending him across his criminal and civil cases.
Two of Trump’s PACS spent $29 million in legal consulting and legal fees in the second half of last year, leaving only $5 million in his leadership PAC’s coffers.
The Republican National Committee doesn’t have the same ban on the personal use of funds as Trump’s campaign committee, but paying Trump’s judgments could jeopardize its nonprofit status.
English (US)