(Bloomberg) — Donald Trump’s lawyers are on a mission to wipe out his biggest financial liability: a nearly half-billion-dollar civil fraud judgment in New York that is rising by more than $100,000 every day.
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Lawyers for the Republican presidential candidate asked an appeals court on Thursday to lift a $454 million fine imposed on Trump for exaggerating his wealth in bank documents to get better loan terms. They argue that the claims were filed too late by New York authorities and that “clear disclaimers” on Trump’s documents advised the banks to make their own assessments of his wealth.
“The disclaimers say what everyone already knows you do in this industry: you do your own due diligence,” Trump attorney John Sauer told a panel of five appellate judges, several of whom seemed open to his arguments.
The battle, coming just six weeks before Election Day, comes as Trump’s wealth fluctuates wildly amid the rise and fall of his social media startup. His majority stake in Trump Media & Technology Group Corp (DJT) added billions to his fortune earlier this year and created a potential source of cash to pay the fraud fine. But that windfall has diminished now that the stock has collapsed.
A decision from the Manhattan appeals court is not expected before the Nov. 5 election and could take several months. If Trump loses, he could take the case to New York’s highest court and, if necessary, the US Supreme Court – although this could delay a final decision until 2026.
The appeal is a financial gamble. The judgment, in a lawsuit filed by New York’s attorney general, added about $23 million in interest costs during Trump’s challenge, bringing the total he owes to about $477 million. Further time-consuming appeals could increase this amount.
“We are confident that a fair hearing on the merits of this case will result in a total dismissal of the unconstitutional, unlawful verdict,” Trump campaign spokesman Steven Cheung said in a statement.
The verdict was the largest liability listed on Trump’s financial disclosure form filed Aug. 13 with the U.S. Office of Government Ethics. It far exceeds his other major debts, including a $160 million Ladder Capital Finance LLC mortgage for his skyscraper at 40 Wall Street, and a pair of Axos Bank mortgages totaling $225 million for Trump Tower and Trump National Doral Golf Course.
The sentence was imposed after a New York judge found that Trump had exaggerated his wealth by billions of dollars a year for more than a decade based on annual financial filings to get better loan terms, using hundreds of millions of dollars in “ill-gotten gains.” dollars had been raised. gain. Trump, 78, denies wrongdoing.
Wealth fluctuates
Jennifer Rodgers, a former federal prosecutor in Manhattan who has closely followed Trump’s cases, said she thinks Trump has a “decent chance” of reducing the sentence at least in part because the method used to extract ill-gotten gains to calculate “is not a hard science”. .”
During Thursday’s hearing, a majority of the appeals panel directed their questions at the attorney general’s attorney, Judith Vale. The justices repeatedly asked for an explanation of the extent of the attorney general’s power under New York law and why the case was brought when no banks or consumers were losing money. One judge called the amount of the sentence ‘disturbing’ and asked why the case should not be seen as ‘mission creep’.
Vale was also pressed about Trump’s use of disclaimers and the argument that Trump’s behavior had “little to no impact on the public marketplace.”
“There was definitely a public impact,” Vale said. “When deceptively hidden risks are injected into the market, it harms the counterparties – and here there was harm to the counterparties – but it also harms other market participants and the market as a whole because they don’t understand the risks.”
The appeal hearing once again focuses attention on Trump’s changing financial fortunes. His wealth this year has been driven by the stock price of Trump Media, which immediately became his biggest asset when it debuted on the public markets in March. Trump’s net worth rose by more than $4 billion to $6.5 billion, putting him on the Bloomberg Billionaires Index rankings of the world’s 500 richest people for the first time.
The value of Trump’s stake rose again when he was awarded more shares that were conditional on achieving certain price targets. As of early May, Trump was worth $8.8 billion, making him the 293rd richest person in the world.
But most of that was on paper, because Trump couldn’t sell his shares until the end of a lock-up period, which ended last week. The stock is now down about 80% from its high in late March.
According to Bloomberg’s wealth index, Trump is now worth $4.1 billion. He has vowed not to sell his Trump Media shares, a promise he kept through Monday, the first day such a move would be made public.
Trump’s stake is currently worth about $1.6 billion and he can still freely sell millions of shares or use them as collateral for loans. However, experts have pointed to low trading volumes, potential volatility and legal restrictions around selling shares quickly as a deterrent to Trump using the stock as collateral.
Trump Media stock has been more volatile than Bitcoin and meme stock GameStop Corp. by some measures. Its 30-day realized volatility is around 97, more than double Bitcoin’s value and well above Tesla Inc.’s. by Elon Musk.
Meanwhile, the billionaire is looking at new sources of income that could eventually generate money quickly, from $100 silver coins that look like him to a crypto project that he believes will take over traditional banks.
Liabilities, income
Trump faces other financial liabilities arising from court rulings. These include the $83.3 million verdict against Trump in author E. Jean Carroll’s defamation case, and a separate $5 million verdict in her sexual abuse lawsuit. His total legal debts are almost $600 million.
The filing with the U.S. Office of Government Ethics, which covers Trump’s finances for 2023 and the first four months of 2024, also showed $513 million in income from U.S. resorts and residences, including his Mar-a-Lago and Bedminster clubs. He also reported hundreds of thousands of dollars in income from licensing his name and image to promote sales of the “God Bless the USA Bible.”
Additional revenue came in from Trump-branded items, including high-top sneakers and non-fungible tokens. He also got about $500,000 from a photo album of his presidency.
Paying the judgment could be complicated if his appeal ultimately fails because his real estate holdings are vast but illiquid. Earlier in the case, Trump said he had $400 million to $500 million in cash, but the appeal bond was reduced to $175 million after he said he did not have the funds to cover the full amount.
(Updates with details of the hearing from the third paragraph.)
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