As Trump’s legal woes mount, so do financial pressures on him

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The New York Attorney General’s fraud case, filed Wednesday against former President Donald J. Trump, aims to recover $250 million from his company and essentially bankrupt him in the state.

Next month, Mr. Trump’s company will face trial in Manhattan on criminal tax charges in a separate case that could cost millions of dollars in fines and legal fees.

And on the horizon are civil lawsuits from people seeking to hold the former president responsible for injuries and trauma inflicted during the Jan. 6 attack on the Capitol by his supporters, a potential wave of lawsuits that some of his advisers fear could be extreme. could be expensive to him.

Taken together, the numerous investigations and lawsuits surrounding Mr. Trump are putting new and significant financial pressure on him.

There is no evidence that he is facing an immediate crisis. In an interview on Thursday, Eric Trump, his son, said the Trump Organization was in a strong position, noting that it had recently paid off some outstanding debt and had seen a windfall in the sale of the Trump International Hotel in Washington.

But when they all pile up, the potential costs facing the former president show that his challenges extend beyond the courtroom and into the maintenance of his wealth, even as he continues to indicate that he is planning another run for the White House. .

At the very least, Mr. Trump’s hopes for new ventures to make money are sputtering: The deal that had the potential to make perhaps the biggest profit for him — a merger involving his fledgling social media company — is hanging by a thread , as regulatory and law enforcement control threatens to unravel it.

Mr. Trump remains a formidable political fundraising force, but even there his situation is complex. Should he run for president, he could face new strict personal restrictions using money he kept on his main political action committee and used for legal fees, Trump property and even Melania Trump’s designer.

John AE Pottow, a professor of commercial law at the University of Michigan, said the kinds of lawsuits the Trump organization faces could hurt any business.

“You have a business that has some serious litigation risks,” he said. “They have a big liability ahead of them.”

Several real estate and commercial law experts said Mr Trump and his company could weather the storms. The Trump Organization generated hundreds of millions of dollars this year from the sale of its Washington hotel, as well as other recent deals, and has refinanced or paid off a significant portion of its loans.

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The company also continues to collect revenue from some of its commercial real estate projects, while many of Mr Trump’s hotels have recovered from deep losses incurred in the early days of the coronavirus pandemic, according to a person with knowledge of the company’s performance.

Its golf clubs, many of which experienced massive growth during the pandemic, have begun to attract new tournaments in recent months, including controversial tournaments such as those run by the Saudi-backed LIV network.

Eric Trump said the family owned most of their real estate assets “free and clear” and had “low debt relative to the value of our assets.” (The lawsuit filed Wednesday by New York Attorney General Letitia James accused Mr. Trump and his family, including Eric Trump, of deliberately and systematically exaggerating the value of the company’s assets.)

Taylor Budowich, a spokesman for the former president, described the various investigations as “armed administration” by Democrats whose efforts “are not credible, they miss the facts and they miss the law”.

Mr Trump is no stranger to legal skirmishes and financial pressures. He served and defended dozens of lawsuits over the years and was nearly financially ruined in the early 1990s. His current problems pale in comparison to those challenges.

Yet Mr Trump’s mounting legal troubles threaten to reverse some of his recent gains and put a damper on his presidential run.

By indicting the former president and three of his children on Wednesday, Ms. James is seeking to ban the Trumps from ever running a business in the state again. She also tries to prevent Mr Trump from acquiring real estate in New York for five years. Although Mrs. James stopped trying to dissolve the Trump organization, her office is trying to shut down at least some of his New York operations.

Ms. James’ case, in which Mr. Trump and his family business are accused of lying to lenders and insurers by fraudulently overvaluing his assets by billions of dollars, had no immediate impact on the company.

It could be years before the case goes to court, and even then a judge would have to impose the sentences that Mrs. James demands. Mr Trump could also try to settle the matter for trial.

More immediately, the Trump Organization’s criminal tax fraud case begins next month in Manhattan. The Manhattan District Attorney’s office, which partnered with Ms. James’s office, accused the company of conspiring with longtime chief financial officer, Allen H. Weisselberg, to evade taxes in a scheme that handed out Mr. Weisselberg perks and other executives.

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Mr Weisselberg recently pleaded guilty to his role in the scheme, which included receiving a rent-free apartment, rented Mercedes-Benzes and private school lessons for his grandchildren. Though he declined to contradict Trump, he agreed to testify at the company’s trial, a move that could help prosecutors defend their case.

If the company is convicted, a judge can impose a relatively modest fine: less than $2 million. But it will also incur a significant amount of legal fees and could create problems with lenders and local authorities, who may shy away from doing business with a company that has been convicted of a crime. (It is believed that the specific Trump Organization entities being indicted do not have loans or liquor licenses, so the impact may be limited.)

At the same time, Mr. Trump is facing a series of investigations and legal charges related to his efforts to retain office after losing the 2020 election, as well as taking — and then refusing to return — presidential records and more than 300 individual documents marked as classified when he left office. He recently paid $3 million from his super PAC to an attorney he hired to help defend himself in those cases.

And possibly hanging over Mr Trump is an apparently unresolved dispute with the IRS, though its status is unclear.

The former president is also facing no fewer than seven separate civil lawsuits seeking to hold him accountable — and seek damages from him — for the role he played in inspiring the chaos and violence that erupted at the Capitol on Jan. 6. 2021. People close to Mr Trump expect other lawsuits to likely follow.

In February, a federal judge in Washington ruled that three of the lawsuits against Mr. Trump could go ahead, setting aside his arguments that he could not be held liable for inciting the crowd on January 6 under the First Amendment and because he was immune. for civil lawsuits. In his decision, Judge Amit P. Mehta said the plaintiffs could try to prove their case that Mr. Trump colluded with the mob that day. The former president has appealed the judge’s decision to the US Court of Appeals in Washington.

Alan Z. Rozenshtein, a former Justice Department official and law professor at the University of Minnesota, said that if the Jan. 6 lawsuits against Mr. Trump were successful, the calculation of the amount he could potentially pay in damages to pay would depend on the individual trials suffered by the plaintiffs. Among them are members of Congress, Capitol police officers and residents of Washington.

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“I don’t think such a fine — even if they had to pay $250 million — would bring the company down,” said Phillip A. Braun, a professor of finance at the Kellogg School of Management at Northwestern University, referring to the question from Mrs. James. “It would be painful for the family, but they could probably do it by liquidating some of their property.”

When Mr. Trump left the White House, it seemed unlikely that money was a concern. Despite the shadow of January 6, he seemed poised to cash in on his appeal in conservative media circles, including through his social media venture – the merger of the parent company of Truth Social, his Twitter-like social media platform, with a special purpose called acquisition company. Digital World Acquisition Corp.

But the deal has been thwarted by duplicate investigations by the SEC and federal prosecutors. The original September 8 TBEN for the deal has passed and Digital World could face the prospect of liquidation in the coming weeks.

Digital World’s promoters hope the company’s shareholders — most of which are private investors — will agree to give them until September next year to finalize the deal. But even with one more year to go, the prospects for SEC approval of the Digital World-Trump Media & Technology Group deal look bleak.

Regulators and federal prosecutors in Manhattan are investigating possible improper communications between representatives of Digital World and Trump Media ahead of the public offering of the special-purpose acquisition company. They are also investigating unusual trading in Digital World’s stock ahead of the merger announcement last October.

Digital World not only raised nearly $300 million in cash in its IPO last September. It also caused dozens of hedge funds to commit to provide an additional $1 billion in funding after the two companies announced the merger in October. Mr. Trump, who is expected to receive more than 70 million shares when the merger completes, telephoned some of the major investors willing to invest at least $50 million.

But the inability to complete the merger on time led to the termination of that $1 billion financing deal. It’s not clear whether Digital World and Trump Media can convince those investors to sign a new deal, given the legal uncertainty surrounding the merger and Mr Trump personally. Shares of Digital World have plunged to $17, from $97.

The post As Trump’s legal troubles mount, so do financial pressures on him appeared first on New York Times.

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