Civil fraud debt: New York AG says she’ll seize Trump’s property if he can’t pay $454 million

February 22, 2024

6 minutes read

NEW YORK (AP) — Donald Trump could be at risk of losing some of his prized properties if he can’t pay his staggering New York civil fraud penalty. With interest, he owes the state nearly $454 million — and the amount is going up $87,502 each day until he pays.

New York Attorney General Letitia James told ABC News on Tuesday that she will seek to seize some of the former president’s assets if he’s unable to cover the bill from Judge Arthur Engoron’s Feb. 16 ruling.

Engoron concluded that Trump lied for years about his wealth as he built the real estate empire that vaulted him to stardom and the White House. Trump denies wrongdoing and has vowed to appeal.

“If he does not have funds to pay off the judgment, then we will seek judgment enforcement mechanisms in court, and we will ask the judge to seize his assets,” James, a Democrat, said in an interview with ABC reporter Aaron Katersky.

Trump’s ability to pay his mounting legal debts is increasingly murky after back-to-back courtroom losses. In January, a jury ordered him to pay $83.3 million for defaming writer E. Jean Carroll.

Trump claimed last year that he has about $400 million in cash — reserves that would get eaten up by his court penalties. The rest of his net worth, which he says is several billion dollars, is tied up in golf courses, skyscrapers and other properties, along with investments and other holdings.

But don’t expect James to try to grab the keys to Trump Tower or Mar-a-Lago immediately. Trump’s promised appeal is likely to halt collection of his penalty while the process plays out.

Here’s a look at where things stand in the wake of Trump’s costly verdict.

COULD THE STATE REALLY SEIZE TRUMP’S ASSETS?

Yes. If Trump isn’t able to pay, the state “could levy and sell his assets, lien his real property, and garnish anyone who owes him money,” Syracuse University Law Professor Gregory Germain said.

Seizing assets is a common legal tactic when a defendant can’t access enough cash to pay a civil penalty. In a famous example, O.J. Simpson’s Heisman Trophy was seized and sold at auction in 1999 to cover part of a $33.5 million wrongful death judgment against him.

Trump could avoid losing assets to seizure if he has enough cash — or can free up enough cash — to pay his penalty and mounting interest.

How much he has isn’t clear because most information about Trump’s finances comes from Trump himself via his government disclosures and the annual financial statements that Engoron has deemed fraudulent.

Trump reported having about $294 million in cash or cash equivalents on his most recent annual financial statement for the fiscal year ending June 30, 2021.

After that, according to state lawyers, he added about $186.8 million from selling the lease on his Washington hotel in May 2022 and the rights to manage a New York City golf course in June 2023. Part of Trump’s penalty requires that he give those proceeds to the state, plus interest.

Engoron’s decision last week spared Trump’s real estate empire from what the Republican front-runner deemed the “corporate death penalty,” reversing a prior ruling and opting to leave his company in business, albeit with severe restrictions including oversight from a court-appointed monitor.

James didn’t specify to ABC which of Trump’s assets the state might want to seize, though she noted that her office is right across the street from a Trump-owned office building in Lower Manhattan that was the subject of some of the fraud allegations in her lawsuit.

“We are prepared to make sure that the judgment is paid to New Yorkers,” James told ABC. “And yes, I look at 40 Wall Street each and every day.”

HOW WILL AN APPEAL AFFECT TRUMP’S PENALTY?

With Trump promising to appeal, it’s unlikely he’ll have to pay the penalty — or face the prospect of having some of his assets seized — for a while. If he wins, he might not have to pay anything.

Under state law, Trump will receive an automatic stay if he puts up money, assets or an appeal bond covering the amount he owes. A stay is a legal mechanism halting enforcement of a court decision while the appeals process plays out.

“Even if we choose to appeal this – which we will – we have to post the bond, which is the full amount and some, and we will be prepared to do that,” Trump lawyer Alina Habba told Fox News on Monday.

Trump’s lawyers can also ask the appeals court to grant a stay without obtaining a bond or with a bond for a lower amount.

In his Georgia election interference criminal case, Trump paid $20,000 — or 10% — for a $200,000 release bond. After losing at a first trial involving Carroll last year, Trump put $5.55 million in escrow to cover the cost of the judgment while he appeals. He has said he would appeal the $83.3 million January verdict but has yet to do so.

“If he can’t post a bond or meet the appellate division’s bonding requirements, then I would expect him to file bankruptcy to take advantage of the automatic stay on collection,” Germain said. “But that’s a couple of chess moves away, so we will just have to see what happens.”

Trump’s vow to appeal all but assures the legal fight over his business practices will persist into the thick of the presidential primary season as he tries to clinch the Republican nomination in his quest to retake the White House.

The appeal is also likely to overlap with his criminal trial next month in his New York hush-money case, the first of his four criminal cases to go to trial.

Trump’s 30-day window to appeal won’t start until the clerk at Engoron’s courthouse files paperwork making the verdict official. Engoron sent the paperwork to the clerk’s office Thursday, but it has yet to be filed. The judge rejected a request from Trump’s lawyer Clifford Robert asking for the enforcement of the penalty to be delayed 30 days “given the magnitude” of the judgment. Engoron, replying to the lawyer by email, said: “You have failed to explain, much less justify, any basis for a stay. I am confident that the Appellate Division will protect your appellate rights.”

DOES TRUMP REALLY OWE $87,502 A DAY IN INTEREST?

With each passing day, Trump owes an additional $87,502 in interest on his civil fraud penalty. By Thursday, that’ll be an extra $525,000 since the decision was issued on Feb. 16. The interest will continue to accrue even while he appeals. Barring court intervention or an earlier resolution, his bill will soar to a half-billion dollars by August 2025.

Trump’s underlying penalty is $355 million, the equivalent of what the judge said were “ill-gotten gains” from savings on lower loan interest and windfall profits from development deals he wouldn’t have been able to make if he’d been honest about his wealth.

Under state law, he is being charged interest on that amount at an annual rate of 9%.

As of Wednesday, Trump owed just over $99 million in interest, bringing his total to just under $454 million — that’s $453,981,779 to be exact, according to the Associated Press’ calculations. Trump’s interest will keep accruing until Trump pays. Trump owes the money individually and as the owner of corporate entities that were named as defendants in James’ lawsuit.

Engoron said the interest Trump owes on about half of the total penalty amount — pertaining to loan savings — can be calculated from the start of James’ investigation in March 2019. Interest on the remaining amount — which pertains to the sale of Trump’s Washington hotel and Bronx golf course rights — can be calculated starting in May 2022 or June 2023.

In all, Engoron ordered Trump and his co-defendants to pay $363.9 million in penalties, or about $464.3 million with interest — the total bill increases by $89,729 per day, according to AP’s calculations.

Trump’s sons, Eric and Donald Jr., must each pay about $4.7 million, including interest, to the state for their shares of the Washington hotel sales. Weisselberg was ordered to pay $1 million — for half of the $2 million severance he’s receiving — plus about $100,000 in interest.

Until they pay, Weisselberg is on the hook for another $247 per day, while Trump’s sons each owe an extra $990 per day, according to AP’s calculations.