The New York attorney general’s fraud lawsuit filed Wednesday against former President Donald J. Trump seeks to recover $250 million from his company and essentially put him out of business in the state.
Next month, Trump’s company will go to 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 accountable for the injuries and trauma involved during the Jan. 6 assault on Capitol Hill by his supporters, a potential litigation wave that some of his advisers fear could result. extremely expensive for him.
Together, the many investigations and lawsuits revolving around Trump are creating significant new financial pressures on him.
There is no evidence that he faces an immediate crisis. In an interview Thursday, his son, Eric Trump, said the Trump Organization was in a strong position, noting that it had recently paid off some outstanding debts and made a windfall from the sale of the Trump International Hotel in Washington.
But when stacked together, the potential costs facing the former president show his challenges extend beyond the courtroom and into maintaining his wealth, even as he continues to indicate he plans another run for the White House.
At the very least, Trump’s hopes for money-making startups are fading: The deal that had the potential to reap perhaps the biggest profits for him, a merger involving his social media startup, hangs in the balance, already. than regulators and law enforcement. scrutiny threatens to unravel it.
Trump remains a formidable fundraising political force, but even there his situation is complex. If he becomes a presidential candidate, he could face strict new restrictions on his personal privacy. using money he has kept in his main political action committee and used for legal fees, Trump properties and even Melania Trump’s designer.
John AE Pottow, a business law professor at the University of Michigan, said the kind of legal cases the Trump Organization faces can hurt any corporation.
“You have a company that has serious litigation risks,” he said. “They have a huge responsibility on the horizon.”
Several real estate and business law experts said Trump and his business could weather the storms. The Trump Organization made hundreds of millions of dollars from the sale of its Washington hotel this year, as well as from other recent deals, and has refinanced or paid off a sizeable portion of its loans.
The company also continues to collect revenue from some of its commercial real estate projects, while many of Trump’s hotels have recovered from deep losses suffered in the early days of the coronavirus pandemic, according to a person with knowledge of the company’s performance. .
His golf clubs, many of which have seen a surge in business during the pandemic, have started attracting new tournaments in recent months, including controversial ones 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 that they had “low debt relative to the value of our assets.” (The lawsuit filed Wednesday by New York Attorney General Letitia James accused Trump and his family, including Eric Trump, of deliberately and systematically overstating the value of the company’s assets.)
Taylor Budowich, a spokesman for the former president, described the various investigations as a “armed government” by Democrats whose efforts “lack credibility, lack facts and lack the law.”
Trump is no stranger to legal skirmishes and financial pressures. He filed and defended dozens of lawsuits over the years, and in the early 1990s, he faced near financial ruin. His current predicaments pale in comparison to those challenges.
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However, Trump’s mounting legal troubles threaten to roll back some of his recent gains and cloud his presidential bid.
By suing the former president and three of his children on Wednesday, Ms. James seeks to prevent the Trumps from running a business in the state again. She also seeks to prevent Trump from acquiring New York real estate for five years. Although Ms. James stopped short of trying to dissolve the Trump Organization, her office is trying to shut down at least some of its operations in New York.
The case of Ms James, which accuses Trump and his family business of lying to lenders and insurers by fraudulently overvaluing their assets by billions of dollars, had no immediate impact on the company.
It could take years for the case to play out in court, and even then, a judge would have to award the punishments Ms James is seeking. Trump could also try to resolve the case before a trial.
More immediately, the criminal trial for tax fraud of the Trump Organization will begin in Manhattan next month. The Manhattan District Attorney’s office, in collaboration with the office of Ms. James, accused the company of conspiring with its longtime CFO, Allen H. Weisselberg, to evade taxes in a scheme that provided unofficial benefits. Mr. Weisselberg and other executives.
Mr. Weisselberg recently pleaded guilty for his role in the scheme, which included receiving a rent-free apartment, rented Mercedes-Benzes and private school tuition for his grandchildren. Though he refused to turn on Trump, he has agreed to testify at the company’s trial, a move that could help prosecutors make their case for him.
If the company is convicted, a judge could impose a relatively modest penalty: less than $2 million. But you will also incur significant legal fees and could face problems with lenders and local authorities, who may avoid doing business with a company convicted of a felony. (The specific Trump Organization entities under indictment are not believed to have any loans or liquor licenses, so the consequences could be limited.)
At the same time, Trump faces a series of investigations and legal costs related to his efforts to retain office after losing the 2020 election, as well as his presidential records and more than 300 presidential records, and then refuses to return them. individual documents marked 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 potentially pending for 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, for his role in inspiring the chaos and violence that erupted on Capitol Hill on Jan. 6, 2021. People Close to Trump they anticipate that other lawsuits are likely to follow.
In February, a federal judge in Washington ruled that three of the lawsuits against Trump could go forward, dismissing his arguments that he could not be held liable for raging the crowd on January 6 under the First Amendment and because he was immune from litigation. civilians. In his decision, Judge Amit P. Mehta said the plaintiffs could try to prove their case that Trump had conspired 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 who is a professor at the University of Minnesota Law School, said if the Jan. 6 lawsuits against Trump were successful, calculating how much he might have to pay for damages would depend on the individual orders suffered by the plaintiffs. They include members of Congress, Capitol Police officers and Washington residents.
“I don’t think a fine like that, even if they had to pay $250 million, would bankrupt the company,” Phillip A. Braun, a finance professor at Northwestern University’s Kellogg School of Management, said, citing the lawsuit. . of Mrs James. “It would be painful for the family, but they could probably do it by liquidating some of their property.”
When Trump left the White House, money seemed unlikely to be a concern. Despite the shadow of January 6, he appeared 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 social media platform. social networks similar to Twitter, with a special purpose acquisition company called Digital World Acquisition Corp.
But the deal has been hampered by dual investigations by the SEC and federal prosecutors. The original deadline of September 8 to complete the deal has passed, and Digital World could face the possibility of liquidation in the coming weeks.
Digital World’s promoters hope the company’s shareholders, most of whom are retail investors, will agree to give them until next September to complete the deal. But even with another year to go, the prospects for the SEC’s approval of the deal between Digital World and Trump Media & Technology Group look bleak.
Federal regulators and prosecutors in Manhattan are investigating potentially inappropriate communications between representatives of Digital World and Trump Media ahead of the special-purpose company’s takeover bid. They are also examining unusual transactions in Digital World stock prior to the merger announcement last October.
Digital World not only raised nearly $300 million in cash in its initial public offering last September. He also got dozens of hedge funds to commit to providing an additional $1 billion in funding after the two companies announced the merger in October. Trump, who will receive more than 70 million shares if the merger goes through, has been on the phone with some of the big investors willing to commit at least $50 million.
But the inability to complete the merger on time led to the termination of that billion-dollar financing deal. It’s unclear whether Digital World and Trump Media can persuade those investors to sign a new deal, given the legal uncertainty surrounding the merger and Mr. Trump personally. Digital World shares have plunged to $17, from $97.
alan fire contributed report.