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Judge Issues Ruling Against Trump And His Sons In Civil Fraud Trial; Judge Orders Trump To Pay Nearly $355 Million In Civil Fraud Trial. Aired 3-3:30p ET

Aired February 16, 2024 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[15:00:44]

BRIANNA KEILAR, CNN HOST: Any minute now, former president, Trump, will learn the price that he'll pay for fraudulently inflating financial statements for years and the fate of his family's business empire may hang in the balance. Prosecutors asking for a $370 million fine and potentially crippling restrictions on how the Trumps can do business in New York.

Plus, Putin's biggest critic is now reportedly dead and President Biden says Putin is responsible. We're following the global reaction to Alexei Navalny's death.

BORIS SANCHEZ, CNN HOST: And more courtroom drama, but in Atlanta, the DA at the center of dramas - of Trump's election case in Georgia is now fighting to stay on the job. Prosecutors think that Fani Willis' fiery testimony yesterday is enough to beat the push to disqualify her and today her dad took the stand defending his daughter.

I'm Boris Sanchez with Brianna Keilar in the nation's capital. We're following these major developing stories and many more.

We actually want to get right to Kara Scannell.

Kara, do we have a ruling in the Donald Trump civil fraud trial case?

KARA SCANNELL, CNN CORRESPONDENT: Yes, we do Boris. We just got the ruling. It is 92 pages long and I'm scanning through it right now. But when I'm looking at these numbers, the totals that the judge is ordering collectively in the case, so this will include all of the defendants, I'm getting a total of $362 million. And I'm just scrolling through this now. I can see that there's the dollar amount specific to Donald Trump. I'm going to use a calculator to do some rough math. It gets us to, for Donald Trump, about $354 million. That's for him, the company, The Trump Organization.

So very close to what the New York attorney general's office was seeking of $370 million. There's a lot of zeros here and a lot of other numbers, but roughly $354 million is the judgment against Donald Trump. The judge also found that his son, Eric Trump, is liable in the amount of $4 million. Donald Trump Jr. is liable in the amount of $4 million. And Allen Weisselberg, the former chief financial officer, is liable in the amount of $1 million.

I haven't had a chance to read through the language of what the judge said here, but really this was about the money because the judge had already found that Donald Trump, his sons and Allen Weisselberg had engaged in fraud by issuing fraudulent financial statements, giving them to banks and insurers in order to obtain favorable rates. He ruled that before the trial, but we did go through a three-month trial. The judge was looking to determine how much in ill-gotten gains, is what this word of disgorgement means, the money that they benefited from.

So now the judge issuing the significant ruling, more than $350 million against Donald Trump and The Trump Organization, and against the sons. I'm going to just see if I can quickly search to see what the judge said about any ban. That was the other outstanding question here. I'm not able to find that very quickly, but that is another issue that we're looking for here, of what the judge says about whether he's banning Trump from doing business or his sons.

But this ruling, there was a question of whether the sons would be found to be liable because the judge said at the end of the trial, during closing arguments, he asked the attorney general's team if they - he said he wasn't sure there was sufficient evidence against the sons, this ruling here indicating that he believes that they did at least receive improper profits and asking them to disgorge that to the - as a result of this case.

This is a significant win for the New York attorney general, Letitia James. She'd been investigating this case ever since Michael Cohen testified before Congress, when he made this first allegation that Trump had inflated the value of properties to get better loans, rates on loans and insurance and to pay less in taxes. So she is now justified by this finding by the judge.

And again, this was a judge trial. This was not a jury trial. So we've been waiting for Judge Arthur Engoron to issue this ruling. And now we have it, we still have to continue to read through it. Our team is doing that as I speak. But a real significant win for the New York Attorney General and a loss for Donald Trump in this case that goes to the heart of his reputation, the reputation that he was a successful real estate businessman, that he rode to the White House.

[15:05:00]

The judge finding here that there was fraud, there was liability and saying that Trump needs to pay back more than $350 million. Boris? Brianna?

KEILAR: Yes. It goes so much to his identity. This is clearly one of the cases, one of the legal issues that he's facing that bothers him the most here as the attorney general in New York had argued that it was the marketplace that was harmed here and was seeking to recoup this disgorgement or these ill-gotten gains.

Let's go ahead and bring in Paula Reid, our chief legal correspondent, to talk about what she is seeing here, with our understanding here, Paula, that this is really kind of hot off the presses, this ruling.

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: Yes. The paper is still warm, but we're going through it right now. And as you and Kara were talking about, this case is so personal because it represents such a threat to Trump's business, his family business and his identity. Remember, it was his identity as a businessman that brought him fame before he arrived at the White House. But in looking at the summary of this ruling, we see, in addition to the monetary penalties that Kara just laid out, they have found him liable for fraud and they are going to continue the appointment of an independent monitor.

So back in 2022, the judge installed a monitor to keep an eye on exactly what The Trump Organization was doing when it came to its business dealings. Now, among the things this monitor uncovered were a $48 million loan, for example, to the company itself, but there was no paperwork. They couldn't really find any information. That was just one thing that came up.

Now, Trump lawyers have insisted, because they loaned the money to themselves, they didn't have the paperwork that they needed, and insist that the monitor has found no fraud. Now, the judge also here orders the installation of an independent director of compliance. But I also want to note that they are saying here, the judge is saying that they're going to limit the defendant's right to conduct business in New York for a few years.

Now, it's probably going to take a few minutes before we unpack exactly what that means. Does that - that does not appear to be an indefinite ban, the so-called corporate death penalty, but it does appear that the judge is going to put some restrictions on Trump and The Trump Organization's ability to do business in the state of New York.

But let's go back to the idea of this independent director of compliance that appears to be maybe an executive level person who will ensure that they are being honest when evaluating their assets, when applying for insurance or loans from banks. Because, of course, that is what the judge here found Trump liable for last fall, before this trial started. They said you are liable for fraud. They believe that he was not honest about the value of his assets, because he was trying to get more favorable terms from banks, from insurance companies.

Now, Trump's defense here was that they were - these are subjective valuations, that ultimately there was no victim. And I want to note, when it comes to barring anyone from doing business in the state of New York, the so-called corporate death penalty is something that is rarely handed down in the state of New York, especially when there is no obvious victim. So we're going to keep reading to learn more about the limits that they're going to put on his ability to conduct business in New York over the next few years.

SANCHEZ: All right. Paula, we'll let you get to it. Please stand by.

We have a couple of important voices now on these developments, Renato Mariotti is with us, Norm Eisen as well, as Doug Heye, looking at the political angle of this. First to you, Norm, just your reaction to this filing by Judge Engoron and the news from Paula that The Trump Organization will not face the corporate death penalty, though there will be some limits on their ability to do business in New York.

NORM EISEN, CNN LEGAL ANALYST: Boris, it's another devastating blow to the former president. Yesterday, there was the criminal case in New York State on allegations of fraud at the end of the 2016 election that - in the form of paying hush money. Now you get this civil fraud ruling in almost the full amount requested, over $360 million against Donald Trump, his businesses, associated persons and entities. And it does have significant sanctions on Donald Trump and others, including his sons, continuing to do business.

So Donald Trump cannot serve as an officer or director of a New York company for three years. He cannot take out loans for three years as part of the penalty. It - however, the one bright lining in here for Donald Trump is the judge rolls back his prior determination of removing the certificates to do business, the so-called corporate death penalty that would have shut these companies down. He had gotten appellate pushback.

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And of course, now all of this will be reviewed on appeal.

KEILAR: And I want to bring in Renato, just sort of a - with a technical question. And Paula, jump in too, if you know this.

As we understand now that the judge has ordered Trump to pay nearly $355 million in this civil fraud trial in these ill-gotten gains, in disgorgement, as it is called. What happens, because obviously he's appealing this, is the - is there some kind of bond that is posted? What is the process for securing the money even as this appeals process continues? Does he have to do that?

RENATO MARIOTTI, FORMER FEDERAL PROSECUTOR: So that's typically the case in most states, is that you do have to post a bond, pending appeal. And that often is something that you'll post a certain amount of capital. You won't post the entire amount in order to obtain that bond.

Here I would expect, for example, there not only to be a bond that's posted, but of course, in the meantime, he's going to have to comply with some of the conditions that the judge has already imposed. So then that's going to limit his ability to continue to make money and run his business. I mean, as a practical matter, businesses have to be nimble.

And having an independent compliance director and a monitor and so on is going to also, I would say, hamper his ability to be nimble and act in a way that he ordinarily might want to in his business. So I think it's a very significant impact on him in the short run, regardless of his financial situation.

I don't see any way, despite Trump often spinning things as a win, I just don't see how any lawyer with a straight face could tell their client that this is a great result. This is a devastating result for Trump and his businesses.

SANCHEZ: We also have CNN Anchor, Kaitlan Collins, with us.

Kaitlan, your reaction hearing this news, you're in touch with a lot of folks in Trump world. I wonder how they're reacting to this.

KAITLAN COLLINS, CNN ANCHOR: Yes. They were bracing today. Obviously, they were not expecting this financial penalty to be anything, a light or anything favorable to them. They already knew that this was working against their favor, given what the judge had ruled. And right now, they're reading this in real time, just like we are. They were waiting. They knew it was expected to come out in the mid afternoon. The former president is preparing to potentially speak on this.

But as of this moment, since this just came out from the judge, they're looking at it themselves. And I can tell you one thing that has caught their eye, that it's not totally clear what this actually means for the future of this company is what Norm was just referencing there, where Trump has been banned from serving in any top roles in any New York company for the next three years. Also, his two adult sons cannot do it for the next two years based on what I'm looking at.

And of course, Eric Trump is essentially in charge of the - he's the executive - the chief executive of The Trump Organization. And so when you're reading through this and this is a question I've had for his team is whether or not it means anyone in his family can run that in the near term and what that means for The Trump Organization over the next two years. And so that is something that is very much in doubt at this moment as they are reading through this and trying to understand really the implications of this, given they already knew just how expensive it was going to be.

Yes, they do plan to appeal. But the question, since this is a little under what the attorney general was asking for here, it's not clear just how much they could potentially get it down, if at all, in an appeal. And so that is certainly something that is kind of tying up this years-long investigation that Trump has been fighting for so long and now it's culminated with this ruling from the judge.

KEILAR: And Kaitlan, if as we expect, the former president has to post some kind of bond while this goes through appeal to cover at least a portion of this $355 million, while he appeals it, but he has to secure part of it, that is still a lot of money that is going to be tied up. How do you anticipate that will affect him in a very real way, but also just, I guess, sort of how he feels about his image and the fact that that will be tied up?

COLLINS: Yes. It's not clear that it would necessarily bankrupt him. I mean, a lot of his money is tied up in real estate, as we know. So that's certainly going to be a focus of how exactly that works, how they structure this, because even if they're appealing it, that doesn't mean they're going to get an answer to it right away. The other part of this that's really interesting is this independent monitor that they have, the appointment of that has been extended. That's someone who is essentially watching for any kind of fraud or transactions that may look questionable.

[15:15:06]

That's something that in this ruling, based on what I'm reading right now, has been extended for three years. That is something that Trump has personally been irritated by and so has his attorneys, because they say that that person who has been in place right now has cost them millions of dollars by what she's pointed out. And the fact that part of this punishment is extending that for three more years is certainly something that they're watching closely.

As far as the financial repercussions on him, I mean, obviously, this is a huge blow to him. The question is what it actually looks like. And, of course, the question of whether or not they can appeal, which is his tried and true strategy with all of these rulings.

SANCHEZ: Doug Heye, as a Republican strategist, you're watching the politics of this. This is now my scrap piece of paper math.

DOUGH HEYE, REPUBLICAN STRATEGIST: Yes.

SANCHEZ: More than 400 - almost $420 million that Trump is going to have to pay in these civil cases. He's obviously got the criminal side of it. And this looming sort of oversight over his business empire that kind of moves him out of the way, it's central to his identity as a politician.

HEYE: Yes.

SANCHEZ: But how does this actually impact his support among the party?

HEYE: Well, in the party, I don't think it'll change anything. Donald Trump's support has been rock solid. If you look at the primary results in the polls that we've seen, both of people voting or just in polling in future states, Donald Trump's in an extremely comfortable position. Not just - we used to talk about the Trump core base. That's really the party writ large at this point.

But to Renato's point earlier, he talked about how if Donald Trump sees any weakness, he can go after and seemingly almost anything that's been thrown at him in a courtroom. This is not an example where Trump can do that.

It cuts to his core. These are very real costs on this. It makes it easier to define him, not as a successful businessman, which he's obviously successfully pitched over the years, but as somebody who's done it through ill means. And ultimately, you've used the word disgorgement a lot, Brianna. That's a term that's usually used for champagne. And there's no Dom Perignon or even Trump's sparkling wine being opened at Mar-A-Lago over this. This is bad news.

KEILAR: No, certainly not.

Doug, if you can stand by for us, we're going to get in a quick break as we go through this many, many pages in this ruling, a judge has ordered that former president, Trump, must pay nearly $355 million in this civil fraud trial. Also putting in place kind of some babysitting, if you will, of how he will have to continue with his business enterprises, among other limitations. We're going through it. We'll bring you the very latest in just a moment.

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[15:21:50]

SANCHEZ: A major decision by a judge in New York in Donald Trump's civil fraud trial. A - Judge Arthur Engoron deciding that Donald Trump is liable for 350 plus million dollars in disgorgement. A lot of other penalties for other people in Trump's orbit, including his sons, Allen Weisselberg, a close associate of Donald Trump's and the decision that an independent director of compliance is going to be installed in The Trump Organization to oversee its dealings. And that Donald Trump himself will not be able to oversee the inner workings of his business for at least three years.

We have CNN's Paula Reid with us.

Paula, we're getting reaction from Trump's attorneys. What are they saying about this?

REID: That's right. We just got the first statement from Alina Habba, one of his lawyers and his legal spokeswoman. But before I read this, I want to remind people what a combative, contentious hearing that this was. Each and every day when Trump would show up, he and his lawyers, they would attack the judge. They attack the attorney general. They attack the judge's clerk. Trump even violated a gag order where he was restricted from attacking court staff. So he chose to take - he and his lawyers - took a very combative approach in this case, not only in the court of public opinion. You can see there he would address reporters, Alina Habba on one side, other lawyers, Chris Kise on the other.

But also in the courtroom, which is highly unusual, Boris. As you know, in courtrooms, there are certain decorum, traditionally attacking a judge or the judge's clerk or the attorney general, the prosecutor, not advised.

But Alina Habba's statement in a moment ago, she says, "This verdict is a manifest injustice - plain and simple. It is the culmination of a multi-year, politically fueled witch hunt that was designed to 'take down Donald Trump,' before Letitia James," the Attorney General, "ever stepped foot into the Attorney General's office. Countless hours of testimony proved that there was no wrongdoing, no crime and no victim. Given the grave stakes, we trust the appellate division will overturn this egregious verdict and end this relentless persecution against my clients. Let me make one thing perfectly clear. This is not about Donald Trump. If this decision stands, it will serve as a signal to every single American that New York is no longer open for business."

So the Trump team had previously signaled that they would appeal this decision. They knew that this was not going to go well for them. But I just think we should reflect on the fact that they took a very combative approach in this case and got hit pretty hard when it comes to the penalties imposed by a judge. In another case, about a block away, there was, of course, the E. Jean Carroll trial in New York where Trump and his lawyer, again, Alina Habba, took a very combative, very contentious approach. And a jury in that case awarded her of over $80 million.

So I think there is a fair question for the Trump legal team today. Yes, being a loud martyr, arguing that you're a victim of an unfair judicial system may possibly work with your supporters, may work in the court of public opinion. But in a court of law, the decisions that are being handed down are not great for your client. And I mean, this is something that is a pretty serious financial hit for the former president. And we're talking about hundreds of millions of dollars now in penalties and jury awards.

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KEILAR: Yes, that's right. And as he maligns, Paula, Letitia James, let's also just put this into context. This is an attorney general who's been, I guess, an equal opportunity offender when it comes to holding people to account. She had, of course, that blistering report - a couple of blistering reports when it came to ousted Gov. Andrew Cuomo on how he dealt with COVID numbers and then how those sexual harassment allegations, many of them against him, so that predated him leaving office.

So she does have a record of being pretty tough, but across the aisle as well. I really wonder what you think about - it's almost like a conservatorship or babysitting of The Trump Organization. Explain a little bit more about what this is going to mean and how it's going to be perceived by Donald Trump and people in the real estate or business world.

REID: So I'm going to go back up to the top. It's a 90 - over 90-page opinion here. So I'm just going to scroll up to the top and let's talk first about this independent monitor. This was something that was first installed back in 2022. And of course, The Trump Organization isn't going to be happy. No organization, no business, no police department, no government organization is ever happy when they have someone come from the outside to come inside, look under every rock, turn over every stone, trying to figure out what you may be missing, what you may have done wrong.

But in a case like this, where a judge has found him liable for fraud, suggesting that he - or finding that he lied about the value of his assets to banks, to insurance companies, installing a monitor, the purpose was to see what else may not have been on the up-and-up.

And as I said earlier, I mean, one of the things that the monitor discovered was this $48 million loan The Trump Organization sort of within itself, but couldn't find any paperwork to support this. And The Trump Organization insisted that look, because that was money we loaned to ourselves, we didn't need to document it. There was no fraud that was found here, but the judge extending the appointment of that monitor, and not only that, but also adding another position, an independent director of compliance. So this appears to be someone who will operate within the organization to make sure that they are complying with the rules, with the regulations, with the laws. Of course, this is something particularly - closely held business like this, they're not going to be happy to have that. But of course, it could have been worse. They are not - it appears - not dissolving The Trump Organization. And there are some restrictions on the ability of many of the executives to do business in the state of New York. Those are pretty detailed. We're still hammering out exactly how we want to articulate those.

But again, they're not going to be happy about this outside oversight. It's not forever, but there's a reason. Again, a judge found him liable, found that he did not accurately represent the value of his assets and did so to get more favorable terms from insurance companies, from banks. Ordinary people know when you are applying for insurance or for a loan, you cannot lie on those applications.

SANCHEZ: Yes. Paula, please stand by.

We have CNN's Kaitlan Collins with us.

Kaitlan, there's a portion of this ruling that is standing out to you. What are you seeing?

COLLINS: Yes. I'm just - it's obviously really lengthy, but I don't think we've gotten to this part yet, but it's right at the end, right before they get to the conclusion about who's barred from doing what, who owes what and these penalties. And it's an entire section and it's - the subject line is refusal to admit error. And I'm not going to read the whole thing, but there are some really key lines here where it says it quotes the English poet, Alexander Pope, saying, to err is human, to forgive is divine.

It says defendants apparently are of a different mind. And it talks about after four years of investigation and litigation when it comes to this, that still the defendants here, the only error that they acknowledge is the tripling and the size of the Trump Tower penthouse, which, of course, is the one at the center of this, because they said it was three times the size that it actually was, which I think the judge clearly here had trouble believing was inadvertent.

But it says their complete lack of contrition and remorse borders on pathological. They are accused only of inflating asset values to make more money. The documents prove this over and over again. It says it's not a mortal sin. It says the defendants did not commit murder or arson. They did not rob a bank at gunpoint. Donald Trump is not Bernie Madoff, yet the defendants are incapable of admitting the error of their ways, and instead they adopt a see no evil, hear no evil, speak no evil posture that the evidence belies.

It says the court obviously is not here to judge morality. It's here to find facts and apply the law. And it says in this case, applying the law to the facts, they intend to protect the integrity of the financial marketplace and thus the public as a whole. And it says the defendant's refusal to admit error and indeed to continue it, according to the independent monitor that you were just talking about, Brianna, constrains this court to conclude that they will engage in it going forward unless judicially restrained.

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It says that Trump even testified he does not believe The Trump Organization needed to make any changes based on the facts that came out during the trial.