By Tom Ozimek
Former President Donald Trump said Saturday that the recent court ruling that fined him over $350 million would spark a business exodus from New York State, while venture capitalist Kevin O’Leary said the ruling turned New York into an uninvestable “mega loser state.”
In a civil fraud trial that accused the former president of inflating asset values to get better terms for bank loans, New York Supreme Court Justice Arthur Engoron issued a ruling on Feb. 16, ordering President Trump and Trump Organization executives to pay $355 million in damages, and barring the former president from doing business in the state for three years.
“I paid over $100 million in taxes and they want me out,” President Trump said on Friday, claiming that corrupt officials were driving businesses out of New York.
Then, during a Saturday rally in Michigan, President Trump said he plans to appeal Justice Engoron’s ruling, while predicting the case would have far-reaching implications.
Mr. O’Leary, an entrepreneur and media personality known for his role on the “Shark Tank” program, also denounced the ruling.
First, in an interview with the New York Post, he called it “appalling,” “unjust,” and “un-American,” warning that if it’s not overturned on appeal it could spark an exodus of businesses from the state.
Now, in an interview on Fox News, Mr. O’Leary continued his critique of the ruling, arguing that “there’s no rationale for it” and that it makes New York state, which was already problematic for investors due to uncompetitive regulations, even worse.
“I would never invest in New York now, and I’m not the only person saying that,” Mr. O’Leary said.
“Do you think any foreign institution or any private equity firm or any pension fund would touch New York? No! And that’s why New Yorkers should be concerned,” he continued.
“Winner states versus loser states,” Mr. O’Leary said. “Look at Tennessee right now. Fastest growing city in America right now. Nashville. Winner state, good policy, competitive taxes. You’ve got to start thinking about this in context of winners and losers.”
“New York—mega loser state,” he concluded.
President Trump took to Truth Social on Saturday to praise Mr. O’Leary for his sharp rebuke of Jutice Engoron’s ruling.
“Thank you to Kevin O’Leary, a Great Entrepreneur and Star,” the former president wrote. “Just watch the Exodus of Business from New York!”
Following Mr. O’Leary’s remarks on Monday, President Trump took to social media again to post an approving message.
“Kevin O’Leary is so great, and tells it like it is. Businesses will flee NYC & State after the Corrupt Judge’s ruling!” President Trump wrote.
The Case
New York Attorney General Letitia James brought the civil fraud case against President Trump.
The trial centered on allegations that the 45th president and his company, the Trump Organization, defrauded banks, insurers, and others by allegedly overvaluing his assets and exaggerating his net worth in documents used in deals and to secure loans.
President Trump has argued that no bank was victimized by the stated asset valuations and that lenders—including Deutsche Bank—made considerable amounts of money in interest by extending the loans.
He has also stated repeatedly that, if his brand value is taken into account, his net worth is “much higher” than what was stated on the Trump Organization statements of financial condition.
David Williams, a Deutsche Bank executive who worked on at least one of three loans the bank gave to President Trump, testified on Nov. 28 that it isn’t unusual for a bank to cut a client’s stated asset value—even by half—and still approve a loan, just like it did with the former president.
Not only that, but Mr. Williams told the court that it’s standard practice for Deutsche Bank to subject a client’s asset value to an adjustment, saying differences between a client and the bank about a client’s asset values aren’t a disqualifying factor when considering granting loans because “it’s just a difference of opinion.”
Deutsche Bank viewed clients’ reports of their net worth as “subjective or subject to estimates” and took its own view of such financial statements, Mr. Williams added.
However, in his 92-page legal opinion, Justice Engoron repeatedly repudiated the testimony of expert witnesses called by the defense to uphold the validity of the Trump Organization’s statements of financial condition.
“In order to borrow more and at lower rates, defendants submitted blatantly false financial data to the accountants, resulting in fraudulent financial statements. When confronted at trial with the statements, defendants’ fact and expert witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future recurrences,” Justice Engoron wrote.
At several points in the ruling, the justice explicitly rejected the argument of defense expert witnesses that statements of financial condition are meant to provide estimates, and that the subjectivity of such statements is widely acknowledged and accepted in commercial real estate.
The Penalty
Initially, Ms. James wanted to fine the former president $250 million but later increased this to $370 million.
She also requested additional penalties against President Trump, including a permanent ban on his doing business in New York state and with any New York-based financial institution.
Justice Engoron granted most of what Ms. James asked for although he stopped short of permanently banning President Trump from doing business in his native New York.
President Trump and Trump Organization executives have been ordered to pay $355 million in damages, while the former president has been barred from doing business in New York State for three years.
The former president’s sons, Donald Trump Jr. and Eric Trump, were also ordered to pay $4 million each in fines.
