Fraud or real estate? Five takeaways from week one of the Trump Organization trial – The Guardian US
The former president treated his court appearance as a campaign stop, despite facing a possible fine of $250m for boosting the value of his assets
The trial of Donald Trump and his real estate business kicked off this week in Manhattan as the former president faces a potential fine of at least $250m for financial fraud.
In his pre-trial ruling, the New York judge Arthur Engoron found Trump guilty of fraud for creating false and misleading financial statements. Trump boosted the value of his assets by as much as $2.2bn, according to an investigation by the New York attorney general, Letitia James, who brought the case against Trump.
Engoron had already dealt a heavy blow to Trump, cancelling the business licenses that allow him to run his business in the state.
The first week of the trial had a full cast of characters, including appearances by Trump himself, who railed against proceedings outside of the courtroom but remained largely muted as they took place inside.
Because this is a civil case, Trump will not be facing jail time. It is also a bench trial, which means the judge will be the sole decider of the outcome.
Here’s what we’ve learned so far during the first week of Trump’s New York fraud trial:
Much of the evidence offered for the case are the tens of thousands of financial documents that prosecutors argue show Trump lied about the value of his assets. The judge already ruled these documents prove financial fraud. What’s left for prosecutors is to demonstrate – through witness testimony – that Trump and those working for his company knew these statements were false, and used them to broker deals anyway.
“They claim they weren’t involved in the valuations process,” the state prosecutor Kevin Wallace said in opening statements. But “there is ample evidence of intent”.
The first witness to take the stand was Donald Bender, a partner at Mazars USA, Trump’s former accounting firm. Prosecutors asked Bender to speak in meticulous detail about financial statements from the Trump Organization. Bender said that “from time to time” he would tell leadership at the Trump Organization that there were discrepancies on company financial statements, but it was essentially up to the company to provide its accountants with accurate information.
A second accountant, Cameron Harris from accounting firm Whitley Penn, briefly took the stand as a second witness. The Trump Organization took on Whitley Penn as its accounting firm after Mazars USA cut ties with Trump in 2022. Harris said that accountants “do not verify the accuracy of any of the information provided” and that his firm’s agreement with the Trump Organization said that they do “not express an opinion or conclusion nor provide any assurance on the financial statements”.
Trump’s lawyers tried to reverse the blame on to the accountants. One of the former president’s representatives, Jesus Suarez, told Bender that Trump’s “company is going through this hell because you messed up”. Bender asserted that while he could have caught shifts in reported information, it was ultimately the Trump Organization’s mistake for misreporting.
By removing Trump’s accountants from the equation, prosecutors are trying to show the judge that those within the Trump Organization were responsible for the financial statements. Prosecutors have a lengthy list of the company’s former employees who are set to testify in the coming week.
“We have renowned experts that say properties like Mar-a-Lago are worth over $1bn,” the Trump lawyer Alina Habba said in her opening statement. “I bet you there is someone who would buy that property for way over $1bn.
“That is not fraud, that is real estate.”
After Trump failed to get the case thrown out of court completely, Trump’s lawyers are focused on trying to convince the judge that Trump did not lie about the value of his properties. Even though they listed the values of the properties in the case as at least double what independent appraisers estimated, they had actually undervalued the properties because of the Trump brand.
A second argument Trump’s lawyers will try to elaborate on during the trial is that the banks that issued the loans were not cheated. They made hundreds of millions from the deals.
There were no “unjust profits, and there were no victims”, Christopher Kise, another Trump lawyer, said during opening statements. Trump’s team said they plan on calling on witnesses from the banks who will testify that the transactions were “successful”.
Finally, Trump himself has also been touting the “worthless clause”, which he argues was an addendum to the financial statements that warned lenders the figures weren’t verified.
Trump is facing an uphill battle with this strategy, as Engoron has already shut down the core of these arguments in his pre-trial ruling.
“Defendants’ respond that: the documents do not say what they say; that there is no such thing as ‘objective’ value; and that essentially, the Court should not believe its own eyes,” he wrote in the 26 September judgment. Engoron said that Trump is operating in “a fantasy world, not a real world”.
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Trump had two personas, depending on whether he was inside or outside the Manhattan courtroom.
Inside the courtroom, Trump was the quiet defendant. He scowled and rolled his eyes at the proceedings, shaking his head angrily at times. He leaned over to talk to his lawyers often. During his third day in court, he could be heard mumbling in anger that there was no jury. But even Trump seemed to know the civility required in a courtroom.
Outside the courtroom – literally, right outside its doors – he became his usual self in front of dozens of TV cameras. Trump, the presidential candidate, called his trial “a witch-hunt” by a “rogue judge”, and described James as “corrupt”.
“My financial statements are phenomenal,” he said.
By the third day, when the first witness was still in the middle of cross-examination, Trump left during a break. “I’d rather be in Iowa, I’d rather be in New Hampshire, or South Carolina, or Ohio, or a lot of other places. But I’m stuck here because I have a corrupt attorney general,” he said.
Because it is a civil case, Trump does not have to be present during the trial. That he showed up came as a surprise to many. He did not make an appearance at his other New York trial in May for the sexual abuse of the writer E Jean Carroll. Even when the verdict, fining Trump $5m, was read, he was not present.
But for three days, even if he had to sit through hours of court, Trump got rounds of media attention. As long as he was outside the courtroom, he could say anything he wanted – with some exceptions.
Ever since his pre-trial ruling, Trump has gone on angry rants against Engoron, calling him “deranged” on social media and saying he should be “disbarred” and “charged criminally” for running the trial. But Engoron did not address Trump’s comments until he wrote about the attorney Allison Greenfield, Engoron’s law clerk who often consults with him on the stand.
Engoron issued a gag order on the second day of the trial after Trump posted on social media about Greenfield. Over a lunch break, Trump called Greenfield Chuck Schumer’s “girlfriend”, linking to an image of her and the Senate majority leader. She “is running this case against me. How disgraceful! This case should be dismissed immediately.”
After the break, Engoron issued a gag order “forbidding all parties from posting, emailing or speaking publicly about any of my staff”, he said. “Personal attacks on members of my court staff are unacceptable, inappropriate and I will not tolerate them in any circumstances. Failure to abide by this order will result in serious sanctions.”
Trump and his adult sons, Donald Trump Jr and Eric Trump, also defendants on the case, are all listed at the end of prosecutors’ witnesses list. Ivanka Trump, who was a defendant until an appellate court dropped her from the case over the summer, is also listed as a witness.
In opening statements, Trump’s lawyers said Donald Trump Jr and Eric Trump, who has been present in the courtroom, will be testifying. When asked outside of the courtroom if he plans on testifying, Trump said: “Yes, I will. At the appropriate time, I will be.”
It is unclear exactly when Trump would be called to testify. The case is scheduled to run until 22 December, though it could end before then, depending on how long witness testimonies take.