Trump’s Money Problems Are Very Real and Very Bad

The danger posed to Donald Trump’s finances by two recent judgments against him has been, if anything, underappreciated. The size of the awards, the structure of the former president’s business empire, and the condition of the real-estate market combine to create a truly perilous moment for the former president’s company and, by extension, for Trump’s personal finances.

Trump must put up the $83.3 million awarded to the writer E. Jean Carroll for defamation by March 9. He also owes more than $450 million—the amount continues to grow because of interest—in a fraud case brought by New York Attorney General Letitia James, and must put up cash or post a bond by March 25. He has appealed both decisions.

Trump doesn’t have that money on hand. In an April 2023 deposition for the fraud case, Trump said, “We have a lot of cash. I believe we have substantially in excess of $400 million in cash, which is a lot for a developer. Developers usually don’t have cash. They have assets, not cash. We have, I believe, $400-plus and going up very substantially every month.”

If this was true at the time, which is doubtful, it is not true now. On February 28, he asked an appellate court to reduce the bond amount in the fraud case to $100 million, and said he might have to sell properties otherwise. The court declined to lower the bond, but did temporarily stay the ruling by the trial judge, Arthur Engoron, that Trump couldn’t seek loans from banks.

[David A. Graham: The cases against Trump–a guide]

Even before the formal finding that many of the Trump Organization’s property valuations were fabricated, pinning down anything definitive about the firm’s finances has always been challenging. Because it is a privately held company, much information about it is secret. Trump’s name has always been synonymous with (to be charitable) puffery and hyperbole. Independent assessments place his net worth in the billions, but as he suggested in the deposition, that’s largely in real property or in hazy estimates of brand value.

Typically, a defendant who has substantial assets but needs piles of cash will obtain a bond, rather than posting the money themselves. Under such an arrangement, a bonding company effectively vouches for Trump with the court, guaranteeing that the money is available. If Trump wins his appeal, he pays the bonding company only a fee. If he loses, he has to pay in full. But Trump seems to be struggling to obtain such a bond. In requesting that the amount be reduced, his lawyers said coming up with the current total would be “impossible,” forcing him to sell properties.

Bonding companies might hesitate to work with Trump for various reasons. The size of the bond required is substantial. Trump also has a reputation for stiffing vendors, and recouping any amount might only get more challenging if Trump is reelected president and tries to use his office to put off collection, as he previously tried to use it to delay or avoid litigation.

A willing bonding company would likely demand that Trump post collateral, and that’s where he’d run into more trouble. Trump does possess lots of assets, but the question is whether he owns them outright. He has resisted detailed disclosures that would answer that, but given his past practices—Trump once dubbed himself the “King of Debt”—experts told me they expect he has few big properties that don’t carry significant debt.

Such existing loans likely include covenants that prevent owners from subordinating them to other liens—which would effectively reduce how much Trump can use the properties as collateral, says Jim Wheaton, a law professor at William & Mary who has studied Trump’s finances. In simple terms, if a building is worth $50 million, and $30 million of that is subject to another loan, the covenant means the other $20 million isn’t free and clear to use as collateral.

The ruling allows Trump to seek other loans elsewhere, but Trump has exhausted nearly every traditional avenue for loans, as the fraud case established. Deutsche Bank, which has become notorious for its sloppy practices, was his “lender of last resort,” as The New York Times put it in 2021, but the attorney general’s lawsuit revealed that the bank had ended its relationship with Trump. That makes it unclear who else might be willing to make a loan to Trump—but one distressing possibility is that a wealthy individual, whether foreign or domestic, might see making a large loan to a potential future president as a useful way to exert influence over him. In trying to wrangle enough cash for a bond, Trump also risks default on existing loans. For example, evidence from the trial revealed that one loan from Deutsche Bank required him to “maintain $50 million in unencumbered liquidity and a minimum net worth of $2.5 billion.”

Trump could try to find other assets to pledge, but he faces the complication of a monitor, the former federal judge Barbara Jones, appointed to oversee the Trump Organization’s finances at James’s behest. Though Trump had a say in her selection process, he has more recently complained about her work. As Wheaton explained to me, “Judge Jones may well say she has a fiduciary duty to make sure the Trump Organization has sufficient liquidity for day-to-day needs, so she won’t let him [act] until she sees an acceptable financial statement, which we know he had not as of the day of judgment.”

[Read: The exasperating difficulty of trying to understand Trump’s finances]

Some coverage has suggested that a deal involving Trump’s social-media company, Truth Social, could provide him an infusion of cash, but the practical size of that windfall may be overstated. Major shareholders are subject to a provision that prevents large sales of stocks for six months, though Trump could seek a waiver allowing him to sell more sooner.

Trump could still get relief from appeals courts on the bond. Judges might conclude that if posting the bond would force him into dismantling his business even before he had exhausted his appeals, the amount is unfair, and reduce it until the appeals are completed. But such relief would be temporary, and Trump faces a difficult legal path in his appeals.

He has insisted that he didn’t commit any crime when he manipulated property valuations, because his lenders were repaid in full and didn’t object. But the statute under which James sued Trump doesn’t require any loss. Trump has complained that the law in question is “rarely used” and “VERY UNFAIR,” but lawyers familiar with the attorney general’s office said the law is actually deployed routinely, and has never suffered any constitutional challenge. In fact, Trump himself was successfully sued for the Trump University fraud under the same law.

The former president could dispute findings of fact by Engoron, but appeals courts tend to give trial courts deference on matters of fact, and look more for errors of law or errors in penalty. Engoron’s ruling offered detailed explanations for his assessments of the evidence and the credibility of witnesses. “Credibility determinations are really difficult to reverse,” Mechele Dickerson, a law professor at the University of Texas at Austin, told me. Trump could also argue that the penalty is unduly harsh, but the number is based on a calculation of Trump’s ill-gotten gains, rather than subjective determinations. Engoron drew on testimony about what interest rate Trump should have received and what he received. “After that, it’s arithmetic,” Wheaton said.

Such a long-shot appeal means that even if Trump is able to stave off his cash crunch right now, there’s a good chance he’ll face it eventually. One option for Trump would be to sell assets. But this is a terrible time to be selling commercial real estate. Office rents in New York have tanked and everyone would know that Trump is a motivated seller, so no matter what values Trump claimed his properties were worth, he’d likely have to accept bargain prices.

Trump could also try to use bankruptcy to resolve his debts, but that might be an unpalatable choice for several reasons. His companies have infamously declared bankruptcy four times, but he erupted at Chris Wallace, the moderator of a 2015 Republican debate, when pressed on the matter. Trump has always emphasized that he was not personally bankrupt, characterizing the past filings as smart business. Engoron’s judgment, however, attaches to Trump personally. “Personal bankruptcy is not on brand for him,” Christopher D. Hampson, a law professor at the University of Florida, told me. “He will do whatever he can to avoid it before the election.”

Going into bankruptcy would also force Trump into the kinds of disclosures that he has strenuously avoided in the past. Any creditors who wanted to seek money from the bankruptcy would have to come forward, including any whose identities might be politically damaging to Trump.

“The old phrase is that bankruptcy is like being in a fishbowl,” Hampson said. “For someone like Trump, that’s uncomfortable in a couple of ways. You have to say what your assets are. He’s been resistant to that in other contexts. You also open up other liability if you’re not truthful.”

Beyond that, it’s not clear that bankruptcy would help Trump escape the judgments against him. Debts can’t be discharged, or removed, when they involve fraud, and defamation judgments like the ones in the Carroll case are sometimes not dischargeable.

If Trump loses his appeals and simply can’t pay up, James could seize his properties. “We are prepared to make sure that the judgment is paid to New Yorkers, and yes, I look at 40 Wall Street each and every day,” she said recently, referring to the Lower Manhattan building that is one of Trump’s marquee holdings. In the case of a seizure, sheriffs would take over a building and then auction if off; the proceeds, minus the cost of any liens on the property, would go toward Trump’s debt.

Whether or not Trump has to sell some crown jewels—or see them taken—Engoron’s ruling endangers the future of the Trump Organization. The judge barred Trump, former CFO Allen Weisselberg, and former controller Jeffrey McConney from serving as officers or directors of any corporation or other legal entity in New York for three years, and banned Trump’s sons Eric and Donald Jr. for two years.

[David A. Graham: Donald Trump’s ‘fraudulent ways’ cost him $355 million]

That condition has also been temporarily stayed. If upheld on appeal, however, it’s not clear how the Trump Organization might operate, because these are the people who have effectively run the company. Who manages the company going forward? Who appoints new officers and directors? What is Jones’s role? Could she approve or reject sales of properties or other major decisions? Anyone seeking to do business with the Trump Organization during the temporary exile of the Trump family might also hesitate. Given that Trump has been known to go back on deals he made himself, what are the odds that he’d stick to deals made by some other manager while he was banned?

“Unless somehow he prevails in getting the stay or prevails on the legal issues on appeal, it’s really hard to run the company,” Wheaton said. “They micromanage issues like paying bills. Why would I think they would have empowered their employees to do more?”

This bleak forecast for Trump’s finances all assumes that the rules apply to Trump as they would to other defendants. Historically, that hasn’t been true. Throughout the fraud trial, Trump seemed outraged that someone was finally punishing him for violating the rules. For most of his business career, as well as much of his political career, he found that the rules as written just didn’t apply to him. In this case, too, he may discover that he can ignore the law and get away with it. The fate of his business, though evidently near to his heart, also doesn’t appear to have any direct impact on his political fortunes. Nonetheless, although Trump has gone through serious periods of business struggle, his empire currently faces perhaps its greatest threat so far.