Judges in two courts have now found that the president of the United States took part in a yearslong fraud that deceived financial institutions about his net worth. They differed, however, on how much Trump should pay as a penalty. Judge Arthur Engoron concluded in February last year that Trump owed about a half-billion dollars. Appellate justice Peter Moulton, in an opinion issued Thursday, threw out that penalty, dropping the figure to zero.
Neither did much math to arrive at those numbers.
The trial judge, Engoron, attempted to gauge how much Trump’s lies saved the now-president in interest on his loans. But he relied on a sloppy calculation. Michiel McCarty, an investment banker that the State of New York called to testify, noted that Trump secured lower interest rates after offering personal guarantees on loans. McCarty then compared those rates to higher ones lenders told Trump he would pay if he did not personally guarantee his loans. He used the difference to estimate the amount of interest Trump saved across four loans spanning 10 years, getting $168 million.
That calculation, however, rested on a faulty premise. Trump did not have to lie about his net worth to give banks a personal guarantee, and therefore secure cheap rates. He lied not just of necessity but also out of habit. Lying is what he does, especially when talking about the size of his fortune. To more accurately calculate how much Trump’s dishonesty saved him, someone would have had to calculate how much Trump’s interest rate if would have changed if he offered a personal guarantee but told the truth about his net worth.
It’s little surprise that the attorney general, angling for a big decision, took a more aggressive approach. Trump’s team, meanwhile, pretended that their client’s misrepresentations did not matter because his lenders got repaid. A former managing director for Trump’s longtime lender, Deutsche Bank, refuted that idea on the witness stand: “Just getting repaid on the principal,” he pointed out, “doesn’t address at all whether we got properly recompensed for the risk we were taking.” Put another way, Trump’s lenders might have charged more interest if they fully understood the extent of his deception. Seeking to account for the damage, and without a decent estimate from Trump’s team, Engoron accepted the expert’s flawed math. In doing so, the judge overestimated the amount of money Trump’s lies saved him—and therefore the amount Trump needed to pay back. With interest, the total from the interest savings amounted to more than $240 million.
In addition, Engoron ordered Trump to repay about $200 million based upon the sale of two properties, a hotel in Washington, D.C. and a golf course in New York. The Trump Organization included puffed-up net worth figures on documents connected to both projects. But if Trump had done those deals without lying to anyone, he still would have received roughly $200 million from selling the assets at sky-high prices during the post-Covid property boom.
Rather than try to pinpoint how much the lies benefitted Trump, Engoron ran with the questionable assumption that Trump could not have completed the deals at all without lying about his net worth. He ordered Trump to hand over all gains to the state. The total payments and interest eventually added up to an estimated $517 million penalty—or disgorgement, as the lower court referred to it.
Trump’s team appealed immediately and received a new ruling Thursday. Justice Moulton spent much of his 122-page opinion explaining the many ways he agreed with Engoron, concurring with “findings of illegality” and citing “ample bases to find that defendants would continue to engage in fraudulent and illegal activity.”
Then came the math. Moulton concluded that it was unclear how much Trump’s net worth lies had to do with the profits he made selling properties in D.C. and New York, so he wiped out that roughly $200 million portion of the penalty. As for the savings in interest, which accounted for most of the money in question, Moulton only briefly addressed the issue. He offered no alternative number, pointing to the difficulty of calculating a proper sum in a footnote. Then, abruptly, he declared, “For the foregoing reasons, we vacate the portions of the Posttrial Order directing disgorgement in its entirety.”
The lower court accepted flawed math. The higher court basically did none. “TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” the president posted on Truth Social. “Everything I did was absolutely CORRECT and, even, PERFECT.”
Nevermind that the ruling, despite letting Trump off the hook financially, offered a damning assessment of his behavior. Why start telling the truth if previous lies cost you nothing?