This week marked the start of the New York Office of the Attorney General’s (OAG) major civil fraud trial against the Trumps and the Trump Organization. Former President Donald Trump was in attendance for both opening arguments and the second day of trial. Though standing outside the courtroom he called the trial a “sham,” his attendance on the opening days and apparent plan to testify show that he is also taking the case seriously. With good reason. After New York County Supreme Court Justice Arthur Engoron’s summary judgment ruling last week—albeit only partial and on one of the seven counts—Trump’s business empire is at risk. Trump looks likely to emerge from this trial in about twelve weeks with an enormous judgment to pay, with losing control of his many New York businesses, and with all of that unlikely to be overturned on appeal. Given the centrality of his businesses and his wealth to his identity, this may be a more personally devastating blow than almost anything he faces in the four criminal cases pending against him.
What’s happened so far
In opening statements Monday, the two sides addressed what remains to be determined at trial, starting with (as Justice Engoron put it) “determinations on liability for the second through seventh causes of action, the amount of disgorgement of profits to which OAG is entitled, and determinations on the third through ninth prayers for relief sought by the OAG.”
The remaining six causes of action and questions of liability to be determined at trial focus on three categories of alleged misconduct, each carrying two causes of action (one for the substantive offense itself, the other for a related conspiracy offense):
Causes of Action 2 & 3) falsifying and conspiring to falsify business records;
Causes of Action 4 & 5) issuing and conspiring to issue false financial statements; and
Causes of Action 6 & 7) committing and conspiring to commit insurance fraud.
These causes of action are unlike that first cause of action, which Justice Engoron described as “essentially a ‘documents case.'” The remaining six counts present more nuanced questions of fact—specifically, ones relating to the defendants’ intent.
We saw a preview on Monday of how this question of intent will loom large over the trial. In addition to doubling down on several of their previously failed defenses (for example, that the lenders to Trump and his organizations made money), Trump’s lawyers hammered the live question of intent in their opening arguments. They asserted that there was “no intent to defraud, period” and “no nefarious intent.”
Meanwhile the OAG used its opening arguments to paint a detailed picture of how Trump’s team generated the numbers on these statements. They highlighted how the alleged end goals—including getting Trump on the Forbes list and securing favorable loans—prevailed over concerns for the means by which those goals were achieved.
This intent question is where witness testimony will be of utmost importance—both to the OAG in demonstrating that the defendants meet the intent standard to prove liability, and also to the defense in successfully rebutting the OAG’s allegations as to those remaining six causes of action. The former president has been listed as a witness for both the defense (which has listed over 120 witnesses) and the OAG (which has listed 28 witnesses). And—notably—Trump has stated his intention to testify in person. His counsel also told the court that they expect Trump to testify (we discuss below the pros and cons of this decision).
Day two and the appellate forecast
The morning of the second day of trial on Tuesday did not go well for the former president and his legal team. Justice Engoron once again corrected them—this time, opening the day’s proceedings by warning that he had already rejected Trump’s renewed statute of limitations argument. It was an apparent response to Trump’s suggestion to reporters on Monday evening that Justice Engoron had backtracked on that ruling near the end of Monday’s proceedings. What the judge had done was to caution the OAG attorneys that testimony about older events needed to link up to more recent ones within the statute of limitations.
Tuesday morning the judge reaffirmed that each false financial statement in business restarts the statute of limitations. The judge resolved the matter for the time being by telling Trump’s lawyers that he knows they “strongly” oppose that ruling and will appeal it, seemingly opening the door – or recognizing the open door – for a new round of appellate litigation once the trial is over.
But higher court review on these grounds is not likely to go well for the former president—a sign of the larger challenges that Trump will face on appeal across the board. For starters, Justice Engoron is right as a matter of law here, as is clear from the New York state appellate court’s ruling earlier this summer rejecting broad swaths of the defense’s statute of limitations arguments as “unavailing.” Moreover, that same appellate court recently refused Trump’s request to intervene in the trial and postpone its start on the supposed grounds that the judge was misinterpreting that statute of limitations appellate decision. That is hardly an auspicious sign for the former president and his lawyers.
Neither is the care the trial judge is taking to ground his decisions in legal and factual support as shown by his summary judgment opinion. Engoron is now going above and beyond that to cautiously implement the remedies in that opinion. He has invited the parties to work with the court to discuss appointment of the receivers and the implementation of their responsibilities, extending his deadline for providing names of potential receiver candidates from 10 to 30 days.
While it remains unclear exactly how long that part of the process will take, on Monday morning Justice Engoron said the trial will last until December 22. It is doubtful the trial will take that long, however, given that he has already ruled on the one main claim in the case. My own view is it will speed up and take something between eight to 12 weeks.
Will Trump testify?
Both Trump and his counsel have said he will testify. But Trump says a lot of things that do not come to pass. While he and his lawyers may well follow through, and there are pros to doing so, there are also substantial cons that may cause them to change their decision.
For one thing, it is not clear that Trump’s testimony will actually change the judge’s mind. In adjudicating summary judgment, based on the heavy documentary record and Trump’s deposition, the judge has already made clear where he stands on the fraud. Every indication is that at the end of this process, he is going to rule against Trump. For a detailed analysis of the substance of the claims supporting that outcome, see my colleagues and my extensive Brookings report analyzing the core allegations well before the case was filed, and our Just Security one from just after the filing.
For that reason, if I were Trump’s lawyer, I would urge my client not to take the stand in his own defense. It is no secret that when it comes to minimizing legal exposure, Trump can be his own worst enemy. Take, for example, his deposition in writer E. Jean Carroll’s defamation and sexual battery civil case, where, among other things, he doubled down on the remarks he made in the infamous Access Hollywood tape bragging about assaulting women; mistook Carroll for his ex-wife Marla Maples in a decades-old photograph of him and Carroll, undercut his defense that he did not assault Carroll because she “wasn’t [his] type”; and attacked Carroll’s woman attorney with similarly derogatory claims about her appearance.
But given that Trump is also on the OAG’s witness list, it appears he may be called upon to testify regardless of whether his lawyers want him to. This puts Trump and his lawyers in a bind that probably explains their current statement that he will testify. If this were a criminal trial and the AG called Trump, he could simply assert his right against self-incrimination. But because this is a civil trial, any invocation of Trump’s Fifth Amendment rights may be used to draw an “adverse inference,” meaning that his refusal to answer questions may be used to bolster the OAG’s case against him. Worse still, under New York law if Trump testifies, he can be cross-examined about prior bad acts—such as some of his alleged crimes in other jurisdictions—by the OAG to undermine his credibility as a witness and demonstrate his lack of truthfulness.
Here, Trump and his lawyers must choose between the lesser of two evils. And unless they can ensure that Trump will control his outbursts, avoid damaging statements, and not commit perjury, accepting an adverse inference may well be the better option. Nevertheless, at least for the moment, they seem to be embarking upon the riskier course.
Who else will testify?
That brings us to the OAG’s witness list and the role these potential witnesses will play in making the government’s case against the former president. Included among the OAG’s list of 25 fact witnesses is Michael Cohen, Trump’s former fixer and one of the witnesses in the former president’s first impeachment trial, where I served as special counsel to the impeachment managers.
As detailed in our Just Security piece and our Brookings report, the allegations Cohen made against Trump and the Trump Organization back in 2019 in his testimony before the House are what prompted the OAG’s investigation and eventual enforcement action. So Cohen’s testimony will presumably be critical to buttressing those allegations. And his prior role as Trump’s right-hand person also positions him to speak directly to Trump’s intent.
Though he was aligned with Trump in the past, ever since pleading guilty to charges in a separate matter based on allegations related to covering up hush money payments, Cohen has made significant efforts to cooperate with New York and other law enforcement authorities investigating Trump. I got to know Cohen when investigating for the U.S. House of Representatives what became the first impeachment of Trump. If colorful, he is at bottom a credible witness who will serve an important role in this trial—contrary to Trump’s lawyers’ attempts to paint him otherwise in their opening arguments. It is indeed true, as Trump’s lawyers pointed out Monday, that Cohen is a convicted felon. But, as I explained in a previous essay, it is not unusual for prosecutors to rely on cooperating witnesses who have committed a crime in the past. With a bench trial and a discerning judge rather than a jury trial, Cohen’s testimony is likely to be received especially well.
At any rate, Cohen is just one witness out of 188 lined up to testify in this trial, not to mention a mountain of documents. So there are many sources of corroborating evidence and of additional proof for Justice Engoron to draw upon.
The gag order: what it portends?
Things went further downhill for Trump on Tuesday after he made a Truth Social post attacking the judge’s clerk, Allison Greenfield. The judge swiftly responded by ordering Trump in private to delete the post (which Trump did). The judge proceeded to tell the courtroom that “one of the defendants” had posted a “disparaging, untrue, and personally identifying post” despite the judge having previously warned counsel off the record about these kinds of attacks yesterday. The warning went “unheeded,” Justice Engoron said.
Justice Engoron then announced that he was entering a gag order preventing “all parties from posting, emailing, or speaking publicly about any of my staff.” He added that “failure to abide by this order will result in serious sanctions.”
The power to enter such orders is well recognized when the judicial system is at risk. This one is well calibrated by the judge to comply with the First Amendment because it is narrowly tailored to prevent harm to court personnel. That focus ensures that the court has not overstepped its bounds —and it is a clear warning to Trump to think twice about other prejudicial statements he might make.
The court has the power to fine Trump or even confine him in an extreme case if he violates this order or others to come. This order may also have reverberations elsewhere, such as in the federal 2020 election interference case where a somewhat similar order is under consideration.
With Justice Engoron already having repeatedly ruled against Trump on other grounds, this latest turn is yet another negative sign for how the former president will fare at this trial.
Beyond questions of liability, also to be determined at this trial are the remaining requests for relief from the OAG’s initial complaint filed last fall. Those requests, as stated in the complaint, boil down to:
* replacing the current trustees of the Donald J. Trump Revocable Trust with new independent trustees;
* requiring the Trump Organization to prepare, on an annual basis for the next five years, an audited statement of financial condition showing the former president’s net worth to be distributed to all recipients of his prior financial statements;
* barring Trump and the Trump Organization from entering any commercial real estate acquisitions in New York for five years;
* barring Trump and the Trump Organization from applying for loans from any financial institution registered with the New York Department of Financial Services for the next five years;
* permanently barring Trump, Trump Jr., and Eric Trump from serving as an officer or director in any New York corporation or similar business entity licensed in New York;
* permanently barring Allen Weisselberg (the former Trump Organization CFO) and Jeffrey McConney (the Trump Organization Controller) from serving in the financial control function in any New York corporation or similar business entity licensed in New York;
* awarding the disgorgement of all financial benefits obtained by the defendants of an amount to be determined at trial but estimated by the OAG to be $250 million;
* and granting any other relief Justice Engoron deems appropriate.
In the event that a determination of liability is made by Justice Engoron as to the other six causes of action—which, as described above, is likely—we can expect that some or all this relief will be granted. These sanctions would, of course, be devastating to the former president.
Indeed, the first two prayers for relief the judge already granted—the cancellation of business certificates and the appointment of a monitor—will most likely severely limit the Trumps from doing business in New York State.
Moreover, this relief would also force them to pay enormous sums—ones that come on top of the significant legal fees Trump is paying for his defense in the four pending criminal trials against him, not to mention the $5 million in damages and counting that he owes to E. Jean Carroll. The grand total will significantly hinder the former president’s ability to do business period.
The bottom line
On top of all that, this case also strikes a powerful blow to Trump where it hurts him most—his decades-long investment in creating a political and financial brand for himself. He is already facing the loss of some of the crown jewels of his business empire as a result of the cancelling of his business certificates in New York. He now also faces losing his ability to run or be involved whatsoever in any corporations there. His personal identity is heavily invested in these enterprises which carry his name. The civil case accordingly comes with a heavy price that is different from the pending criminal cases, and the ongoing trial will involve a lengthy, public process in which the writing appears to be on the wall.