Donald Trump Faces Cash Problem

Donald Trump's legal headaches could result in his cash reserves taking a serious hit, even if "the overall effect would likely be a short-term one," an expert told Newsweek.

The Republican is facing damages payments for multiple legal trials. On Friday, a New York City jury ordered that he must pay $83.3 million in damages to the journalist E. Jean Carroll for statements made in 2019; he said she was lying about allegations that he sexually assaulted her inside a Manhattan department store dressing room in the 1990s. That amount includes $7.3 million in compensatory damages, $11 million for reputational repair, and $65 million in punitive damages.

Trump was previously ordered to pay Carroll $5 million in damages last year in another civil defamation trial stemming from a denial he made about her claims in 2022. He has repeatedly denied all wrongdoing and has said he will appeal the verdict. Newsweek contacted a representative for Trump by email Monday to comment.

Meanwhile, a verdict is expected this week in the former president and GOP frontrunner's civil-fraud trial.

In September, Judge Arthur Engoron issued a partial summary judgment in the case brought by New York Attorney General Letitia James, ruling that Trump and top executives at The Trump Organization committed fraud. Engoron held that Trump grossly inflated the value of his assets to obtain more favorable terms from lenders and insurers. He will now rule on how much the Republican will pay in damages, as well as rule on six other accusations—including falsifying business records, insurance fraud and conspiracy claims. James is seeking the return of $370m in profits Trump made.

While the state of Trump's finances is not publicly known, in a deposition last year, Trump described his stockpile of cash as being "substantially in excess" of $400 million. Meanwhile, the Bloomberg Billionaires Index placed his liquid assets at about $600 million and said he has a net worth of $3.1 billion. This is mostly tied up in real estate, including office and residential buildings in Manhattan, golf courses and the Mar-a-Lago Club in Palm Beach, Florida.

If Trump is then hit by damage awards of more than $450 million in less than a week, he could face a significant cash problem. Even if he appeals the verdicts, he may have to put the amount in escrow; this is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met, until the appeals process is resolved.

Bloomberg analysis found that a $450 million worst-case penalty from the civil-fraud trial and Carroll verdicts would make up almost 15 percent of his estimated net worth.

Meanwhile, the Republican also faces legal bills for his four criminal indictments. Former federal prosecutor Jennifer Rodgers, who spoke to Bloomberg, said he cannot use campaign funds to pay for personal expenses like damages.

Todd Landman, professor of Political Science, School of Politics and International Relations at the University of Nottingham, in the U.K., told Newsweek that the charges could make Trump's net worth decline in the short term.

Landman said: "Mr Trump's total estimated wealth varies considerably, and is made up assets and liquidity, where if the total penalties were to fall between the $338.3 million and $458.3 million, he would see a sizeable portion of his liquid assets needed to cover these penalties. He can, of course, liquidate some of his other assets to regain liquidity. The fraud case also calls for the Trump Organization to cease operating, which would entail significant transaction costs and loss of future revenue.

"Were these two eventualities to transpire, Mr Trump would see a decline in his estimated net worth; however, the overall effect would likely be a short-term one, since he has proven adept at bouncing back from adversity; can trade on the proclaimed injustice of these trials; and strengthen the Trump brand that will allow him to recover," Landman added.

Christopher Phelps, a historian at the Department of American and Canadian Studies, at the University of Nottingham, told Newsweek that potential combined damages "would just about wipe out his cash holdings, possibly requiring him to sell some assets in order to maintain his liquidity."

Phelps added: "In short, this is a significant hit, even for someone with Donald Trump's wealth.

"It's worth noting that there is also the psychological factor, if the court decides that he was fraudulent, since so much of Trump's personal posture is premised on his supposed success in business and his great wealth. How does that appear if a court ruling finds that it was premised, at least in part, on a fraud?"