Trump’s New York real estate empire in limbo after fraud verdict

For more than a century, the Trump family has developed real estate in New York.  

But the far-reaching ruling in former President Trump’s civil fraud case, if upheld, could leave the namesake family business without a Trump at its helm for the first time.

Judge Arthur Engoron ruled Friday that Trump and top executives would for three years be banned from serving as a director or officer of any New York firm. His adult sons, Donald Trump Jr. and Eric Trump, were exiled for two years. And the powers endowed to an independent monitor overseeing the Trump Organization’s business were expanded.  

The decision followed a months-long trial after which the judge determined Trump and top executives conspired to alter his net worth to receive tax and insurance benefits.  

With Trump’s top deputies cast out, barring a successful legal appeal, the Trump Organization could be “hamstrung” by the decision, said Will Thomas, a business law professor at the University of Michigan. 

“It’s just unclear — who’s there to run this thing?” Thomas said.  

The Trump family’s real estate business began with the former president’s grandfather, who started buying land in New York City in the early 1900s. Trump’s father, Fred Trump, expanded the business, and Trump, the former president, himself transformed it into the empire it is today.  

Trump’s first big project as a young developer in Manhattan got underway in 1976, kicking off the decades-long career in real estate that boosted him to fame — and, later, the White House.  

During the trial, Trump lawyer Chris Kise described the former president as “part of the fabric” of New York’s real estate industry for half a century and sharply criticized New York Attorney General Letitia James (D) for attempting to put him “out of business.” 

While the ruling won’t shutter Trump’s company, it could significantly shake up its organization.  

Donald Trump Jr. and Eric Trump have run the Trump Organization together as executive vice presidents since 2017, when their father began his term as president. The ruling would block them from serving in their top leadership positions.

Trump could still appoint someone to lead his company in compliance with Engoron’s order. While barred from serving as a director, he could — as an owner of the Trump Organization and other entities — select directors to serve in his place. Those directors could in turn choose officers to run the business day-to-day.  

“It makes it a very, very different kind of business, because … if the owner wants to have some kind of voice, they’re going to have to find someone willing to stand in their place as the director,” said Brian Quinn, a law professor at Boston College.  

The question then becomes whom Trump would select, according to Thomas. 

“One of the striking features of this case is it just revealed how pervasive these types of practices were across the organization,” he said. “It seems like a condition of being tasked with a leadership position at the Trump Organization, at least up until now, has been at least a willingness, if not eagerness, to routinely engage in fraud.” 

There’s nothing preventing Trump from selecting an unbanned family member to fill that role. His wife, Melania Trump, daughter Ivanka Trump and son-in-law Jared Kushner could all be possible contenders, according to Quinn.

However, any decisions would be scrutinized by an independent monitor imposed by the court. 

“They still have to be in compliance with the law; they can’t engage in persistent fraud, the statements of financial condition have to be correct and all the rest, but it’s not as if the LLCs are set adrift without a possibility of there being some family control somewhere,” Quinn said.  

A spokesperson for the Trump Organization called the ruling a “gross miscarriage of justice” and predicted that, if allowed to stand, it would “only further expedite the continuing exodus of companies from New York.” The spokesperson did not comment on any of the business’s plans going forward.  

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In his ruling, Engoron expanded the role of retired U.S. District Judge Barbara Jones — the independent monitor he appointed — ordering her to continue her oversight of the Trump Organization for at least three more years. 

“There’s going to be an outsider who’s going to be in the room — and that outsider, presumably, is going to … make sure there’s compliance with the judgment,” Quinn said. 

Jones informed the court last month that despite the Trump Organization’s cooperation with her oversight, she identified “deficiencies” in the materials she reviewed — including “disclosures that are either incomplete, present results inconsistently, and/or contain errors.” 

Engoron ruled that the Trump Organization must receive Jones’s approval before submitting financial disclosures to third parties and ordered the installation of an independent director of compliance at the business, to be overseen by Jones.

The judge also asked her to submit a proposed order outlining the “specific authority she believes that she needs to keep defendants honest.” 

“I think it’s fair to say this is going to be immensely challenging for the Trump Organization to navigate the next couple of years,” Thomas said. “And while I wouldn’t say it’s the most likely outcome, it wouldn’t at all surprise me if the enterprise just does not survive this transition.”