Many top-level business owners and real estate investors are giving up on New York City and heading for Florida and Texas in the wake of Donald Trump’s more than $454 million fine for consumer fraud. Here’s everything you need to know about his civil case and how it’s affecting the landscape of New York’s real estate sector.
What Did Donald Trump Do Wrong?
New York Attorney General Letitia James filed a civil suit against Donald Trump for allegedly lying about his wealth on financial statements in an effort to secure loans with banks and make deals with other businesses and financial institutions.
Many experts argue that what Trump did is a common practice among real estate investors and business owners in NYC today. If the government can do what it’s doing to Trump, then it can do it to anyone – and that’s why so many executives are considering a move.
Trump Receives Hefty Fine and Ban
In February, Trump received a massive blow in the case when New York Judge Arthur Engoron fined him $355 million for consumer fraud – though the exact number was higher than $450 million when you include interest.
Not only that, but Engoron banned Trump from serving as an officer or director of any New York company for three years. He extended that same ban to Trump’s two sons (Donald Trump Jr. and Eric Trump) – but for two years instead of three.
Trump Had Until March 25 To Pay Bond
Trump was given until March 25 to pay his $454 million bond, but he later argued that getting such a large sum is ‘a practical impossibility.’ He had approached more than 30 surety companies in hopes of securing an appeal bond, but all 30 underwriters said no.
On March 25, the appeals court was paused for 10 days, and Trump’s bond was reduced to $175 million. If that never happened, then Letitia James would’ve had every right to start seizing the NYC mogul’s properties – which he refers to as his ‘babies.’
Trump Lashes Out In Truth Social Rant
On March 24, Donald Trump unleashed a rant on his Truth Social platform that took aim at James and Engoron – who he described as ‘corrupt’ and ‘crooked.’ He also called them ‘Radical Left Lunatics and Communists.’
“I had intended to use much of that hard earned money on running for President. They don’t want me to do that — ELECTION INTERFERENCE!” he wrote – describing his businesses as ‘very successful properties and assets that took me years to zone, build and nurture into some of the best of their kind anywhere in the World.’
Former Federal Prosecutor Says Trump Is Being ‘Choked’
According to former federal prosecutor Josh Naftalis, Trump is currently ‘being choked on a personnel level, and he’s being choked on a capital level’ – with the government essentially attacking his business in hopes of silencing him on a political level.
“I think practically what this means is that a bank is not going to want to do business with them because he effectively has a scarlet letter on his chest,” Naftalis said – adding that the ruling now presents itself as a red flag to potential lenders.
Trump Organization Spokesperson Says Exodus Will Continue
One Trump spokesperson argued that the ruling is just as damaging to New York City as it is to Trump and his business. “If allowed to stand, this ruling will only further expedite the continuing exodus of companies from New York,” the spokesperson said.
And while Trump’s lawyer calls the recent bond reduction as a ‘great first step towards the ultimate reversal of a baseless and reckless judgment,’ James reassured the Trump team that he is ‘still facing accountability for his staggering fraud.’
Grant Cardone Rethinking Doing Business In NYC
On March 24, Grant Cardone—a famous salesman—took aim at New York City for its abuse toward Donald Trump, claiming that the ruling ‘will wreak financial havoc on New York City’s Economy that will take decades to erase.’
He has already ‘stopped all underwriting’ in NYC and has ‘committed $500 million in new investments in Florida.’ He also called Trump ‘officially the greatest negotiator in Presidential History’ after the former President secured the 65% bond reduction.
Kevin O’Leary Worried About Impact Of Ruling
Kevin O’Leary, best known for his role on Shark Tank, said the NY Attorney General is likely ‘giddy with excitement,’ but argued that ‘the collateral damage to the American brand is horrific’ – adding that what we’re seeing in New York ‘is not America.’
“Property rights are mentioned 37 times in the Constitution. Due process. Very important. Why steal someone’s asset in 27 days? Why not give them more time to come up with the cash? Forget about Donald Trump,” he said.
Jonathan Turley Says Businesses Turning To Florida
George Washington University Law School professor Jonathan Turley also chimed in – arguing that ‘undervaluing and overvaluing property is a longstanding practice in New York real estate.’ He doesn’t quite see how this move benefits New York in the short or long run.
“In the name of protecting businesses in New York, you probably just led to hundreds of businesses looking at potential rentals in Florida because they look and they go, ‘Wow, if we fall on the wrong side of the politics in New York, they could sell us off for spare parts,’” he said.
Ari Fleischer Calls New York A ‘Legal Banana Republic’
During an appearance on Fox News, Ari Fleischer—who served as the 23rd White House Press Secretary under George W. Bush—highlighted that this wasn’t a fight against fraud. Instead, it was a fight against Trump, and NYC might’ve awoken the beast.
“So unless the appeals process in New York comes to the rescue – New York has become a legal banana republic,” he said – adding that New York is an overwhelmingly blue state that votes more than 85% in favor of Democrats.
Ruling Puts NYC’s Real Estate Sector and Economy On Blast
Many experts are waiting to see just how big of an impact the ruling has on property value and loan defaults – both of which could affect regional banks in the area. People are starting to wonder how New York will solve the market’s future trajectory – which is bleak, at the moment.
When you combine the recent ruling with the regulatory environment, high taxes, and competitive regulations New York is already known for, you can start to see why so many businesses are hesitant to move to or stay in the city – and state, in general.
Gov. Kathy Hochul Reassures NYC Businesses
New York Governor Kathy Hochul wants to reassure everyone that their companies are safe in the state – chalking it up as ‘an extraordinary, unusual circumstance’ that ‘law-abiding and rule-following New Yorkers’ have nothing to worry about.
“By and large, they are honest people and they’re not trying to hide their assets and they’re following the rules,” Hochul said during a radio appearance. “And so this judge determined that Donald Trump did not follow the rules.”
