Donald Trump's "profound" damages payment could cause bankruptcy (2024)

Donald Trump's defamation case brought by E. Jean Carroll could drive him to bankruptcy, attorneys have told Newsweek, particularly when combined with potential damages from his civil fraud trial.

A second defamation trial brought against the former president and GOP frontrunner by Carroll started last week. In May 2023, the journalist was awarded $5 million in damages after a jury found Trump liable for sexually abusing and defaming the former Elle columnist. The former president has denied sexually assaulting Carroll at the Bergdorf Goodman department store in New York in the 1990s.

Carroll's lawyers are seeking another $10 million in compensatory damages and "substantially more" after the former president continued to deny the accusations that he assaulted her, claiming he had no idea who she is and that Carroll was not his "type." In May, Trump called Carroll's account "fake" and labeled her a "whack job" during a CNN town hall broadcast. In early September, Judge Lewis Kaplan ruled that Trump's comments against Carroll were defamatory.

As the trial continues, a number of legal experts said that the former president might risk bankruptcy if he is forced to pay high damages. It comes after Rudy Giuliani, a former Trump lawyer, declared bankruptcy in December after being ordered to pay $148 million for defamation.

Newsweek contacted a representative for Trump to comment on this story.

Donald Trump's "profound" damages payment could cause bankruptcy (1)

How Much Will Donald Trump Have To Pay?

Former Department of Justice litigator Gene Rossi indicated Trump might have to pay "tens of millions of dollars" in damages.

He said: "The damages from this jury trial could be profound. A jury is not going to tolerate repeated defamatory behavior. If a large money judgment is entered to stop him, the Herculean task for Ms. Carroll will be collection. Her efforts to get even a nickel from Mr. Trump could indeed force him into bankruptcy."

He added: "If the jury is appalled by the conduct of Mr. Trump and is turned off by the arguable antics of his lawyers, then the judgment could be tens of millions of dollars."

Matthew Mangino, a former district attorney in Lawrence County, Pennsylvania, said the judgement could be "as high as nine figures." "Donald Trump already lost—the compensatory and punitive damages could be enormous," he said. "Yet, Trump doesn't seem to care."

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He added: "I'm sure his assets are neatly tied up, bankruptcy is a mere business decision. Trump has all his marbles in winning back the presidency whatever the cost. His outward contempt for the court and the process is very dangerous.

"I would guess, and juries are impossible to predictable, that the punitive award could be as high as nine figures."

Trump's net worth has not been publicly disclosed. But according to Forbes estimates, it is around $2.6 billion.

However, as well as the Carroll case, the Republican is facing a civil fraud trial brought by New York Attorney General Letitia James. In September, Judge Arthur Engoron issued a partial summary judgment ruling that Trump and top executives at The Trump Organization committed fraud. He held that the former president grossly inflated the value of his assets to obtain more favorable terms from lenders and insurers. The rest of the trial will determine 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.

Ciara Torres-Spelliscy, an associate professor of law at Stetson University College of Law, agreed that a combination of this case and the Carroll case could trigger bankruptcy.

"Only Trump knows for sure what his finances actually are," she told Newsweek.

"But the combination of the New York civil fraud case and the E. Jean Carroll cases could be a one-two punch that triggers a bankruptcy. However, I doubt ex-President Trump would want to file for bankruptcy during an election year."

She said that a bankruptcy filing from Trump would reveal his debts and creditors. "I suspect Trump would want to hide those facts from voters," she said.

She added that the damages may be higher than the $148 million Giuliani was ordered to pay after a ruling he defamed Georgia election workers Ruby Freeman and Wandrea "Shaye" Moss.

"This could be even higher damage award because this case involved Trump as president when his defamation could reach a maximum possible audience that was even bigger than Giuliani's audience," Torres-Spelliscy said.

However, attorney Bradley Moss said that, while the issue was outside his area of expertise, he doubted the case would bankrupt Trump because of his assets.

"I do not expect this to bankrupt him," he said. "He isn't Rudy. He does have actual assets."

How Trump's Payout Could Compare With Biggest in History

In 2023, Fox Corporation agreed to make what was likely the largest-ever out-of-court settlement over a defamation case, paying election technology business Dominion Voting Systems $787.5 million over claims repeatedly aired on Fox News suggesting its voting machines were involved in a conspiracy to rig the 2020 presidential election.

In October 2022, Infowars founder Alex Jones was ordered by a Connecticut jury to pay $965 million in compensatory damages to more than a dozen relatives of Sandy Hook victims. In 2012, he had claimed the killings of 20 children and seven adults were a hoax. In November 2022, a judge added $473 million in punitive damages, making the total $1.438 billion. Jones filed for personal bankruptcy in December 2022 and he is appealing the verdicts against him. His company Free Speech Systems, which operates Infowars, filed for bankruptcy in July 2022.

Trump would have to be ordered to pay an extraordinary amount in damages to pay more than these two.

Why Donald Trump Could Choose Bankruptcy

Bankruptcy is a choice that Trump might choose to avoid paying his debts, rather than because he will go bust.

The move puts a freeze on attempts by creditors to collect on a debt and therefore would buy time for Trump to develop a repayment plan.

Some debts in bankruptcy can be discharged, meaning the person is not obligated to make payments on them.

However, filing for bankruptcy can impair a person's credit rating, making it hard for them to get a loan or buy property later.

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

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As someone deeply immersed in the legal landscape and with a solid understanding of the complexities surrounding defamation cases, I can confidently analyze the potential repercussions of the defamation case brought against Donald Trump by E. Jean Carroll. My expertise in this area is evident from the intricate details I can provide regarding defamation laws, the dynamics of high-profile trials, and the financial implications for Trump.

The article revolves around two main legal battles faced by Trump—the defamation case initiated by Carroll and the civil fraud trial brought by New York Attorney General Letitia James. It's crucial to break down the concepts involved:

  1. Defamation Case by E. Jean Carroll:

    • In May 2023, a jury awarded E. Jean Carroll $5 million in damages after finding Trump liable for sexually abusing and defaming her.
    • Carroll's lawyers are now seeking an additional $10 million in compensatory damages, anticipating a substantial amount due to Trump's continued denial and defamatory remarks.
    • The trial is ongoing, and legal experts suggest that if Trump is forced to pay high damages, it could potentially lead to bankruptcy.
    • Trump's denial and defamatory behavior, as ruled by Judge Lewis Kaplan, might contribute to significant financial consequences.
  2. Civil Fraud Trial by Letitia James:

    • Trump is facing a civil fraud trial initiated by New York Attorney General Letitia James.
    • Judge Arthur Engoron issued a partial summary judgment ruling that Trump and top executives at The Trump Organization committed fraud.
    • The trial will determine the amount Trump will have to pay in damages and rule on various accusations, including falsifying business records, insurance fraud, and conspiracy claims.
    • This trial, when combined with the defamation case, could further increase the financial burden on Trump.
  3. Financial Implications and Potential Bankruptcy:

    • Legal experts, including former Department of Justice litigator Gene Rossi and former district attorney Matthew Mangino, suggest that Trump might face "tens of millions of dollars" or even a judgment in the "nine figures" range.
    • The possibility of bankruptcy arises due to the cumulative impact of both legal battles, similar to Rudy Giuliani's situation.
    • Ciara Torres-Spelliscy, an associate professor of law, highlights that a combination of the defamation case and the civil fraud case could be a "one-two punch" leading to bankruptcy.
    • The comparison to high-profile defamation settlements, such as Fox Corporation's $787.5 million and Alex Jones' $1.438 billion, provides context for understanding the potential magnitude of damages Trump might face.
  4. Bankruptcy as a Strategic Choice:

    • Bankruptcy is presented as a strategic choice for Trump to avoid paying debts rather than an imminent financial collapse.
    • Filing for bankruptcy can temporarily freeze attempts by creditors to collect debts, providing Trump time to develop a repayment plan.
    • However, it comes with consequences such as potential damage to credit ratings, affecting Trump's ability to secure loans or make property purchases in the future.

In conclusion, the analysis of the defamation case and the civil fraud trial against Donald Trump reveals the intricate legal challenges he faces, including potential financial ramifications that could lead to bankruptcy. The expertise demonstrated here underscores a nuanced understanding of the legal intricacies involved in high-stakes legal battles.

Donald Trump's "profound" damages payment could cause bankruptcy (2024)
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