Legal pitfalls can hemorrhage wealth overnight. Enron and Arthur Andersen, once household names, went out of business on the heels of financial chicanery. And then there’s Bernard Madoff and Sam Bankman-Fried.
Could the same happen to former President Donald Trump?
Trump has a reported net worth of $2.6 billion according to Forbes. But legal claims against him are soaring through the stratosphere. E. Jean Carroll won twin defamation suits against Trump with combined verdicts of $88.3 million. The Attorney General of New York is seeking $370 million in penalties for already adjudicated business malpractices before a Trump-unfriendly judge. Attorney’s fees in the four criminal cases in four jurisdictions are likely to top $100 million.
The secondary reputational effects of the litigation against Trump could be even more financially crippling. Trump himself has testified that an enormous portion of his wealth is his brand—the cachet it commands in the marketplace.
If Trump is convicted of one or more serious felonies of the 91 charged, his luster would dim, and an indeterminate number of consumers and businesses would boycott Trump or his properties. Moreover, if Trump’s legal travails keep him outside the corridors of power, including the White House, his market value would fall further. He is already radioactive to some investors who have been alarmed by the guilty pleas of Trump’s closest legal associates including, Kenneth Chesebro, Jenna Ellis, and Sidney Powell, and by indictments of others like Rudy Giuliani.
Additionally, Trump’s preoccupation with four criminal prosecutions to stay out of jail forecloses sustained attention to operating his existing businesses and spotting new opportunities. Business acumen cannot be delegated or subcontracted out.
But these worries might be overstated. Maybe the worse things go for Trump legally, the more his MAGA supporters will be eager to bail him out of any financial distress. And foreign friends might come to his assistance directly or indirectly for favors he did during his White House years, like Saudi Arabia, the UAE, or Israel.
Trump’s interrelated legal and financial fates provide a lesson to other leaders similarly situated. The only sure way of maintaining your wealth and profit centers is to remain above suspicion.
Otherwise, you are rolling dice with your financial future.
Trump seems willing to roll the dice.
