Trump Could Have Easily Avoided His $540 Million Cash Crunch

Forbes

Donald Trump is facing a liquidity crisis. Over $540 million in legal fines currently weigh on him, threatening to deplete his $400 million estimated cash reserves and force him to sell or borrow against his real estate empire. On March 8, thanks to the Chubb insurance company, he posted a $91.6 million bond in the E. Jean Carroll case, where the writer won two verdicts against Trump for sexual abuse and defamation.  Read the full story on Forbes: https://www.forbes.com/sites/kylemullins/2024/03/20/trump-could-have-easily-avoided-his-540-million-cash-crunch/?sh=7af7bae4fefa  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Thursday, March 21.

00:05 Today on Forbes, Trump could have easily avoided his $540 million cash crunch.

00:13 As we've been reporting this week, Donald Trump is facing a liquidity crisis.

00:17 Over $540 million in legal fines currently weigh on him, threatening to deplete his $400

00:23 million in estimated cash reserves and force him to sell or borrow against his real estate

00:28 empire.

00:30 On March 8, thanks to the Chubb Insurance Company, he posted a $91.6 million bond in

00:35 the E. Jean Carroll case, where the writer won two verdicts against Trump for sexual

00:39 abuse and defamation.

00:42 Now Trump's lawyers say he is unable to secure a bond for the more than $450 million he owes

00:47 in his other case, where he has a judgment against him for fraud.

00:52 Insurance companies are balking at giving him a bond, apparently saying they won't

00:55 accept his real estate as collateral.

00:58 Payment or bond in that case is due this Monday, March 25, to the state of New York, which

01:04 could subsequently try to seize his assets.

01:06 While Trump appeals both cases, he may be wondering if there was a different path, a

01:11 financial road not taken.

01:14 Forbes considered two viable paths that would have saved him a lot of headaches, not to

01:18 mention money.

01:20 Trump could have simply invested the estimated $400 million inheritance he received from

01:24 his father, who died in 1999. Or he could have divested his business empire, as ethics

01:30 officials urged him to do, when he became president in January 2017, and then simply

01:35 reinvested the proceeds in the stock market.

01:38 In both cases, he'd be much richer and more liquid today. And he may have even avoided

01:43 the $450 million bill for lying about his assets.

01:49 Ethics experts urged Trump, worth an estimated $3.5 billion the day he entered the White

01:53 House, to sell his assets and put the returns in a blind trust during his presidency.

01:59 Walter Schaub, then head of the Office of Government Ethics, said in January 2017, "Nothing

02:06 short of divestiture will resolve these conflicts."

02:10 Trump refused, opting instead to let his sons run his businesses. His companies raked in

02:15 more than $2.4 billion in revenues from 2017 to 2020 while he was in office, raising constant

02:21 conflict of interest questions about exactly who was spending money at his properties.

02:26 Everyone from hotel guests to office building tenants to real estate buyers were scrutinized.

02:32 Had Trump followed that advice and divested instead, he would have taken a hit to pay

02:37 taxes initially. Federal and state capital gains taxes could have lopped off as much

02:41 as 33%—over $1.1 billion—off his fortune.

02:46 But even assuming maximum taxes are taken out—which isn't likely given Trump's

02:51 long record of finding ways to minimize his payments to Uncle Sam—he'd still be worth

02:55 much more today. If he'd invested the remaining $2.4 billion in a fund tracking the S&P 500,

03:02 he'd be up about 125% since January 2017, putting his present-day net worth at roughly

03:09 $5.3 billion. That's more than twice what he's actually worth—$2.6 billion, per Forbes'

03:16 last estimate in September.

03:19 Some of his pre-presidency business activity may still have attracted New York State Attorney

03:23 General Letitia James' attention, but with over $5 billion in liquid assets, he'd easily

03:28 be able to pay off a judgment against him like the one he faces now. He likely would

03:33 still be on the hook for the E. Jean Carroll case.

03:37 For years, people have speculated about how much help Donald Trump got from his father

03:41 in building his fortune. Trump himself fanned the flames, famously and falsely claiming

03:46 that all he got from his father was a "small loan of a million dollars" that he had to

03:51 pay back with interest.

03:54 The New York Times helped clarify the question in 2018 in a 13,000-word exposé, revealing

04:00 that Trump had received over $413 million from his father across multiple decades. The

04:06 article noted that if Trump had simply invested that inheritance in the S&P 500, he would

04:10 have been worth $1.96 billion the day the article came out. At that time, Trump was

04:16 worth $3.1 billion, so he'd done better than he would have just sitting on cash.

04:22 But since the Times article was published, the stock market has been on a tech-fueled

04:26 tear while Trump's business empire has struggled. Starting in 2021, the hypothetical inheritance

04:33 investment began to outpace his real-world net worth, and has done so mostly consistently

04:38 except for in late 2022 when markets swooned. But markets recovered, and today, that same

04:44 inheritance would be worth an estimated $3.7 billion, well above his $2.6 billion real-world

04:51 net worth.

04:53 For full coverage, check out Kyle Mullen's piece on Forbes.com.

04:59 This is Kieran Meadows from Forbes. Thanks for tuning in.

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