Trump Org. tries to figure out the future of its business after fraud ruling

By Sabrina Souza and Devan Cole, CNN

New York (CNN) — The Trump Organization is trying to determine the sweep of Tuesday’s ruling that Donald Trump is liable for fraud and what it means for the future of the former president’s namesake business, his attorneys say.

At a pre-trial hearing Wednesday, Trump attorneys said they didn’t know to which part of the company the ruling applied and were starting to work out what may need to be dissolved to comply with the judge’s surprise decision.

Officials from New York Attorney General Letitia James’ office also said they needed more time to go through the order.

The fraud case “changed significantly since yesterday,” New York Judge Arthur Engoron said in court Wednesday, referring to his stunning ruling where he found Trump and his adult sons liable for fraud and canceled the Trump Organization’s business certification.

Addressing the uncertainty from Trump on when a court-appointed manager, known as a receiver, would oversee the dissolution of Trump’s corporate entities, Engoron extended the timeline to 30 days to come up with a plan for the receivership, up from the original 10.

The trial, despite Tuesday’s ruling which addressed part of James’ claims, will still proceed on Monday as scheduled, the judge said.

Here’s the latest:

Major questions loom

Trump attorney Christopher Kise stressed during Wednesday’s hearing that the judge’s ruling injected fresh uncertainty for his team about the fast-approaching trial and raised a host of questions for them, including over how far-reaching the decision is for the company.

“And don’t take this the wrong way, but what in the court’s mind does this trial now look like? Like what are the issues?” Kise asked “We certainly have our idea, we haven’t spoken to (the) attorney general.”

Kise added: “I’m just wondering what’s the point?”

Underscoring just how vast Trump’s business empire is, Kise said he wasn’t sure which entities under the Trump Organization are covered by Engoron’s ruling.

“I’m not even sure.” Kise explained, “which of the entities are actually covered here because you have New York entities that, for example, own like just like a house or own a townhouse or something. There may be like Don Jr. or Eric’s residence. Are those covered?”

“It’s the reason why I’m saying we would ask the court for a little more time with the monitor,” he said, referring to a retired federal judge who had been appointed several years ago to oversee the company’s financial statements.

Receivership would oversee corporate dissolution

Engoron said in his ruling that a receiver will be put in place to “manage the dissolution” of the corporate entities, a move that is rare outside of cases where a judge finds there to be a notable amount of business fraud, according to Simon Miller, a New York-based attorney with broad expertise on receiverships.

“Given that the judge has found that there’s persistent fraud in that context, it is not a surprise that the judge appointed a receiver,” Miller said. “But in general, the appointment of a receiver is not something that courts do either routinely, or absent extraordinary circumstances.”

Both sides will now propose names from a court-approved list of receivers and the judge will ultimately decide who will be appointed to the role.

But questions still remain as to how the receiver would dissolve the properties, if the ruling would impact properties located outside of New York state, including Mar-a-Lago, and if the Trumps could transfer the New York-based assets into a new company located out of state.

“Having an independent person who literally has the power of ownership over all of these assets – it can be a very destabilizing thing within an organization. And so how the receiver is going to operate and what the receiver is going to do is going to be something that the parties will have to discuss,” Miller said.

There are two New York properties that are part of the lawsuit, the commercial tower at 40 Wall Street and the Trump family compound at Seven Springs.

Trial to partly focus on penalty amount

Engoron said in his ruling that the issues that will be determined at trial include how much Trump will be held liable for in the lawsuit and the amount of disgorgement, or ill-gotten funds, the company will need to pay to the attorney general’s office.

James’ lawsuit is seeking $250 million.

During the trial, James’ office won’t need to prove the company’s financial statements are false as they seek to hold him and his sons liable for insurance fraud and false business records. But the trial gives them the opportunity to prove other specific claims brought in the lawsuit, which would allow them to seek a larger penalty from the Trump Organization.

“We’ve only reached two of the relief items that the attorney general asked for,” Kevin Wallace, an attorney with James’ office, said during Wednesday’s hearing. “A trial would be useful to get to that conclusion.”

Nearly 200 witnesses may testify

There are currently 188 witnesses for the trial, Engoron said in court, but did not specify how many would be for the defense and how many would be for the state, or if they’ll all be called.

“I’m not going to worry about the limitations on the number of witnesses,” he said.

James’ office said there were 130 individuals on its witness list.

Clifford Robert, an attorney for the Trump Organization, said they would object to at least some of the government’s witnesses.

“If they’re planning to call these witnesses in the middle of the trial, can we suspend the trial for a day or two before they take a stand?” Robert said. “There were millions of pages of documents they gave us and if their names were buried in them, I wouldn’t say yes, I wouldn’t say no.”

The attorney general’s office also said the defense team has not provided them with a list of their own witnesses yet.

“I do think we would like defendants to provide us with a list of who they’re likely to call,” Wallace said.

“Up until now we haven’t been able to narrow things, the court’s done a good job of narrowing things,” Kise replied. “We now have a better idea of who’s going to be involved.”

Trump team plans to appeal

The Trump team indicated Tuesday that they plan to appeal Engoron’s ruling.

“We intend to immediately appeal this decision because President Trump and his family, like every American business owner, is entitled to their day in court,” Trump attorney Alina Habba said in a statement.

Kise said in a separate statement that the judge’s decision is “outrageous” and argued that it “seeks to nationalize one of the most successful corporate empires in the United States and seize control of private property.”

“While the full impact of the decision remains unclear, what is clear is that President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice,” he said.

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CNN’s Kara Scannell contributed to this report.