Opinion: This penalty could hurt Trump more than prison time

(CNN) — Capped off by Ivanka Trump’s testimony Wednesday, the civil trial over the fate of the Trump Organization has brought its share of star power to a Manhattan courtroom. Still, the allegations in the case are far less splashy than others in which the former president is currently a defendant.

For instance, in a federal case in Washington, DC, former President Donald Trump faces allegations of subverting the 2020 election; a second election subversion case has been brought by the district attorney in Fulton County, Georgia; a federal case in south Florida alleges mishandling of sensitive government documents at Mar-a-Lago; a case brought by the district attorney in Manhattan alleges that Trump falsified business records in order to conceal extramarital affairs; and a civil defamation suit in New York federal court involves statements Trump made in 2019 about a sexual assault. (Trump denies wrongdoing in all of these cases.)

In contrast, the central issue in the current trial, initiated by New York State Attorney General Letitia James, is a straightforward question of corporate law: did a real estate entity improperly inflate the values of properties in appraisals in order to secure favorable loan and tax treatment? Despite fireworks from Trump and two of his sons on the witness stand earlier in the trial, the case is as uncontroversial (or, dare I say, boring) as they come.

A major issue isn’t even being considered at trial, as the judge overseeing it has already ruled that the Trump Organization engaged in “persistent and repeated” fraud. (The ruling came in a “summary judgment” order, a type of ruling typically issued before a trial that allows a court to resolve issues it deems to be so clear on their face as to not be in legal dispute).

At this point, the court is primarily weighing what damages and penalties the Trump Organization will face as a result. As she is not a defendant in the case and left the Trump Organization in 2017 for a role in the White House, Ivanka Trump’s testimony is hardly pivotal.

But the question of what penalty the Trump Organization will pay is surprisingly crucial to Donald Trump’s future. The case could carry seismic consequences a casual observer might overlook: the organization’s loss of any meaningful ability to do business in New York. In a way, it could end up being far more significant to Trump than any financial penalties or going to prison might.

For background, an entity can’t do business in New York (as elsewhere) without a certificate filed with the state. The cancellation of that certificate, for any reason, could have a devastating effect on a company, possibly imperiling its right to exist.

Earlier in the case, the judge granted a request from the attorney general to cancel several of the Trump organization’s state business certificates. Trump successfully obtained a stay of the decision on appeal, and it is on hold while the case plays out.

If the certificates are canceled, a number of major Trump assets, including Trump Tower in Manhattan, would be taken over by a court-appointed receiver. That individual, who would function like an executor of an estate, would have the power to manage and sell Trump properties to pay off legal bills and creditors. Notably, absent from the process of managing the company would be Donald Trump himself.

It may be a weedy aspect of state corporate law unknown to many, but it could do far more irreparable harm to Trump than many other potential sanctions he faces. For instance, the full financial penalty of $250 million the attorney general seeks from the Trump Organization seems less-than-eye popping when considered against Trump’s net worth, estimated to be in the ballpark of $3 billion.

While $250 million tops the gross domestic product of some countries, it is, in effect, a drop in the bucket for one of the richest men on the planet. Consider that the $15,000 in fines Trump was ordered to pay for twice violating a gag order in the case would have wiped many American families out; they were a rounding error for Trump, who paid them off almost immediately. There is no deterrent or punitive effect of fines and fees that are of no consequence to the person paying them.

Even the growing threat of significant prison time Trump may be facing in other cases doesn’t necessarily provide the accountability that it might for most other defendants in American criminal history.

As a former prosecutor, I will acknowledge that even under the most charitable of circumstances, prison robs people of almost everything — their liberty, their dignity, their humanity. However, the one thing prison doesn’t rob people of is the ability to run for, and perhaps even serve as, president of the United States (historians will remember that in 1920, Eugene V. Debs got nearly a million votes for president from behind bars).

Certainly, there is some measure of justice when a defendant is convicted following fair, public legal proceedings and sentenced in accordance with the law. But does any of it actually matter if that defendant can simultaneously serve as leader of the free world? With polling consistently indicating that wide segments of the voting population are unconcerned with the cloud of legal allegations hanging over Trump, it’s a reasonable question to ask.

On the other hand, while largely losing the ability to do business in New York may appear to be a slap on the wrist, it will be devastating for Trump, his brand and his businesses.

People are free to disregard a candidate’s criminal history, or even to deny the results of an election. However, they can’t do business with an entity that effectively no longer exists. Trump the business came long before Trump the president. Losing that would be cataclysmic for Trump on every level. No amount of bluster on the campaign trail can change that.

The arcana of business certificates and corporate structure may not gain as much attention from the public as allegations of sexual assault in department stores, dalliances with porn stars, phone calls to state election officials , sensitive documents stored in gold-plated bathrooms, or insurrections might.

However, for a major business run by a former president, they may end up providing an existential measure of accountability that most fines or getting locked up will not.

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