Some New York appeals court judges appeared receptive Thursday to possibly reducing or reversing a civil fraud judgment that could cost Donald Trump almost $500 million.
One judge called the former president’s penalty “troubling” and wondered if the state’s policing of private business transactions equated to “mission creep” or “deterrence.”
The state’s intermediate Manhattan appeals court five-judge panel quizzed attorneys representing the New York attorney general’s office and the former president during oral arguments in the GOP presidential nominee’s fight to get his February 16 verdict overturned.
However, the judges sometimes also appeared doubtful of Trump’s side. Frequently, judges in appeals courts ask targeted questions of both sides to weigh their arguments.
Donald Trump is asking the court to reverse Judge Arthur Engoron’s ruling that the former president lied for years about his worth on paperwork given to insurers, banks, and others to secure loans and make deals.
Trump didn’t attend the hearing. He has previously slammed the lawsuit’s outcome as “election interference” and accused Judge Engoron of punishing him for “having built a perfect company.”
The Appellate Division generally rules about a month after arguments, meaning a decision could come before Election Day. The court could either reduce, modify, or uphold the trial verdict or overturn Engoron’s verdict completely. For the verdict to be overturned, a majority of the five appellate judges must agree.
D. John Sauer, a Trump lawyer, argued that the lawsuit brought by Democrat Attorney General Letitia James stretched the state’s consumer protection laws and insinuated the government into transactions where there were “no complaints” and “no victims.”
Trump’s insurers, lenders, and others he conducted business with were “sophisticated counterparties” that performed their own due diligence instead of relying only on annual financial statements he provided — documents Engoron ruled dramatically inflated his net worth.
Sauer said the case “involves a clear-cut violation of the statute of limitations,” with some transactions dating back over a decade. He argued that if the verdict is permitted to stand, “people can’t do business in real estate” without worrying they’ll face comparable scrutiny.
Judith Vale, the state’s deputy solicitor general, countered that “there was absolutely a public impact and a public interest here,” noting that Trump lenders, including Deutsche Bank, took on undue risk based on his alleged misrepresentations.
Judge Peter H. Moulton questioned if the attorney general’s office was engaging in “mission creep” and if the law she sued Trump under had “morphed into something that it was not meant to do.” Later, Moulton queried Vale about Engoron’s weighty punishment, observing that “the immense penalty in this case is troubling.”
State argues there is significant evidence to support the verdict
According to Vale, under the law, the judge was allowed to essentially take away whatever Trump had gained from the transactions based on his exaggerated financial statements. That includes savings from lower loan interest rates and profits on sales of properties like his Washington, D.C., hotel.
“That is an enormous benefit that they got from the misconduct, and it is not an excuse to say, ‘Well, our fraud was really successful, so we should get some of the money,'” argued Vale.
The state argues that there is significant evidence to support the verdict and that Donald Trump’s appeal is based on meritless legal arguments, many of which the Appellate Division and Engoron have rejected before.
Previously, Sauer argued Trump’s successful presidential immunity case in front of the U.S. Supreme Court.
Ruling following a 2 ½ month trial, Judge Engoron found Trump had padded his net worth by several billions on annual financial statements by overestimating assets, including his hotels and golf courses, his Trump Tower penthouse, and his Mar-a-Lago estate in Florida in Manhattan.
Former President Trump and his co-defendants are also challenging Engoron’s decision to rule, even before testimony, that the state had proven Trump had inflated his financial statements fraudulently. Judge Engoron ordered Trump and the other defendants to pay $363.9 million in penalties, which has now increased with interest to over $489 million.
In April, Trump posted a $175 million bond to halt the judgment collection and block the state from seizing assets during his appeal. The bond ensures payment if the verdict is upheld. If the former president is successful in his appeal, he will receive the money back.
If either side doesn’t agree with the outcome, it can ask the state’s highest court, the Court of Appeals, to consider taking up the case. The former president has vowed to dispute the verdict “all the way up to the U.S. Supreme Court if necessary.”
