On Thursday, September 26, the New York State Appeals Court heard a verbal argument from former President Donald Trump regarding his appeal in a civil fraud case. The panel of five judges displayed a cautious attitude towards the case, expressing skepticism about the validity of the prosecution and Trump requested the Appeals Court to overturn the nearly 500 million US dollars fraud judgment against his real estate business activities announced by the trial judge.
This case originated from the Trump Organization, the family real estate company led by Trump before he became president in 2017. The civil suit was initiated by New York State Attorney General Letitia James in the fall of 2022.
On February 16 of this year, Judge Arthur Engoron issued a ruling ordering Trump, the Republican candidate for the November 5 presidential election, to pay a fine of 454.2 million US dollars plus interest. The reason cited was Trump’s inflation of asset net worth to deceive lenders and insurance companies in order to obtain more favorable loan terms.
Trump deposited 175 million US dollars in April to prevent the enforcement of the judgment and to prevent the state government from seizing his assets during his appeal. If the judgment is upheld, the deposit will ensure payment. If Trump wins, he will get this money back.
With interest accruing, Trump now owes 478.3 million US dollars.
The five judges of the Appeals Court seemed concerned about the possibility of overreach by Letitia James. A judge at the Appeals Court reportedly expressed that the punishment against the former president is “troubling” and questioned whether the state’s oversight of private business transactions has constituted “deterrence” or “mission creep.”
Two judges interrupted the opening statement of New York State lawyer Judith Vale, asking if there were other cases that could be used as references. New York State has previously sued parties engaged in private business transactions under laws intended to protect market integrity.
Judge David Friedman told Vale, “Every case you cited involved harm to consumers and the market, but here (referring to the Trump case), there is no similar situation,” and no one “lost any money.”
The judges also expressed doubts about the conditions under which the laws cited by Letitia James in bringing the lawsuit can be applied, as the laws are typically used to prosecute fraudsters targeting vulnerable consumers.
Judge Peter Moulton asked, “How do we draw the line, or at least how do we set up guardrails?”
Deputy Attorney General of New York Vale stated that the regulation [specifically Section 63(12) of the Administrative Code] aims to broadly prevent fraud and illegal behavior, hence applicable to the Trump case.
Vale said, “When risk is injected into the market, it does harm to counterparties and the entire market.”
Trump’s lawyer John Sauer told the judges that the trial testimony showed that any discrepancies in Trump’s net assets were unrelated to his lenders.
Sauer said, “There is no dispute that even if the net assets were as low as one million US dollars, the transaction result would be exactly the same.”
Sauer further emphasized that Trump’s lenders, insurance companies, and other business partners were all “sophisticated counterparties” who would conduct due diligence rather than solely rely on the annual financial statements he provided.
Sauer said, “There are no victims, no complaints.”
In rebuttal, Sauer stated that Vale, “struggles to articulate any clear principle,” for using to show that Trump’s business conduct limited New York State’s lawful enforcement authority.
Sauer stated that this case “clearly violates the statute of limitations,” as some transactions date back over a decade. Once a judgment is established, he believes people will no longer feel secure engaging in real estate transactions, fearing similar scrutiny.
Sauer had previously successfully defended Trump in a presidential immunity case at the US Supreme Court.
Engoron’s ruling poses a threat to the commercial empire Trump has built over decades, including hotels, office buildings, and golf courses worldwide.
This is one of the many legal disputes Trump has faced since leaving the White House in 2021. He owes nearly 90 million US dollars in federal civil fines for defamation charges over allegations of sexual abuse by a writer and was convicted in May for paying hush money to a porn star.
Trump denies all wrongdoing, condemning the lawsuit as “interference in the elections” and accusing Judge Engoron of punishing him because “he built a perfect company.”
In a brief statement submitted to the Appeals Court in July, Trump’s lawyers claimed that the financial statements he submitted to banks actually underestimated his wealth and there were no indications that any lenders suffered losses. The lawyers also accused Democrat Letitia James of using the judiciary to target political opponents.
In September 2023, during a three-month trial without a jury, Engoron ruled that Trump had inflated his net worth by billions of US dollars in annual financial statements, including assets such as golf courses and hotels, the Mar-a-Lago estate in Florida, and the top-floor apartments of Trump Tower in Manhattan.
Judge Engoron ruled Trump responsible for making false statements about the value of his assets and net worth over the course of a decade. He specifically questioned Trump’s claim about the square footage of his top-floor apartment in Manhattan, believing it was nearly three times the actual size.
The initial trial focused solely on penalties. In addition to the fine, Engoron also prohibited Trump from holding any top positions in any New York companies for three years or seeking loans from banks registered in the state.
The Appeals Court may uphold the original judgment, mitigate or modify the penalties, or completely overturn Engoron’s ruling. The majority of the five appellate judges participating in Thursday’s hearing must agree to change the judgment.
The Appeals Court’s decision may come before election day. Trump has vowed to “fight the lawsuit to the Supreme Court at all costs.”
(This article references reporting from Reuters)