A New York appeals court rigorously questioned attorneys representing both Donald Trump and the New York attorney general’s office over a $454 million civil fraud judgment against the former president. The court’s scrutiny centred on the size of the penalty and the attorney general’s authority to bring the case.
Trump was absent from the hearing, but his legal team sought to overturn the judgment issued by state Judge Arthur Engoron in February. Engoron had found Trump, his sons Donald Trump Jr. and Eric Trump, and his business liable for fraud and falsifying financial statements. This appellate hearing adds another layer to Trump’s ongoing legal battles, concurrent with his presidential campaign.
Key points from the hearing include Justice Peter Moulton’s concerns about the hefty penalty. He questioned how the amount assessed by the Supreme Court tied to the actual harm caused, given the contents’ perceived happiness post-transaction. Deputy New York Solicitor General Judith Vale defended the penalty, emphasising the significance of disgorgement, which aims to remove ill-gotten gains. According to Vale, the penalty was substantial due to the extensive fraud and the resultant benefits from false financial statements.
The judges also delved into the calculation of disgorgement. Justice Llinet Rosado queried whether it should be based on differences in property valuations, but Vale insisted it was correctly calculated based on the disparity in loan rates obtained through the falsified financial statements. Additionally, she justified including profits from the sale of the Old Post Office building in Washington, DC, in the disgorgement calculation.
A significant portion of the questioning targeted the legal grounds used by New York Attorney General Letitia James to initiate action against Trump. Justice David Friedman highlighted the lack of harm claimed by Deutsche Bank, Trump’s creditor, questioning the rationale for the attorney general’s intervention. Vale countered that the statute did not necessitate proof of harm and suggested that Deutsche Bank ultimately withdrew from the agreement due to the false financial statements.
Trump’s attorney, John Sauer, argued that the judgment should be nullified, citing a breach of the statute of limitations, as much of the conduct in question was outdated. Sauer also referenced a prior ruling that excluded Trump’s daughter, Ivanka, from the case due to similar reasons. He contended that no parties suffered financially and that lenders conducted due diligence. However, the judges probed into whether Trump’s team was attempting to limit the attorney general’s capacity to address persistent fraud.
The stakes of the judgment are immense, with February’s ruling charging Trump and his co-defendants with inflating asset values to secure better loans and insurance rates. The initial $354 million judgment has grown to over $478 million due to accruing interest. As Trump appeals, a $175 million bond has been posted. The hearing offered Trump’s lawyers a chance to challenge the trial’s outcomes, including the significant monetary penalty deemed unconstitutional by Trump’s defence.
The New York attorney general’s office, in its defence, submitted that there was overwhelming evidence of fraudulent conduct by Trump. They argued that Trump’s financial statements substantially misrepresented asset values, warranting the penalty. The office claimed that Trump’s defence largely avoided substantive discussion of the deceptive practices uncovered during the trial, focusing instead on disputing the legal grounds of the case.
The appellate panel has not yet issued a ruling, and a decision is unlikely before the upcoming election. The appeals court’s ruling remains subject to further appeal to New York’s highest appellate court.
The appellate hearing highlighted contentious issues concerning the substantial penalty against Trump and the legal basis for the case. The court’s decision, pending ahead of the election, remains a significant element in Trump’s legal landscape, with potential implications on his presidential campaign.
