A panel of five New York appeals court justices heard opening arguments on Thursday in former President Donald Trump’s appeal of the massive $454 million fine (plus interest) he was ordered to pay at the end of his civil fraud case in February. Judge Arthur Engoron found Trump liable for overstating the values of his assets on bank loan applications, which is actually a common practice among commercial real estate developers. Trump’s sons, Donald Trump, Jr. and Eric Trump, were also found liable for fraud and fined approximately $4 million each.
Among the other sanctions outlined in Engoron’s extraordinary ruling, Trump and his sons were prohibited from serving as officers or directors of any business in the state for three years.
The case was brought by New York State Attorney General Letitia James, an elected Democrat who made it clear during her campaign that she would use the law to take down Trump. She told supporters, “This illegitimate president [Trump] — I look forward to going into the office of the attorney general every day, suing him, and then going home.” She kept her word.
James charged Trump with violating a state anti-fraud law that, according to Reuters, is “typically used to protect consumers. Unlike many similar cases, this one did not involve ordinary people losing lots of money.” Or any money.
It was a case that should never have been brought and would never have been brought had the target been anyone other than Trump. Obviously, he has very strong grounds for appeal.
From the several accounts of the hearing I’ve read, the justices appeared to direct more questions to Deputy Solicitor General Judith Vale, who represented the attorney general’s office, than to Trump’s legal team.
CNN reported the justices questioned Vale about “the scope of the attorney general’s authority, the lack of alleged victims in the case, and the size of the penalty Engoron imposed.”
Justice Peter Moulton noted, “The immense penalty in this case is troubling.” He asked Vale, “How do you tether the amount that was assessed by the Supreme Court to the harm that was caused here where the parties left these transactions happy?”
Vale replied, “Although this is a large number, it’s a large number for a couple reasons. One, because there was a lot of fraud and illegality. That is an enormous benefit they got from this conduct.” The benefit, she explained, came in the form of reduced loan insurance rates and the lower interest rates Trump was charged based on the “inflated” valuations of the buildings used as collateral for the loans.
The justices also asked how prosecutors calculated the “disgorgement” amount.
[According to Cornell Law School, “disgorgement is a remedy requiring a party who profits from illegal or wrongful acts to give up any profits they made as a result of that illegal or wrongful conduct. The purpose of this remedy is to prevent unjust enrichment and make illegal conduct unprofitable.]
Justice David Friedman pointed out that representatives from Deutsche Bank said they had not been harmed, the loans had been paid back in full, and that they hoped to do more business with Trump in the future. Friedman said, “You have two really sophisticated players in which no one lost any money.”
Vale replied that the statute doesn’t require anyone to lose money.
Moulton said, “There has to be some limitation in what the attorney general can do in interfering in these private transactions … where people don’t claim harm. So what is the limiting principle?”
“There are still limits,” Vale said. “It is not falsity in the wind … it has to be related and relevant to the business at hand, and it does have to have a capacity or tendency to deceive.”
Trump lawyer John Sauer argued that “We have a situation where there were no victims, no complaints, no evidence of materiality or reliance.” He emphasized that the lenders “did do their due diligence.”
CNN reported that in written filings ahead of Thursday’s hearing, Trump’s attorneys argued that the “monetary penalty in the judgment was unconstitutional” and that “most of the case against Trump should have been barred because the conduct was too old.”
The justices did not indicate when they will issue a decision in the case. According to Forbes, a ruling is not expected until after the election. If Trump is unsatisfied with the appeals court ruling, he can appeal his case to New York’s highest appellate court. Forbes added that interest will continue to accrue throughout the process.
Following Engoron’s ruling in February, James filed a notice of entry in the case. At the time, ABC News reported, this motion “started the clock on Trump’s financial penalties in the case.”
James was obviously delighted by the outcome and found it exceedingly difficult to contain her glee. She took to X to show followers just how much money Trump owed the state of New York: “$464,576,230.62.” (This amount includes the $4 million owed to the state by Trump’s sons.)
$464,576,230.62
— NY AG James (@NewYorkStateAG) February 23, 2024
In case anyone forgot that the debt is costing Trump more than $100,000 in interest for each day that it remains outstanding, she reminded them in a new post the next day: “+$114,553.04.”
+$114,553.04 https://t.co/YySFtkX0i4
— NY AG James (@NewYorkStateAG) February 24, 2024
Not quite sure how long this went on, but nothing says equal justice under the law quite like a prosecutor providing daily updates on a defendant’s debt clock.
How inappropriate was this case and the penalty that followed? George Washington University Law School professor Jonathan Turley noted that “[e]ven the New York Times agreed that it could not find a single case in history where this statute was used against an individual or a company that did not commit a criminal offense, go bankrupt, or leave financial victims.”
This case, just like all of the other cases brought against Trump by highly partisan prosecutors after he declared his intention to run for the Republican presidential nomination in November 2022, is a travesty. And I hope these justices bring it to a swift end.
A previous version of this article appeared on Legal Insurrection.
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