A five-judge appellate panel in New York reviewed arguments related to former President Donald Trump’s appeal of his ‘civil fraud’ case brought by state Attorney General Letitia James, during which they questioned key elements of the state’s case, expressing skepticism about the application of a consumer fraud statute, the extent of the financial penalties sought by prosecutors, and the confidentiality of the transactions in question.
These concerns reflected key arguments from the defense, which, while not successful in the initial trial, appear to carry significant weight. Notably, Trump was absent from Thursday’s hearing. The New York judges critically examined the rationale behind the $454 million civil fraud judgment against Trump, questioning the basis for such a substantial penalty and seeking clarification on the actual harm caused, particularly given that the transactions in question reportedly led to no financial loss for either party.
The legal challenge is just one of many hurdles Trump faces as he campaigns to reclaim the presidency. In February, Justice Arthur Engoron ordered Trump to pay over $454 million in penalties and interest, ruling that he had inflated his net worth to obtain more favorable terms from lenders and insurers.
The appeals judges rigorously questioned New York Deputy New York Solicitor General Judith Vale about various facets of the case against Trump. They expressed skepticism regarding the scope of James’s authority, the lack of clear victims from the alleged conduct, and the scale of the penalty. At least two judges were notably critical, interrupting Vale’s opening statement to inquire whether there were precedents for using a law designed to protect market integrity in lawsuits involving private transactions between sophisticated parties.
Justice Peter Moulton expressed his concern during the proceedings, asking, “The immense penalty, in this case, is troubling. 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?” according to the Daily Mail. Vale countered, stating, “Although this is a large number, it’s a large number for a couple of reasons. One, because there was a lot of fraud and illegality.”
D. John Sauer, who earlier this year successfully argued Trump’s presidential immunity appeal before the Supreme Court, was also in the courtroom. “We have a situation where there were no victims, no complaints. How is there a capacity or tendency to deceive when you have these clear disclaimers?” Sauer said, according to ABC News.
He further argued that the lawsuit was filed too late and that imposing a “crippling financial penalty” on the former president for his decades-old financial statements, which Engoron deemed illegally inflated, would be unjust. “This case involves a clear-cut violation of the statute of limitations and relevant case law,” Sauer contended.
He further highlighted that discrepancies in Trump’s stated net worth did not affect his dealings with lenders, as evidenced during the trial. “What is not disputed is the testimony that if the net worth had been as low as one million (dollars), the deal would’ve been exactly the same.” Sauer also repeated previously argued points that Trump’s lenders and business partners suffered no harm due to the inaccuracies in the financial statements, maintaining, “There were no victims, no complaints,” a point Trump’s legal team has consistently emphasized throughout the proceedings.
Justice David Friedman questioned Vale about whether there was any precedent for the attorney general pursuing legal action over transactions between sophisticated parties when neither side “lost any money.” He added: “Every case that you cite involves damage to consumers, damage to the marketplace. … We don’t have anything like that here.”
Disclaimer: This article may contain commentary which reflects the author’s opinion.