Trump lawyers ask appeals court to toss $489 million civil fraud ruling

Lawyers for former President Donald Trump and his company told an appeals panel Thursday that it should throw out a judge’s ruling that Trump must fork over hundreds of millions in profit obtained through fraud, plus millions more in interest.

At least two of the justices from the five-justice panel from the Appellate Division, First Judicial Department — the state’s second-highest court — seemed skeptical about the enormity of the judgment handed down in the case, which has ballooned to $489 million. One of the justices called the “immense” amount “troubling.”

An attorney for New York State countered that the figure accurately represents the size of Trump’s profits from fraud. 

In February, New York Judge Arthur Engoron found that Trump, his company and top executives — including sons Eric and Donald Trump Jr. — deceived banking partners by falsely inflating Trump’s wealth on financial statements. That deception allowed Trump and his company to receive deal terms that he wouldn’t have otherwise gotten, leading to massive windfalls, Engoron concluded.

The judge ordered Trump and his co-defendants to pay the state nearly $364 million in “ill-gotten gains” and interest — from before and after the ruling — that has accrued to more than $120 million. Since the case is a civil matter, Trump does not face the prospect of prison time. 

The hearing

The former president was not present for Thursday’s arguments. His attorney and a lawyer for New York Attorney General Letitia James, whose office brought the case, argued before the justices in a Manhattan courtroom.

Trump’s lawyer John Sauer said James’ office had contorted the so-called “continuing wrong doctrine” to “pretend that there’s no statute of limitations at all.” The doctrine allows law enforcement to consider a string of illegal conduct over time as one violation.

Sauer also raised many arguments long made by Trump and his legal team, in particular claiming that there were “no victims” and “no complaints” by banks and insurers at the center of the case. James’ office claimed, and Engoron found, that Trump and his company provided false data and financial statements that made his properties appear far more valuable than they were.

Sauer took time to focus on one valuation made by Engoron in a pretrial ruling that enraged Trump. Engoron cited a series valuations of Trump’s Mar-a-Lago club by a local assessor showing it worth between $18 and $27 million. Trump has since claimed the property, where he currently resides, is worth upwards of $1.8 billion. The two sides have long sparred over that vast disparity. James’ office says the property is deed-restricted and cannot be used as a residence, limiting its true resale value. 

Sauer said the club should be valued as a residence because Trump himself lives there.

“They said he couldn’t value it as a private residence, but he’s been using it as a private residence since 1995,” Sauer said.

The justices peppered Sauer with questions, interrupting him and New York’s Deputy Solicitor General Judith Vale frequently as they dug into Trump’s claim that James’ office exceeded her authority, and that the judge came down too hard.

“The immense penalty in this case is troubling,” said Justice Peter Moulton. “So 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 about how these transactions went down?”

Vale countered that the judgment was not a penalty, but a claw back of proceeds from fraud. 

“Although this is a large number, it’s a large number for a couple reasons. One, there was a lot of fraud and illegality. It went on for seven years,” Vale said. “Another reason is because the guarantee and the financial statements each year worked to get enormously favorable interest rate savings to the defendants.” 

Vale added: “It is not an excuse to say, well, our fraud was very successful, so we should get some of the money.”

The Trump fraud ruling

In his scathing ruling earlier this year, Engoron wrote that Trump and his co-defendants’ “complete lack of contrition and remorse borders on pathological.” 

He wrote that documents in evidence prove “over and over again” that they falsely inflated Trump’s wealth and reported those fraudulent numbers to business partners.

Engoron concluded Trump and his company gave the accountants “blatantly false financial data.”

The judge lambasted Trump for blaming his employees and others during several hours of testimony in the November 2023 bench trial. While James’ office and Engoron concluded Trump’s wealth was overvalued, Trump said on the stand that the opposite was true, and that his company “underestimated” the value of his properties. He further claimed that the value of his brand was not being factored into the estimates.

“The numbers you are talking about here is, you know, they are very big numbers, very, very big. Far bigger — the values are far bigger than what is on the financial statement,” Trump said, later adding, “billions of dollars more.”

Trump has called this and several other civil and criminal cases against him a coordinated effort to tarnish his reputation and harm his presidential campaign. The appellate court is not expected to rule on his appeal before the election.

The civil fraud judgment is one of a trifecta of rulings against Trump in New York in the past year that have hit Trump financially and personally. In January, Trump was ordered to pay over $83 million in damages to the writer E. Jean Carroll for defamation — on top of a previous $5 million judgment in her favor. In May, he was convicted on 34 felony counts of falsifying business records in his criminal trial. Trump is appealing both of those rulings and has denied all allegations.