In New York, a panel of five judges at the Appellate Division, First Department heard arguments surrounding former President Donald Trump’s appeal, and the panel’s line of questioning seems to cast doubts on several core aspects of the state’s allegations. The judges raised probing questions about the use of a consumer fraud statute, the scale of the financial penalties pursued by the prosecutors, and the private nature of the transactions involved.
These points echoed key defense arguments that, despite not prevailing at the initial lengthy trial, seem to hold substantial weight. Notably, Trump was not present at Thursday’s hearing. The New York judges scrutinized the state prosecutors’ rationale for imposing a staggering $454 million civil fraud judgment against Trump. The appellate court questioned the justification for such a hefty penalty and sought clarity on the actual harm incurred, especially since the transactions in question reportedly resulted in no financial loss to either party.
The legal challenge has been just one of many Trump faces, intertwining with his campaign to reclaim the presidency. In February, Justice Arthur Engoron ordered the former president to pay over $454 million in penalties and interest, concluding that he inflated his net worth to secure more favorable terms from lenders and insurers. The civil case was spearheaded by New York State Attorney General Letitia James.
On Thursday a panel of five judges intensely questioned Deputy New York Solicitor General Judith Vale about several aspects of the case against Trump. They expressed their doubts about the extent of Attorney General James’s authority, questioned the absence of clear victims from the alleged conduct, and challenged the enormity of the penalty. At least two judges appeared particularly skeptical, interrupting Vale’s opening statement to ask if there were precedents for the state’s usage of a law intended to safeguard market integrity to sue over 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. He argued: “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.
Sauer, Trump’s attorney, argued before the judges 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 Justice 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 reiterated 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 on whether there was any precedent for the attorney general suing over transactions between sophisticated parties where neither side “lost any money.”
“Every case that you cite involves damage to consumers, damage to the marketplace. … We don’t have anything like that here,” Friedman noted.
