Donald Trump’s legal team and state prosecutors went head to head in a New York appeals court on Thursday over his ongoing effort to throw out an approximately $500m civil fraud judgment against him.
The former US president is disputing the Manhattan supreme court judge Arthur Engoron’s 16 February decision after he found that Trump lied to financial institutions and insurers about his wealth. Trump’s case was litigated during a months-long civil trial in Manhattan in fall 2023.
The arguments were in effect a rehashing of claims that both sides have made in their respective appeals papers, as is normal for cases during this type of proceeding. Trump’s lawyer, D John Sauer, hammered down on his claim that the alleged wrongdoing happened too long ago to be pursued in court.
“This case involves a clearcut violation of the statute of limitations,” Sauer said.
He also insisted that businesspeople have flexibility in determining their assets’ value, even if it does not reflect how it has been assessed elsewhere. “You’re allowed to make optimistic predictions,” Sauer added. “You’re allowed to disregard appraisals.”
Sauer also insisted that Trump’s valuations were in keeping with generally recognized best practices for accounting and said that if people and companies can get in trouble while following best practices “people can’t do business in real estate”.
Trump’s team had invoked a similar bogeyman in their appeals paperwork, saying “based on the ruling in this case, no company will want to come to New York to do business, and many businesses are fleeing”.
Sauer also presented a hypothetical, which he claimed was backed by case evidence; even if Trump’s net worth was just $1bn, far less than had been stated at trial, he would have gotten “exactly the same” deals.
“We have a situation where there are no victims, no complaints, no evidence of causation, materiality,” he said.
Indeed, Trump’s defense claimed in July appeals papers that New York’s attorney general, Letitia James, wanted to punish “highly successful” dealings between him and “highly sophisticated” Wall Street institutions, which “left all parties deeply satisfied and had no impact on the public interest”.
Trump’s lawyers also railed that the case was an “unauthorized, unprecedented power-grab” and should have been tossed. They also turned to a well-worn page in their playbook – accusing James, a Democrat, of targeting Trump for partisan purposes.
If upheld, the decision would give James “limitless power to target anyone she desires, including her self-described political opponents”, they said in court papers.
In their response to Trump’s appeal, James’s office reiterated that his namesake company and its top executives plotted to boost his net worth by as much as $2.2bn annually, using puffed-up financial statements to secure plum deals with banks and insurance companies.
“Through their misconduct, defendants derived significant economic benefits they otherwise could not have obtained, including over $360 million in illegal profits,” James’s office said in court filings.
Judith Vale, deputy solicitor for the New York attorney general’s office, addressed whether or not Trump’s actions had a victim, with one appellate judge noting that all parties seemed to walk away from their dealings satisfied, without any seeming harm to others.
“There was absolutely a public impact and a public interest here,” Vale said.
If Trump secured loans based on questionable valuations, then his ability to repay them was not as certain as he had intimated to banks, setting the stage for broader potential effects, she argued.
“When deceptively hidden risks are injected into the market, that does hurt the counter-parties,” she said, “But it also harms other market participants in the market as a whole, because they are not understanding the risks.”
The risks are not “priced in” properly and are not accounted for. The law under which Trump was tried in civil court “was concerned with harms to the honest business people, the honest business people who don’t do the misconduct.
“Without the fraud, the net worth and liquidity would have started much lower, and then you do the stress test and it takes it down much lower, and did not look like such a strong financial guarantee any more,” Vale said. “It does not look like ironclad guarantee any more, and it was absolutely a fair [assessment] that Deutsche Bank would not have given these loans without the financial strength being inflated.”
The appeals court is expected to issue its decision at a later date.
Trump’s battle against this civil judgment comes as he fights legal woes on a variety of fronts. Trump is scheduled to be sentenced on 26 November after being found guilty on 34 felony counts in his Manhattan hush-money case.
Special counsel Jack Smith, meanwhile, brought a revised indictment against Trump in his Washington DC federal court election subversion case. Smith is poised to present more evidence to the judge by Thursday as she decides how presidential immunity might affect the proceedings.
