Counsel for the New York Attorney General and Donald Trump squared off before a mid-level New York appeals court on Thursday, as lawyers for the former president urged the panel to toss a civil fraud judgment that has now ballooned to nearly half a billion dollars.
The justices of the Appellate Division, First Department repeatedly interjected—with many questions focused on the scope of power afforded the AG’s office under Executive Law § 63(12).
The arguments were heard by Presiding Justice Diane Renwick and Associates Justices John Higgit, Peter Moulton, David Friedman and Llinet Rosado.
Manhattan Supreme Court Justice Arthur Engoron in February found that Trump, his eldest sons, and top executives at his company had deceived financial institutions by falsely inflating net worth on statements of financial condition provided in order to secure loans. The misstatements brought Trump and others massive windfalls, Engoron found.
He ordered that Trump and others disgorge $364 million in ill-gotten gains, plus interest—now totaling nearly $500 million as the defendants appeal the judgment.
Trump’s lawyers are challenging both the sum and Engoron’s ruling in summary judgment that defendants were liable for fraud. They have called the disgorgement penalties “grossly unjust” and allege that many claims should have been barred by the statute of limitations.
They have also argued that § 63(12) is a consumer protection statute that Attorney General Letitia James improperly applied to this case.
“You hear underneath all these questions the question of mission creep, has 63(12) morphed into something greater?” Moulton at one point asked Judith Vale, the NY deputy solicitor general who argued on behalf of the Office of the Attorney General.
“What is the limiting principle?” he added.
“This is not falsity in the wind, it’s not falsity that you whispered to someone on the couch,” Valse said of the misstatements submitted to institutions.
“These misstatements or omissions were about objective facts,” she said, including the size of Trump’s Manhattan triplex.
“When risk is injected into the market, that does hurt the counterparties and it does hurt the market as a whole,” Vale stated.
Defense counsel D. John Sauer argued the case was brought too late, stated there were no victims, and warned of overreach.
“If this case falls on the other side of the line, there is no line,” he said.
He also claimed that Vale “struggled to articulate any clear principle” that made clear the state’s enforcement power.
Trump in April posted a $175 million bond pending appeal.