‘Troubling’: NY Appeals Court Seems Skeptical of Trump’s $454 Million Fine in Civil Fraud Case
Justice David Friedman said, “You have two really sophisticated players in which no one lost any money.” Vale replied that the statute doesn’t require anyone to lose money.
A panel of five New York appeals court justices heard opening arguments on Thursday in former President Donald Trump’s appeal of the massive $454 million fine (plus interest) he was ordered to pay at the end of his civil fraud trial in February.
Judge Arthur Engoron found Trump liable for overstating the values of his assets on bank loan applications, which is actually a common practice among commercial real estate developers. Trump’s sons, Donald Trump, Jr. and Eric Trump, were also found liable for fraud and fined approximately $4 million each.
Among the other sanctions outlined in Engoron’s extraordinary ruling, Trump and his sons cannot serve as officers or directors of any business in the state for three years.
New York State Attorney General Letitia James, an elected Democrat who made it clear during her campaign that she would use the law to take down Trump, brought the case to court. She told supporters, “This illegitimate president [Trump]—I look forward to going into the office of the attorney general every day, suing him, and then going home.” She kept her word.
James charged Trump with violating a state anti-fraud law that, according to Reuters, is “typically used to protect consumers. Unlike many similar cases, this one did not involve ordinary people losing lots of money.” Or any money.
James should never have brought the case to court. No one would have filed the case had the target been anyone other than Trump. Obviously, he has grounds for appeal.
From the several accounts of the hearing I’ve read, the justices appeared to direct more questions to Deputy Solicitor General Judith Vale, who represented the attorney general’s office, than to Trump’s legal team.
CNN reported the justices questioned Vale about “the scope of the attorney general’s authority, the lack of alleged victims in the case, and the size of the penalty Engoron imposed.”
Justice Peter Moulton noted, “The immense penalty in this case is troubling.” He asked Vale, “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?”
Vale replied, “Although this is a large number, it’s a large number for several reasons. One is because there was a lot of fraud and illegality. That is an enormous benefit they got from this conduct.” The benefit, she explained, came in the form of reduced loan insurance rates and the lower interest rates Trump was charged based on the “inflated” valuations of the buildings used as collateral for the loans.
The justices also asked how prosecutors calculated the “disgorgement” amount.
[According to Cornell Law School, “disgorgement is a remedy requiring a party who profits from illegal or wrongful acts to give up any profits they made due to that illegal or wrongful conduct. The purpose of this remedy is to prevent unjust enrichment and make illegal conduct unprofitable.]
Justice David Friedman pointed out that representatives from Deutsche Bank said they had not been harmed, the loans had been paid back in full, and they hoped to do more business with Trump in the future. Friedman said, “You have two really sophisticated players in which no one lost any money.”
Vale replied that the statute doesn’t require anyone to lose money.
Moulton said, “There has to be some limitation in what the attorney general can do in interfering in these private transactions … where people don’t claim harm. So what is the limiting principle?”
“There are still limits,” Vale said. “It is not falsity in the wind … it has to be related and relevant to the business at hand, and it does have to have a capacity or tendency to deceive.”
Trump lawyer John Sauer argued, “We have a situation where there were no victims, no complaints, no evidence of materiality or reliance.” He emphasized that the lenders “did do their due diligence.”
CNN reported that in written filings before Thursday’s hearing, Trump’s attorneys argued that the “monetary penalty in the judgment was unconstitutional” and that “most of the case against Trump should have been barred because the conduct was too old.”
The justices did not indicate when they would issue a decision in the case. According to Forbes, the justices won’t rule until after the election. If Trump is unsatisfied with the appeals court ruling, he can appeal his case to New York’s highest appellate court. Forbes added that interest will continue to accrue throughout the process.
Following Engoron’s ruling in February, James filed a notice of entry in the case. At the time, ABC News reported, this motion “started the clock on Trump’s financial penalties in the case.”
James was obviously delighted by the outcome and found it exceedingly difficult to contain her glee. She took to X to show followers just how much money Trump owed the state of New York: “$464,576,230.62.” (This amount includes the $4 million owed to the state by Trump’s sons.)
$464,576,230.62
— NY AG James (@NewYorkStateAG) February 23, 2024
In case anyone forgot that the debt is costing Trump more than $100,000 in interest for each day that it remains outstanding, she reminded them in a new post the next day: “+$114,553.04.”
+$114,553.04 https://t.co/YySFtkX0i4
— NY AG James (@NewYorkStateAG) February 24, 2024
I’m not sure how long this went on, but nothing says equal justice under the law, like a prosecutor providing daily updates on a defendant’s debt clock.
How inappropriate was this case and the penalty that followed? George Washington University Law School professor Jonathan Turley noted that “[e]ven the New York Times agreed that it could not find a single case in history where this statute was used against an individual or a company that did not commit a criminal offense, go bankrupt, or leave financial victims.”
This case, just like all of the other cases brought against Trump by highly partisan prosecutors after he declared his intention to run for the Republican presidential nomination in November 2022, is a travesty. And I hope these justices bring it to a swift end.
Elizabeth writes commentary for The Washington Examiner. She is an academy fellow at The Heritage Foundation and a member of the Editorial Board at The Sixteenth Council, a London think tank. Please follow Elizabeth on X or LinkedIn.
DONATE
Donations tax deductible
to the full extent allowed by law.
Comments
NY Ct of Appeals is primarily a political entity. NY is a one-party State, and this Court’s present purpose is to carry water for the Dems. Expect a Dem-friendly outcome.
Bitch want her Rep-ahhh-Ray-Shunz
Maybe, maybe not. Even partisan courts have their limits and I’m sure those judges see the potential damage this type of thing could bring to the commercial real estate market in NY. Who is going to appraise property if they are under constant threat of being harassed with prosecution? I think this will be thrown out and Trump will then go after James for malicious prosecution.
I pray he does.
The only thing I am very certain of it that Donald Trump’s civil rights were egregiously violated by this pair of partisan hitmen.
Correct. Letitia James is really a transgender man. An ugly one at that
Sources?
Check the photo. She definitely has Obama’s nose.
Last photo I saw of Obama, he still had his nose.
She should probably give it back. No telling who’s ass that nose has been sniffing!!!
Look in the mirror sometime.
I have. I am one smokin hot mother fucker.
You? Old decrepit basement dweller.
I have him pegged more as South Park Gamer Guy.
The Bank’s chief Risk officer testified the bank relied on the inflated personal financial statements.
While I am not a loan officer, I am a CPA that deals frequently with large loans. There is absolutely no bank, no credit facility that is going to make a 100m loan relying on a personal financial statement inflated or not inflated.
One of my clients is high level risk officer at a major bank that does make 500m+ loans to fortune 500 companies. He confirmed that the testimony was complete BS
After 2007 everyone has become risk averse. There is no way in hell that a bank would not do its own due diligence since the great meltdown.
The application submitted my Trump even told the bank not to rely on his valuations but to do their own. They did with their own very sophisticated department. The problem is that the value of real estate is not a fixed number, it fluctuates depending on many things including the market. We just saw a commercial building in Minneapolis sell for 10% of it’s appraised value. So what is it’s actual value?
Kevin O’Leary, real estate expert on Shark Tank, said this is the way EVERYBODY does business in real estate funding; both sides come up with a valuation of the property, then they negotiate to a mutually acceptable price.
This should be concerning for car buyers, because they do the same thing on a small scale, the dealer pushed MSRP, and the buyer doesn’t want to pay that price. They negotiate (dealer’s advantage) and come together in a mutually agreeable excessive price (LOL).
Should the buyer or the dealer be prosecuted as was Pres. Trump? (leave out your feelings for the “stealer”)
Good Grief! I’m not even a banker or financial manager, however I know that FDIC and whatever bank regulator (state/federal) requires independent collateral valuations to be done on deals of the size of that. If it took me six weeks to get my modest (by contemporary standards) mortgage to get approved, I can’t imagine how long it took to get all of the appraisals, audited financial statements and labyrinthine committee meetings for Trump to get his loans approved. And if the banks had any kind of FDIC-insured deposits funding them, at least one or two set of regulatory eyes already were upon them. Engoron was a moron, and rubberstamped something Tish “Trash” James handed him. Not even a two-tiered justice system. This was, to use pop culture image, a Cardassian court.
Engoron isnt a moron – he knows exactly the case was BS.
Say, isn’t this Tish Trash James the same one who went after the NRA, determined to destroy the organisation? If so, WHO is vetting these powerful creatures? WHO gives them the authority to decide which organistions will prosper and which they will destroy? This is tyranny fr beyond even the old Kings of England
There were no ‘inflated personal financial statements’, In finance there is no such thing.
There were only records.
And real estate –not tax assessor– estimates.
Lenders ALWAYS do their own assessments. ALWAYS. I know. I see them every single day. Because I’m in the field.
Trump UNDERVALUED Mar a Lago.
The entire case, from the outset, is a heaping mound of BS.
Will these NY hacks every be held accountable? I would love to see bother personal accountability and the state on the hook.
“Big Grocery” makes less than 1% profit but gouging. Big Oil makes less than 5% profit and has windfall profit taxes but never allowed windfall losses. Big Pharmacy charges Big Money but that’s OK. Making it up as they go along. The watch word is “because we can”. The Appeals Court will have to come up with some spectacular reasoning to maintain “Orange Man Bad”.
New York is poised to lose far more in business interests than can be gained from this punitive farce.
Many businesses, tired of high taxes, rising crime rates, and the increasingly hostile business environment, have already fled the state.
Many, but not enough.
Those that remain will never get my business.
New York was arguably the most important city in the world. But this kind of political prosecution on steroids has to be deeply troubling to businesses in NYC or considering moving there. It’s a shame but NYC is imploding.
One can only hope. I’d like to see the day when Trump is personally invited back.
And tells them to stuff it.
The only developers left in NYC will be the government. Trump was once the darling of the left, now they are trying to bankrupt him. Don’t think that other developers are not watching and wondering when they will fall out of favor and be attacked like this by an out of control partisan hack.
The are trying to do it to Musk too. And look at the harassment Tulsi Gabbard is getting. RFK Jr. etc. etc.
Now the mayor didn’t play ball with the sanctuary insanity, and now he is being prosecuted. True or not, they would have protected him if he didn’t stray from the Democrat plantation.
The only developers left in NYC will be the government.
Which os perfectly alright with the communists.
That looks fine and dandy on the surface. HOWEVER aanyone with tthree nanogrammes of sense within heir cranium will comprehend that without taxpayers to gouge, here IS no source of money to conunie the charade. Such a house WILL collapse… and great will be the fall thereof.
“Don’t think that other developers are not watching and wondering when they will fall out of favor and be attacked like this by an out of control partisan hack.”
Even to the point of having their business, all their properties, and everyone who does business with them attacked and harassed when they refuse to do what the government wants them to do.
When I look at Blue City commercial real estate being sold at 10-20 cents on the previous sale’s dollar, I have to wonder if perhaps it was the intent of .gov to simpley bankrupt the owners (who can pay any property taxes with no rent coming in?) and thus simply take over the property for themselves. Companies are leaving NY and CA but a lot of their real estate assets are staying behind and will soon be state owned. Portland and the surrounding cgovernment shells are buying up hotels and motels right and left to provide housing.
Here in oregon we are facing a situation where the University Hospital System in Portland is buying up the other system providers and soon there will only be a State Operated health system.
A point that apparently wasn’t brought up: as the USSC is now emphasizing ‘historical context’ in the interpretation of long-standing law, one could ask what the usual fine has been for a violation of this one. What’s the median fine for when someone was ‘injured’? What dollar amount was at the 90th percentile? And so on.
Because $454 million is clearly such an outlier amount it violates all historical context, and that makes it a prime candidate for being slapped down as a violation of the 8th Amendment.
So even if a court could fine a person for a financial crime in which no one suffered injury, the court has to consider the boundaries of law and context. This judge clearly didn’t.
I don’t think that one works. SCOTUS has used historical context recently in order to try to understand constitutional provisions whose meaning has been lost over the years.
Specifically, when the second amendment was ratified, absolutely protecting “the people’s right to keep and bear arms”, what exactly did that right entail? When we say the right is not absolute, we don’t mean that there are times when it may be infringed; we mean that there are restrictions that don’t infringe the right, and are therefore allowed.
But how do we know what infringes and what doesn’t? In the absence of a large ongoing body of precedent such as exists for the first amendment, the court said look at what sort of restrictions seem to have been accepted without protest back when people understood the 2A and took it seriously. If those people had understood it to be an infringement they would surely have protested; if they didn’t, then they must have understood it not to be an infringement, so we can allow similar restrictions.
That doesn’t apply here, at least not directly, though it’s not completely off topic.
Concerning the 2nd Amendment, it matters not if the right “is not absolute.” That’s not the point of the amendment. If you will read the Preamble to the Bill of Rights, the first ten amendments were meant to guarantee that Congress had no authority over the subjects mentioned therein or was barred from taking certain actions. Therefore, the Second Amendment was meant as a guarantee that Congress has no authority over “arms” (which at the time literally meant “weapons of war”) in private ownership. It doesn’t matter how far the right extends or does not extend-the amendment’s existence was a guarantee that Congress had no authority over the matter.
BTW, I also think that rights are absolute. They are absolute because they are self-limiting. You can exercise your rights however you please, but once you begin to harm innocent parties, you are no longer exercising a right, you’re committing a crime. The right self-terminated at the point a crime was committed. It is not possible for a person to “abuse his rights.” (Although one can abuse one’s liberty. “Liberty” and “freedom” are not the same things as “rights.”) Police do not arrest people for “abusing their rights.” They arrest people for committing crimes. There is plainly a distinction.
BRAVO!!!!
That is not true. Congress does have authority to restrict arms, which is precisely why the second amendment was necessary, to limit that authority. If it had no such authority there would be no need for the 2A.
Also, what preamble? There is no preamble to the bill of rights, it’s just ten separate amendments.
And no, the right is not “absolute”, in the sense that it has limits. Not every conceivable restriction infringes it. But the knowledge of the right’s exact parameters has been lost, which is why SCOTUS has said look at the history for a guide. If something has an analog from a time when people took the amendment seriously and they didn’t object, then it’s probably not an infringement.
Try this: when the 8A was ratified, protecting the people’s protection against excessive fines, what exactly did that right entail? Yes, there are fines that don’t infringe that right and therefore are allowed. A court would look at what sort of fines have been accepted without protect back when people understood the 8A and took it seriously. If they didn’t protest they they understood it not to be an infringement, and so we can allow similar restrictions.
That does apply here, and directly so. You can’t find a similar judicial ruling in any case when no clear harm has been done (the state of New York does considerable hand-waving to find any harm at all in this case).
I would say that the “harm” found to anyone in the State of New York is to Democrat egos, perhaps the greatest wounds they have to bear. “Psychiatric surgery” is the hardest to perform, has the worst outcomes, and often causes more “pain” than admitting to the facts at hand—namely that Democrats failed in so many federal judicial venues that they had to send Matthew Colangelo to coordinate a state-level assault on a single candidate they so viscerally despised.
No, it doesn’t apply because this is a fairly recent statute, so there’s no doubt about what it covers.
If you’re talking about an 8th amendment challenge, “excessive” is not necessarily related to history.
Don’t include me when you say, “we say the right is not absolute.”
SCOTUS has ruled a number of times on the issue of excessive fines. Considering the facts of this non case and the amount of damages I think that if it gets to them, they will take a dim view of this. Also, since the statute Trump was prosecuted on has never been used in this manner, a selective prosecution, unreasonable taking and deprivation of Constitutional Rights under color of law looks pretty straight forward. James is even on record saying that if she is elected she will put Trump out of business.
That is neither here nor there. Democrats needed a conviction so they could campaign on anything but their record.
Scotus has actually only ruled a few times on excessive fines and the opinions are best characterized as vague with no real clear guidelines as to what is excessive.
But the only JUST and FAIR end to this would be to have Laticia James, Arthur Engoron and all of the participating staff at both of their offices fired and then criminally tried, with James and Engoron being served up with ultimate sentences of 45 to life.
This case was one of the worst crimes in New York history. James and Engoron NEED to be held to account. They are criminals of the first order and need to spend the rest of their burdensome, empty, destructive lives in prison.
When the shit hits the fan, these types of people will get 18th Century France level justice.
If they don’t get 20th Century Dealy Plaza justice first.
Yes they should be criminally charged – however , as prosecutors and as judges, they have absolute qualified immunity (or very near absolute qualified immunity)
Not a lawyer, but can’t imagine that this gets past the Eighth Amendment if it ever makes it to SCOTUS. I wonder what the precedent is anywhere on the size of financial penalty on an offense with a zero loss claimed by the “victim”?
Engoron’s argument is that regardless of whether anyone lost any money, you made money. You broke the law, and this is the amount you made from doing so. You shouldn’t be allowed to profit by breaking the law, so we’ll take that amount from you. And since your “victims” didn’t suffer any loss, we won’t give it to them, we’ll apply it to the general expenses of the state, thus slightly easing the burden on the general taxpayer.
So yes, it’s a question of what’s “excessive” in the circumstances.
Of course if the conviction is overturned altogether, then no fine is justified, whether $450M or $4.50.
That’s such a vacuous claim and we know this is a vacuous claim because that must therefore make all those who lent money to Trump criminals as they made money on the loans too.
For the law to be truly blind it must be applied to EVERYONE equally. However these never ending law suits have shown us the only blind thing here is Democrats when it comes to honesty.
No, you idiot. The lenders didn’t break any laws. They didn’t falsify any claims. And they didn’t make any money from his falsification. So they’re entitled to make money from the loan. Assuming he is in fact guilty, which the appeals court must assume at this stage, the judge’s argument is that this is the profit he made because of his falsification. If he’d told the truth his interest rate would have been higher. Therefore, he says, it’s completely fair and not excessive to strip him of the amount by which he unlawfully profited.
fwiw – the NY statute doesnt require either an actual victim or actual damages. Its one of the features of the NY statute that allowed Engoron to file the charges.
A further point that is overlooked –
supposedly, Trump received a benefit via lower interest rates, thus he profited.
What is overlooked is that businesses of all types will lower fees to attract more business. In the case, the bank lowered the rates so that they could finance more deals with trump, thus generating additional profits in the future. for example drop interest rate from 6% to 5% so trump gets 1% windfall, but the bank finances 3 more deals, so bank comes out ahead with more overall profit.
Then NY State would have to prosecute ANY “preferred” customer at any level, from a single little old lady who had mucho dinero on deposit and had a “preferred” rate on her small limit credit card at her bank because of her total relationship to large “whale” customers (no size pun intended) like Trump and other wealthy clients who receive similar breaks on interest rates because of their long-standing relationships with banks and other financial institutions. Across the spectrum, they all “profit” from having those lower rates versus Joe Smith who comes in off the street with an average credit rating and no longstanding banking relationship. NY State is shooting itself not in the foot, but in the head also.
1. They don’t have to prosecute anyone they don’t want to.
2. Your little old lady didn’t falsify her financials, and obtain a loan on the basis of that falsificaiton.
Note: Milhouse isn’t a lawyer either. He just pretends to be one.
But he pretends better the most real lawyers, which isn’t hard. All you have to do is read the Constitution and the applicable laws.
Please. Milhouse is a simp for whatever judgement benefits the state 90% of the time.
Paddy isn’t a truthful person, but only pretends to be one. He’s a simp for whatever judgment suits his preferences, and doesn’t give a sh*t whether it’s right or wrong. In all likelihood, like a true leftist, he doesn’t even recognize the concepts of right and wrong, because whatever is useful for the Party is automatically right.
“…there was a lot of fraud and illegality”
Yet despite that mountain of fraud and illegality there was no criminal case that could be made by the state of New York since there was no evidence of any fraud or illegality.
I wonder how judges feel about being gas lit.
That’s kind of what I was thinking. If there was a crime worthy of a fine like this where is the criminal prosecution?
There’s an old fable where a judge finds the accused guilty of stealing the sweet smell of cinnamon rolls from a bakery to improve the taste of his own stale bread.
The accused is ordered to pay the baker with the sweet sound of jingling gold coins.
Pretty sure one of the elements of fraud is damages. No damages, no fraud.
Yeah. This, apparently, is a special fraud statute, that’s not like common-law fraud. Or at least that’s what we’re told; I haven’t looked into it myself.
Milhouse – the specific statute in this case doesnt require either an actual victim nor does it require actual damages. My opinion as a non lawyer is that creates the vagueness issue which should effectively overturn the statute. – with the caveat is that I am not an attorney
Not being an attorney can be an advantage when it comes to noticing that a law is unconstitutional, too vague, or written to enable corruption, etc.
The damage was the hurty fweeeeelings of the left 😂😂
Jame’s premise is that the bank was defrauded when it charged an interest rate lower than what it could’ve for a less wealthy borrower, so is the fine money going to the alleged aggrieved party or NY?
NY I would think since the bank never filed a complaint. That opens another can of worms of the State seizing property. It’s common for everyone to get lower rates from a bank or financial institution depending on the amount of business, their credit rating etc. The average person will get a lower rate on a car loan if he has a 800 vs 600 score. Is she now going after that?
I was just about to use that analogy.!
Exactly. The prosecutor is second-guessing the risk assessment of the lender and substituting its own saying, “no, you can’t negotiate!” and taking the difference for its own benefit, both financial and political.
taking the difference for its own benefit, both financial and political.
Which sounds a bit like fraud, in and of itself, doesn’t it?
It’s the essence of communism.
It’s their dogma that everything has an objective value which is determined by the state — not a subjective value which is determined by fluctuations in a free market. If you sell something for over OR under that value — you have committed a crime against the state. It doesn’t matter if the other party has no grievance. Only a communist state would even write a law like the one NY used to convict Trump in this case.
I lost my reference to it, but there is a notorious case from the “economic recovery” era where a laundry owner was convicted (and stayed convicted) of laundering shirts for 26¢ instead of charging the “government mandated” price of 33¢. (Prices from memory, not exact.) This is the style of civil order to which NY commies aspire.
Vale neglected to make the strongest defense of this penalty by failing to call west coast numerologists as expert witnesses. It seems his astrologer advised against it.
If this judgment stands, any director of a publicly-traded company that is incorporated in, based in, or has major real estate holding in New York who is NOT taking action to get the company out of NY is likely breaching their fiduciary duties to shareholders.
New York has served notice on the business community: the rule of law does not apply if we decide to go after you for political reasons, and our uniparty government assures that our court system will go along with the political appropriation of your assets.
Businesses are starting to ask those hard questions — don’t be surprised if one (or more) of the stock exchanges announces that it is relocating to Dallas.
That the current exodus of business (and high net worth taxpayers) could likely turn into a tsunami has gotten through to at least some of the more sane Dem pols in NY, who know that if these companies and individuals leave en masse, the state is cooked. Time will tell whether there are enough of such realists on the NY state judicial bench.
Note that Governor Hochul just about said as much when she told the gathering of business people in the city that the law was just being aimed at Trump. That was supposed to make them feel better?
The implication being that Trump’s practices were perfectly ordinary and undeserving of prosecution.
No such reassurances were necessary after Bernie Madoff or SBF were prosecuted, for example, because they actually committed fraud.
Wouldn’t a law aimed at one person be unconstitutional on the face of it?
This law couldn’t possibly have been aimed at Trump, since it’s been on the books since before he was even born.
You keep pretending not to understand the concept of lawfare via selective prosecution.
Trump’s lawyers should call he as a witness the next chance they get.
her college degree is worth less than a hillary quote
This case may wind up in SCOTUS on numerous grounds but especially as an “excessive fine”
I’ve been seeing Elizabeth Stauffer’s byline a lot recently. Not sure whether she is new to LI. Just want to say that I think her post’s are good—very thorough. If you are new to LI, Elizabeth, welcome.
If no-one lost anything or gave up anything how can there be any fraud other than on the part of the prosecution?