Trump attorneys lay out case for tossing $478 million fraud verdict

The justices were generally critical of arguments made on both sides, giving little indication of how they would rule. Yet many of the judges questioned key aspects of the attorney general’s case, including whether the nine-figure penalty was proper.

“The immense penalty in this case is troubling,” Justice Peter H. Moulton said.

In February, New York Supreme Court Justice Arthur Engoron ordered the former president to pay more than $350 million in penalties plus interest, ruling that Trump, his company and his two sons illegally inflated the value of certain assets to obtain better interest rates and lower insurance costs. As of Thursday, Trump’s judgment amount was over $478 million, including interest, according to the attorney general’s office. Trump’s attorneys appealed the decision in July.

In addition to the civil case in state court, Trump continues to fight four separate criminal cases. In May, he was found guilty of 34 counts of falsifying business records to conceal a hush money payment to an adult-film actress — a verdict Trump also seeks to reverse.

The appellate judges in the civil fraud case could reduce the amount Trump owes or overturn the verdict entirely. The Appellate Division generally rules weeks after arguments, so a decision could come before Election Day.

The penalty is appropriate, Deputy Solicitor General Judith Vale said, because “a lot of fraud” went on for years, allowing Trump to accrue significant interest-rate savings.

“That is an enormous benefit that they got from the misconduct,” she said. “And it is not an excuse to say, ‘Well, our fraud was really successful, so we should get some of the money.’”

New York Attorney General Letitia James (D) launched the case in September 2022, accusing the former president and his company of manipulating property and other asset valuations to deceive lenders, insurance brokers and tax authorities. James’s office alleged, for example, that Trump made about $100 million on the sale of a D.C. hotel lease that was obtained using falsified information about his business.

On Thursday, Trump’s lawyers continued to attack those claims, arguing that Trump’s representation of his properties’ values were well within general accounting standards and that Trump’s business partners were not harmed by any alleged misrepresentations.

Arguments also focused on whether the case was decided in violation of the statute of limitations and whether prosecutors properly applied a statute that gives the New York attorney general powers to investigate and bring business fraud cases. Sauer, the former Missouri solicitor general who also argued Trump’s presidential immunity case in front of the U.S. Supreme Court in April, argued that the attorney general misapplied the statute.

“Surely this is not within the statute,” Sauer said. “If this is, there’s nothing that falls outside of the statute, and that is a sweeping and unsettling thing.”

Vale countered that the attorney general’s office properly applied the statute — and that doing so was necessary to protect the financial markets and consumers.

“There was absolutely a public impact and a public interest here,” Vale said. The misrepresentations not only harmed Trump’s business partners but also “other market participants … because they are not understanding the risks; they are not pricing them in properly, and they are not prepared for what might happen if the true risks come to pass.”

Shayna Jacobs contributed to this report.