A panel of judges on a New York appeals court expressed skepticism over the massive $450 million judgment levied against former President Donald Trump after he was found liable for civil fraud last year.
The massive civil fraud lawsuit was brought by New York Attorney General Letitia James. Judge Arthur Engoron issued a summary judgment against Trump back in September 2023, finding that the former president overvalued his assets and lied about his net worth to obtain better interest rates for bank loans.
Engoron’s final judgment found Trump liable for $364 million before interest in February. The amount the former president owes has grown to over $450 million in the months since.
But some judges on New York’s First Appellate Division court echoed some of the arguments Trump’s lawyers have been repeating for months—indicating they might be persuaded to reduce the fine.
“The immense penalty in this case is troubling,” Justice Peter Moulton asked New York Deputy Solicitor General Judith Vale, who argued on behalf of the government. “How do you tether the amount that was assessed by the [New York] Supreme Court to the harm that was caused here—where the parties left these transactions happy how things went down?”
Vale insisted that the scheme gave the Trump Organization “enormously favorable interest rate savings” for years. “That is an enormous benefit they got from the misconduct, and it is not an excuse to say ‘well our fraud was really successful, so we should get some of the money.’”
She also argued that the former president still engaged in a crime even if Deutsche Bank claimed it was unharmed. “If someone issues a false financial statement to a counterparty, the counterparty gets it and is not fooled, picks up the phone and calls the enforcement authorities—the crime has still been committed. Even though the counterparty didn’t rely on it at all.”
Vale also pushed back on the idea that Trump’s bankers were completely happy with his company’s conduct. “Deutsche Bank did complain when they first found out about the alleged misstatements and omissions,” Vale said, and claimed that the bank later “exited the entire relationship with the Trumps.”
The justices also grilled prosecutors on whether the attorney general even has the authority to prosecute business transactions between private parties. Attorney General James’ office relied on a reading of New York’s Executive Law 63(12), which instructs the AG to prosecute “repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business.”
But Justice David Friedman noted that the state’s other examples of using this law were all cases brought to protect consumers—including the collapse of Lehman Brothers. “Every case that you cite, whether it was damage to consumers, damage to the marketplace… you don’t have anything like that here.”
“It hardly seems that that justifies bringing an action to protect Deutsche against President Trump,” Friedman said. “I mean, you’ve got two really sophisticated parties in which no one lost any money”
Moulton seemed to agree with Friedman on this point, and wondered if the attorney general’s scope had widened too far. “Has 63(12 morphed into something that it was not meant to do?”
Vale argued that the attorney general’s office has the obligation to go after fraud before it gets to the point of hurting consumers or the market. “A big point of these statutes… is for the Attorney General to go in quickly to stop the fraud and illegality before it gets to the point that counterparties are harmed, or it has those kinds of ripple effects in the market.”
