Appeals Court Seems Skeptical of New York Civil Fraud Suit Against Trump

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Some of the judges seemed concerned that James exceeded her authority.

Appeals judges in New York fielded multiple questions to the New York attorney general’s office on Sept. 26 indicating they were skeptical of its application of an anti-fraud law to former President Donald Trump’s business practices.

The questions came during oral argument over Trump’s claims that the state Supreme Court erred in handling the civil fraud case, which resulted in a $489 million penalty for the former president.

Trump’s attorney, D. John Sauer, told a five-judge panel in the court’s appellate division that the judge and prosecutors flouted time limits on the claims involved. He added that Attorney General Letitia James’s office pressed an overly broad interpretation of legally punishable fraud and that, regardless, the former president hadn’t committed fraud in his dealings with banks and others.

Some of the judges questioned whether the state was acting within the bounds of its authority or had a legitimate interest in bringing the suit.

Justice David Friedman pressed Vale on whether there was any precedent for the attorney general suing over transactions involving sophisticated parties where neither “lost any money.”

“Every case that you cite involves damage to consumers, damage to the marketplace. … We don’t have anything like that here,” Friedman said.

Justice Peter Moulton asked: “How do we draw a line, or at least [put up] some guardrails to know when the AG is operating well within her broad, admittedly broad sphere of 63(12)?”

He was referring to New York Executive Law Section 63(12), which is the statute James used in suing Trump. The statute allows the attorney general to apply for court intervention when “any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business.”

New York Deputy Solicitor General Judith Vale argued that “there was absolutely a public impact and a public interest here. There are at least four different public harms from the kind of misconduct here.”

She also said that “when risk is injected into the market, that does hurt the counterparties and it does hurt the market as a whole.”

Reuters contributed to this report.