The New York attorney general has urged an appeals court to reject arguments challenging almost half a billion dollars in penalties by Donald Trump and his former top executives at the Trump Organization that “tellingly ignore almost all their deceptions.”
Asking an appeals court to affirm the liability findings earlier this year by Manhattan Supreme Court Justice Arthur Engoron, lawyers for AG Tish James said Trump and his crew must pay for illegally reaping hundreds of millions of dollars by lying about his net worth.
“Defendants intentionally used false and misleading financial statements to engage in fraud and illegality on an immense scale,” Assistant Solicitor General Daniel Magy wrote to a mid-level appeals court in filings late Wednesday.
“And defendants created and used financial statements rife with blatant misrepresentations and omissions to maintain loans worth more than half a billion dollars and to generate over $360 million in ill-gotten profits.”
Following an 11-week trial, Engoron on Feb. 16 found Trump, his sons, Eric and Don Jr., and former top Trump Organization executives Allen Weisselberg and Jeffrey McConney civilly liable for breaking multiple state laws by fraudulently ballooning Trump’s bottom line in deals with banks, lenders and various financial institutions for years by as much as $2.2 billion.
The judge found that Trump’s pseudonymous Fifth Ave skyscraper and his Mar-a-Lago resort in Palm Beach, Fla., were among the properties whose values were vastly exaggerated between 2014 and Trump’s last year in the White House.
The judge hit them with a penalty to pay New York around $355 million in “ill-gotten gains” — accruing with more than $112,000 in interest daily — that’s owed chiefly by Trump. Six months since the judgment came down, the debt now stands at more than $485 million. Trump has deposited a $175 million bond with the courts to ward off his prized properties being seized and bank accounts being drained while he appeals.
Engoron also placed restrictions on Trump’s real estate empire, including installing a monitor to babysit it for the next three years, and he temporarily barred him and his sons from operating a New York company. He permanently barred Weisselberg and McConney.
In the appeals filed last month, Trump’s lawyers argued that the judgments should be reversed or reduced because the claims were time-barred, financial statements that misrepresented Trump’s net worth didn’t result in losses for the institutions who were lied to or consumers, and that the statements were couched with disclaimers for banks to do their homework.
Describing Trump as “among the most visionary and iconic real estate developers in American history,” his legal team also argued that the AG lacked authority to dismantle transactions “that implicate no public interest,” accusing her of being politically motivated and an “unauthorized, unprecedented power-grab.”
The state, in response, said on Wednesday that Trump and his codefendants were “wrong on the law.” AG lawyers argued the claims were timely, that there was no evidence banks discovered the falsehoods to adjust accordingly, and that the New York statute under which the case was brought didn’t require the AG to prove there were financial losses to victims — but empowered her “to seek equitable relief to stop fraud or illegality before it causes monetary losses.”
The state argued that the distortions victimized honest brokers by destabilizing the market.
“[Defendants’] misconduct here — which misstated business risk by vastly inflating the value of the assets used to guarantee loans, insurance, and other deals — reduces transparency, misallocates risk, and, ultimately, increases the costs and economic risks for those not engaged in fraud and illegality,” Magy wrote.
“When borrowers deceive lenders about the true risk of a transaction, the lender does not receive adequate compensation, and the market is destabilized.”
The Appellate Division, First Department will hear oral arguments in the appeal on Sept. 26. It’s unclear whether it will issue a ruling in the less than two months before Election Day.
The Republican nominee is also appealing more than $88 million he’s been ordered to pay writer E. Jean Carroll after he was found liable for sexually assaulting her in the 1990s and defaming her when she spoke out decades later.
The civil fraud case and Carroll’s suits are playing out parallel to Trump’s criminal matters, including his Manhattan hush-money case, which resulted in his conviction for felony falsification of business records in May. The judge in that case is due to rule on outstanding requests to toss the guilty verdicts and push back the Sept. 18 sentencing until after the November election, the latter of which prosecutors have not opposed.
Trump also faces criminal charges in Washington, D.C., and Georgia for his alleged efforts to subvert the results of the last presidential election. He has pleaded not guilty.
