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Letitia James’ massive Trump victory in the civil fraud case is in question after an appeal
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Letitia James’ massive Trump victory in the civil fraud case is in question after an appeal

Donald Trump had a decent day in court on Thursday as his lawyer urged a panel of New York state appellate judges to overturn the massive nine-figure fraud verdict against the former president and his business empire. If the justices’ pointed questions to the state are any indication, there’s a chance New York Attorney General Letitia James’ stunning trial victory earlier this year could be slowed.

Part of the issue boils down to how extensively James used a state law to prosecute Trump and his civilian co-defendants for financial fraud, as this was not a case in which victims were defrauded and then complained about it to the government complained. In other words, the question is how far this law, Executive Law 63(12), can go.

For the state’s attorney, Judith Vale, the hearing got off to a rocky start (it started at around 34:00 in the video posted by the court). Before she could even say anything, one of the justices intervened and asked if there had ever been a case in which the attorney general had sued under the state’s executive law

disrupting a private business transaction between equally sophisticated partners in which the alleged victim had the ability and legal obligation to uncover the allegedly misrepresented matters through his or her own due diligence; if the alleged perpetrator advised the alleged victim, through written disclaimers, to do his or her own due diligence and draw his or her own conclusions; whereby the alleged misrepresentation almost exclusively concerned inherently subjective valuations of real estate and businesses; and where the victim has never complained about fraud.”

Well, if you put it that way.

Things didn’t get much better for the state from then on. A second judge questioned the damages, saying there was little or no impact on the public market. A third judge said the case sounded like a potential commercial dispute between private players, suggesting the attorney general didn’t need to get involved. And a fourth judge on the five-judge panel said they were concerned about “mission creep” — that is, whether the state law was used for something it was not intended to do.

Vale claimed that there was a public impact, that the public interest was at stake, and that the state legislature in passing the executive law was “concerned with harming the honest businessmen” who “do not commit the wrongdoing.”

It wasn’t all bad for the state. Presiding Judge Dianne Renwick noted during Vale’s hearing that the state executive law was passed to protect honesty and integrity in the marketplace, a mindset that supports the state’s broad use of the law. Trump lawyer John Sauer (who argued the Republican presidential candidate’s immunity case before the Supreme Court) was also questioned by the panel.

Ultimately, you can never be sure from an oral hearing what the exact decision will be. But the performance could have been better for James and worse for Trump. At least the panel didn’t sound like it was in lockstep with Judge Arthur Engoron, who presided over the case before the court and ruled clearly against the Trump camp. In a scathing ruling in February, Engoron wrote that the civil defendants

The lack of remorse and remorse borders on pathology. They are only accused of inflating the value of assets to make more money. The documents prove this again and again. This is a venial sin, not a mortal sin. The defendants did not commit murder or arson. They didn’t rob a bank at gunpoint. Donald Trump is not Bernard Madoff. However, the defendants are unable to admit their mistake. Instead, they adopt a “see no evil, hear no evil, speak no evil” attitude that is refuted by the evidence.”

Thursday’s argument took place in Manhattan before the Appellate Division, the state’s intermediate appeals court. Its highest court is the Court of Appeals (the trial-level court is somewhat confusingly called the Supreme Court), to which either side could appeal under Appellate Division rules (it is unclear when that will happen). The U.S. Supreme Court could theoretically intervene after state courts have been exhausted if the appellate party can raise a federal matter instead of a state matter, the latter being a matter over which the justices would not have jurisdiction.

In any case, it is unlikely that the matter will be fully resolved after some time.

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