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A New York appeals court raised doubts on Thursday about the $489 million civil fraud judgment against Donald Trump, his sons, and their businesses, questioning whether the penalty imposed by the state attorney general was too severe or even justified. The skepticism from the five-judge panel opens the possibility that the fine could be reduced or vacated.

Judges Question Extent of Attorney General’s Authority

During the oral arguments, several justices expressed concerns over the scope of New York Attorney General Letitia James' authority in the civil fraud case. Associate Justice Peter H. Moulton voiced apprehension about potential "mission creep," suggesting the attorney general's office may have overstepped its powers in pursuing the Trump case. Similarly, Associate Justice John R. Higgitt and Associate Justice David Friedman questioned whether New York’s broad fraud statutes were intended to apply to private transactions between sophisticated parties like Trump and financial institutions.

"There has to be some limitation on what the attorney general can do in interfering in these private transactions," Justice Moulton said, questioning whether the statute used in the case had been applied too broadly.

Trump $489M Civil Fraud Verdict : Fraud Allegations and Massive Penalty

The civil fraud case stems from a lengthy investigation and an 11-week trial where Trump and top Trump Organization executives were found to have inflated his personal wealth to secure more favorable business deals, including loans from Deutsche Bank and Ladder Capital. Evidence presented during the trial showed Trump inflated the value of properties, such as his penthouse apartment and the Mar-a-Lago resort, by as much as $2 billion annually.

Justice Arthur F. Engoron ruled in February that Trump and his businesses committed fraudulent acts, finding deviations from truth amounting to "hundreds of millions of dollars," and possibly "a billion dollars or more" in the case of Mar-a-Lago. The judgment required Trump to pay $354.9 million, while Eric Trump, Donald Trump Jr., and former CFO Allen Weisselberg were ordered to pay lesser amounts. With interest, the total judgment reached over $489 million.

However, the size of the penalty concerned the appellate court. Justice Moulton remarked that the "immense penalty in this case is troubling," particularly given Trump’s claim that the trial court may have double-counted damages.

Debate Over Legal Basis and Precedent

New York Attorney General's counsel, Judith Vale, defended the judgment, arguing that the fine was appropriate for the scale of the fraud Trump allegedly committed. She further claimed that if similar fraud cases in the residential mortgage-backed securities market had been stopped earlier, the 2008 financial collapse might have been averted.

Justice Friedman, however, repeatedly interrupted Vale’s arguments, questioning whether the state’s fraud statute applied in a case involving sophisticated parties like Trump and Deutsche Bank, where no one had reported financial losses.

"It hardly seems that that justifies bringing an action to protect Deutsche Bank against President Trump," Friedman said.

Trump’s Defense Leans on Statute Limitations

Trump’s appellate counsel, D. John Sauer, seized on the panel’s concerns, arguing that allowing the case to proceed under such broad authority would be "sweeping and unsettling." Sauer contended that the state had overreached and the case should be dismissed based on the statute of limitations.

"If this case falls on the other side of the line, there is no line," Sauer argued, emphasizing that New York's fraud statutes shouldn't cover this dispute.

Trump $489M Civil Fraud Verdict : Next Steps for the Appeal

The appeals panel, which includes Presiding Justice Dianne T. Renwick and Associate Justices Llinét M. Rosado, Higgitt, Moulton, and Friedman, did not issue a ruling immediately after the hearing. Should the court decide to reduce or vacate the $489 million judgment, it could be a significant legal victory for Trump, who is also facing other legal challenges.

Trump $489M Civil Fraud Verdict : Legal Teams

Trump, his organization, and his sons are represented by a legal team including Christopher M. Kise, Dean Sauer, and Alina Habba, among others. Attorney General James is represented by a group of lawyers from the New York State Office of the Attorney General, including Andrew Amer and Colleen K. Faherty.