Attorneys for former President Donald Trump urged a New York appeals court again on March 18 to remove or lower the $464 million bond President Trump must pay in less than a week as he tries to appeal a judgment of more than $350 million from a civil fraud case.
“Enforcing an impossible bond requirement as a condition of appeal would inflict manifest irreparable injury on Defendants, and ‘defeat or impair [this Court’s] appellate jurisdiction,’” they argued.
The New York attorney general’s office, which brought the civil fraud lawsuit, argued that the appeals court had no authority to lower or remove the bond, and the defense pointed to other cases in which that was found appropriate. The bond President Trump would have to put up would include backdated interest at 9 percent, adding another $100 million to the court-ordered fine, which defense attorneys say has been improperly classified as disgorgement of ill-gotten gains.
They pointed out, as they had repeatedly, that the case named no victims and that therefore no one would be harmed in a delay of payment.
“The case involves no actual victims and no award of restitution, and [the attorney general] is fully protected by Defendants’ real-estate holdings. This factor alone warrants a stay,” the defense argued.
“The judgment seeks to destroy a successful business that employs many hardworking New Yorkers, has contributed approximately $300 million in taxes to public coffers just during the dates in question in this case, and has made historic contributions to the State and City of New York.”
Attorneys also revealed that 30 companies have already turned down the defense’s bond applications, attaching an affidavit from one of the brokers. A $454 million bond would require President Trump to have $1 billion in cash reserves, and four brokers have tried to obtain one so far, to no avail.
‘Manifold Errors’
The attorney general had accused President Trump and other Trump Organization executives of persistent and repeated fraud and artificially inflating President Trump’s net worth through annual statements of financial condition (SFCs), which were informal summary documents of Trump Organization assets.After a 45-day bench trial, Justice Engoron had ruled for the plaintiffs on all claims, setting disgorgement at more than $350 million, in line with a calculation devised by an expert witness called by the state.
The judge had also put a ban on President Trump’s holding a director position in any financial or legal entity in the state for three years or taking out loans from any financial institution chartered in the state, and more limited bans were placed on his sons Eric Trump and Donald Trump Jr.
Crucially, he extended the third-party monitorship of the Trump Organization, with future reviews based on the monitor’s report for additional penalties, including the extension of monitorship and even business certificate cancellations.
Defense attorneys argued the judgment had “manifold errors,” including the disregard of the statute of limitations set by the appeals court on both claims and disgorgement, the “ridiculous” valuing of Mar-a-Lago between $18 million and $27 million, and “a massive disgorgement award in the absence of any evidence that misrepresentations caused the supposedly ill-gotten proceeds.”
Disgorgement
The defense attorneys argued that the disgorgement award was “unconstitutional,” as it violates the excessive fines clause in both the U.S. and New York constitutions, and called it an “irrational, punitive sanction.”“This case has no victims, no damages, and no actual financial losses,” the brief reads. Defendants argue that their business partners—including Deutsche Bank and the Zurich financial group—were “sophisticated” major financial institutions that testified they did their own analyses, were aware of the Trump Organization SFC disclaimers, and would not have changed the terms offered to the Trump Organization “in light of the alleged ’misrepresentations’” in the SFCs as the attorney general presented at trial.
The massive figure is not an objective one; the state needed to tease out the portion of profit earned by the Trump Organization that would have been a result only of inflated numbers presented on the SFCs.
The state presented an expert who created formulas to calculate the figure, and defense attorneys sought to show through their own expert testimonies that the profits were not “ill-gotten.”
In court filings, the defense also argued that several of these calculations relied on transactions that were outside of the statute of limitations, and it faulted the trial court for allowing this. The attorney general had argued that the transactions were, under the continuing wrongs doctrine, distinct violations that each restarted the statute of limitations period, but the appeals court had previously found that the doctrine did not apply to this case.
“The proper application of this Court’s previous ruling forecloses over 75 percent of the judgment,” the defense argued.
About $351 million of the disgorgement, after interest, falls outside the statute of limitations, the defense argued. This covers the loans for Trump National Doral Miami, Trump Golf Links at Ferry Point in New York, and Trump International Hotel and Tower Chicago, all in 2012, and the Old Post Office building in Washington in 2013.
Yet even with the statute of limitations properly applied, the defense argues that it was not shown that the alleged misrepresentations on the SFCs resulted in these specific gains.
The case was brought under Executive Law Section 63(12), and the defense argued the statute is “inapplicable to the facts of this case in the first place,” and was “wrongfully relied upon” by both the state attorneys and court. The defense attorneys criticized the attorney general for using cases that had no relation to the Executive Law Section 63(12), including one involving attorney disbarment, to argue against a stay of penalties during appeal.
The appeals court had already temporarily stayed some of the nonmonetary penalties ordered, which the defense argued should continue throughout the appeal.
