February 7, 2025
  • Contrary to the judge’s decision that Trump’s settlement of loans didn’t insulate him from fraud allegations, he is projected to urge the appeals court to either decrease or overturn the ruling based on the lack of customary victims.
  • Trump is likely to request the appeals court to delay enforcing him to discharge the ruling until the appeals have been settled.

In light of Donald Trump’s supposed appeal to the $453.5 million real estate fraud verdict levied against him, legal experts predict he will underscore the absence of conventional victims to mitigate or annul the repercussions.

New York Attorney General, Letitia James, secured the win in the case by evidencing intentional deceit in Trump’s exaggerated declarations of his assets when applying for loans and insisting Trump should forfeit the “unjustly obtained gains.” The State Supreme Court Justice, Arthur Engoron, ruled that the extent and unrepentant nature of the fraud verge on pathological.

Nevertheless, Deutsche Bank and other lenders haven’t initiated legal proceedings against the former president for fabricating the overblown statements of his net worth that convinced them to levy lower interest rates. The question of who Trump harmed among the complex financial institutions will likely be a crucial point in the appeal.

“To what degree is a large financial institution expected to conduct their own due diligence in such scenarios?” queried Gregory Germain, a law professor at Syracuse University and director of the Bankruptcy Clinic. “This is an important question, particularly given his notorious reputation as a braggart.”

Furthermore, Trump will likely ask the appeals court to suspend Engoron’s order to avoid paying the judgment as long as the appeal is under consideration. Typically, the appeals court would demand a bond to ensure Trump would pay if defeated. However, considering the lack of standard victims in the fraud case, the appeals court could request a bond that is a mere fraction of the ruling.

As you prepare to vote: Examine who the presidential candidates are and compare where they stand on key issues in our Voter’s Guide.

“This is a windfall for the attorney general,” Germain observed. “She’s not incurring any losses here. This is a recovery of (Trump’s) unjust enrichment.”

Here are the details we have gathered as we countdown to the appeal:

What Calculations Did the Judge Use to Determine Trump’s Debt?

Engoron concluded that Trump had perpetrated fraud for prolonged periods by exaggerating the worth of his real-estate assets. Recently, he ordered Trump to settle $453.5 million in penalties and interest for “unfairly acquired gains” gained via the fraud:

  • $168 million from reduced interest rates, derived from Trump’s personal commitment to settle loans based on his counterfeit declarations of net worth.
  • $126.8 million in revenue from transforming the historical Post Office building in Washington, D.C. into a hotel by deploying counterfeit financial declarations.
  • $60 million in “unexpected profit” from disposing of Ferry Point golf course in the Bronx, whose license agreement depended on his counterfeit financial statements, to Bally’s Corp.

Engoron decided that Trump evaluated his Mar-a-Lago resort at 20 times the tax assessment. Additionally, some flats at Trump Park Avenue profited millions of dollars on his corporate balance sheet exceeding their estimated values. Also, Trump groundlessly almost tripled the square-footage of his personal residence at Trump Tower to inflate its worth by tagging the measurement “a subjective process.”

Trump Cites ‘Pointless Clause’ to Acknowledge Property Values Fluctuate

Trump has vowed to challenge the verdict and has 30 days to do from when Engoron officially enters the decision – a deadline that had not been met as of Wednesday. Trump asserts that the case lacks victims since the banks were reimbursed with interest. Trump’s legal team argued that James targeted him for an offence that didn’t harm anyone.

“There’s no concrete proof that any of the conditions would have been altered,” Trump’s attorney, Christopher Kise, articulated to Engoron in closing arguments. “There’s no real-world impact, no victims of the fraud.”

Trump referred to a disclaimer given to lenders in his financial statement as the “worthless clause,” acknowledging that property values are unpredictable.

James contends, and Engoron concurred, that the statute doesn’t demand victims, only a demonstration of misconduct.

James clarified after the conclusion of the arguments that the case wasn’t about a “personal grudge or name-calling.”

“This case concerns the facts and the law,” James asserted. “And Mr. Donald Trump broke the law.”

If Trump is unable to afford the settlement, the court has the authority to seize his assets.

Attorney General Letitia James noted that if an average New Yorker were to submit fraudulent documents to a bank, they would face harsh legal repercussions and this should be no different for ex-presidents.

Under New York law, mortgage fraud is considered a felony which can be penalised with up to 25 years in prison.

Business law firm senior partner Mark Zauderer stated that the law doesn’t let someone off the hook for simply claiming they’re being targeted. Determining guilt depends on whether the action was committed or not. He describes this case as a typical fraud case.

Understanding ‘haircuts’ and ‘whales’

James unusually filed the lawsuit as a representative of the people of New York, even though lenders like Deutsche Bank didn’t initiate their own lawsuit.

Officials from the bank’s Personal Wealth Management Division stated that they customarily reduced their client’s net worth statements by half, a procedure known as a “haircut”.

When the Trump Organization’s “chief relationship manager” Rosemary Vrablic was recruiting Trump for business in 2011, she referred to him as a ‘whale’, implying a potential high-value client.

Trump’s alleged appeal to focus on lack of victims: legal experts

Based on Trump’s claims of non-existent victims in the case, legal experts foresee his appeal to question why the attorney general’s office took up the case.

Alexander Reinert, a professor of litigation and advocacy at Cardozo Law School, anticipates Mr. Trump’s lawyers arguing that the attorney general and the court overstepped their boundaries due to the absence of clear victims in the case.

Evidence findings by Engoron are not likely to be challenged in an appeal, according to Jim Wheaton, a clinical associate professor at William and Mary Law School. Wheaton expects Trump to dispute the authority of James to sue and whether the state is entitled to the money.

Zauderer doesn’t foresee arguments challenging the law gaining any traction as it has been in place since 1956 and is well-established. He believes Trump might challenge the calculations made by Engoron to determine the damages.

Why did James pursue a civil case against Trump instead of criminal charges?

The fraud judgement against Trump was the result of a civil lawsuit, not a criminal charge. This strategy made it easier for James to secure a victory and imposed financial penalties instead of prison time.

Trump’s criminal trial in New York, based on allegations that he falsified business records to pay off women claiming to have had sexual encounters with him prior to the 2016 elections, is set to begin on March 25.

Criminal cases have a higher threshold to meet since prosecutors must prove allegations beyond a reasonable doubt, unlike in civil lawsuits where government attorneys simply need to demonstrate a likely occurrence of wrongdoing.

James had recommended that, however, lawyers representing Trump contended that a greater degree of clear and compelling evidence should be used.

What amount will Trump have to post as bond to delay judgment for an appeal?

When Trump files his appeal, it’s anticipated that he’ll request the appellate court to postpone the judgment during the proceedings, so as to avoid an immediate payment of $453.5 million. The court of appeals might necessitate a bond to ensure that the state gets paid in case Trump’s appeal fails.

In the libel case won by E. Jean Carroll, who made rape allegations against Trump, he’s likely going to need a bond matching the complete judgment of $83 million throughout the argument of an appeal.

However, unlike other cases where there is an obvious victim, the appeals court has ample discretion to set the bond at a fraction of the complete judgment in a fraud case.

Should Trump propose posting less than the entire judgment, a panel of five judges will assess the proposal, Zauderer explained. The panel will compile written arguments, enabling Trump and the attorney general’s office to each file within a few days, and the panel typically makes a decision within three weeks. The bond could range anywhere from nothing to the entire judgment.

“The judiciary has the authority to make a determination,” said Zauderer. “That would pause the execution while the appeal proceeds.”

The Old Post Office Pavilion Clock Tower maintains operation during the partial shutdown of the government, seen above the Trump International Hotel, on January 4, 2019, in Washington.

Could bankruptcy or other ‘dire’ alternatives be considered?

Throughout his professional journey, Trump has frequently resorted to bankruptcy protection to settle debts while restructuring his enterprise. Last year, Trump declared having $400 million in readily available cash, and he might choose to offer his properties as security against the judgments.

Considering the accumulated judgments of $536.8 million, doubts arise concerning whether Trump will resort to bankruptcy once again. Declaring bankruptcy would stall his obligation to promptly pay off the judgments.

If Trump falls short of the needed bond pending the appeal, he could either be compelled to declare bankruptcy or resort to combating the government’s attempts to recover the judgments in state court.

“Beyond that point, things get extremely complicated,” remarked Germain.

It remains uncertain whether loan agreements would hinder the usage of properties as collateral — or if Engoron, the former federal judge appointed to supervise business decisions at the Trump Organization, would endorse it.

“The certainty expressed in some media reports that there’s no probability of bankruptcy because his properties are valuable has surprised me,” Wheaton stated. “Bankruptcy can also occur when you’re unable to settle your debts as they fall due because you lack liquidity.”

Yet, given the impending presidential election and his carefully maintained persona as a prosperous businessman, Trump might be reluctant to declare bankruptcy, even if it could prove beneficial.

“In my opinion, he’d make every attempt to avoid such a strike to his reputation,” opined Reinert.