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PaperclipPerfector  3mo ago (text post)   25679 thread views

Culture War Roundup for the week of August 18, 2025

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Trump's civil fraud convictions (regarding intentional misvaluation of properties) have been upheld by the state appeals panel. I hope that distilling the three opinions down from 230 letter-size pages to something slightly more digestible counts as sufficiently high effort for a top-level comment.

(1) Moulton, joined by Renwick: All the convictions and most of the penalties should be upheld, but the sanctions against Trump's lawyers and the disgorgement penalties against Trump should be reversed.

This decision is one of three issued by this Court today. Presiding Justice Renwick and I agree with our colleagues on certain points. Most importantly, we agree with Justice Higgitt, who is joined by Justice Rosado, that the Attorney General is empowered by Executive Law § 63(12) to bring this action. However, our remaining disagreements with our colleagues' decisions are profound. In sum, Justice Friedman finds that Supreme Court's rulings are infirm in almost every respect and would hold that the Attorney General had no power to bring this case under Executive Law § 63(12). He would dismiss the complaint outright. Justice Higgitt, while agreeing that the Attorney General had the power to bring this lawsuit, finds that errors made by Supreme Court require a new trial limited to only some of the transactions in question.

Because none of the three decisions garners a majority, Justices Higgitt and Rosado join the decretal of this decision for the sole purpose of ensuring finality, thereby affording the parties a path for appeal to the Court of Appeals. Like Justice Friedman, we commend them for doing so. Unlike Justice Friedman, we do not find that this necessary measure is unfair to defendants.

This Court has already ruled in Trump I that the facts of this case warrant the application of Executive Law § 63(12), and that the Attorney General is vindicating the public interest in challenging the transactions in question. The law of the case doctrine "is designed to eliminate the inefficiency and disorder that would follow if courts of coordinate jurisdiction were free to overrule one another in an ongoing case". This Court departs from the doctrine only when a prior holding is clearly erroneous, or where there has been a change in law or evidence. None of those circumstances are present here. Defendants cannot relitigate the issue of the scope of Executive Law § 63(12) under the guise that Trump I that was decided at the motion to dismiss stage (where the Attorney General is entitled to the presumption of the truth of her allegations and the benefit of all favorable inferences), as opposed to the summary judgment stage (where the Attorney General is held to the record evidence).

In this appeal, we have before us an actual record which demonstrates clearly that defendants committed fraud and illegality squarely within the ambit of Executive Law § 63(12). We do not have before us some hypothetical future misuse of the statute. The record also refutes Justice Friedman's implication that the judicial system is being used for "political ends" in this litigation. The antithesis is true. Given the evidence uncovered during the Attorney General's investigation, which is discussed at length below, the "political" choice would have been to not bring this case, thereby avoiding a fight with a powerful adversary. Her allegations have been tested at every stage of this maximalist litigation and for the most part have been upheld. We now have before us the evidence the Attorney General amassed and it demonstrates that defendants engaged in a decade-long pattern of financial fraud and illegality.

Supreme Court correctly awarded partial summary judgment to the Attorney General, and correctly denied defendants' motion for summary judgment, after determining that the Attorney General proved that there were no triable issues of fact concerning the Executive Law § 63(12) cause of action insofar as it was based on fraud (not illegality). This type of section 63(12) claim is sometimes called a "standalone claim" because it is not predicated on violation of another statute.

The record before the court on summary judgment was voluminous. However, volume does not inevitably demonstrate the existence of issues of fact. For the reasons set forth below, we find that the record made on summary judgment clearly demonstrates defendants' liability under Executive Law § 63(12). Moreover, as discussed in section C below, even if Supreme Court erred in granting summary judgment to the Attorney General, the record at trial overwhelmingly supports Supreme Court's finding of liability for violations of the Penal Law.

Our colleagues agree with Presiding Justice Renwick and me that Supreme Court improvidently levied sanctions on defendants' attorneys. The parties in this litigation had to contend with novel legal issues. In grappling with these issues, defendants offered colorable arguments in their defense. Consequently, their arguments were not "completely without merit" under 22 NYCRR 130-1.1(c)(1). Defendants' summary judgment papers certainly repeated arguments advanced in opposition to the Attorney General's motion for a preliminary injunction and in their motions to dismiss the complaint. However, the court made no findings that the arguments were made primarily to delay or prolong the litigation or to harass or maliciously injure the Attorney General under 22 NYCRR 130-1.1(c)(2).

While we find that Supreme Court erred in imposing sanctions, Justice Friedman is incorrect in divining that this somehow reflects a subliminal "tacit" conclusion that Supreme Court was biased against defendants. We agree that Supreme Court's two decisions are sometimes conclusory and insufficiently rigorous in their legal analysis. However, in the pressured environment of a heavily scrutinized trial Supreme Court produced a clear and complete record for this Court to review. In the course of reading and re-reading that record we found that the court was even-handed at trial, and allowed both sides to "make their case."

For the reasons set forth above, we find that Supreme Court properly awarded partial summary judgment on the standalone claim. We disagree with Justice Higgitt's view that Supreme Court engaged in improper fact-finding and credibility determinations in its summary judgment decision. However, even if my colleagues are correct that Supreme Court erred on summary judgment, we also have before us an extensive trial record that amply establishes defendants' liability. At the bench trial Supreme Court was not constrained by the rules of summary judgment. Fact-finding and credibility determinations are among the central tasks of a judge presiding over a bench trial. As set forth below, our de novo review of the trial record supports Supreme Court's findings of illegality. Accordingly, there is no need to remand for another trial.

In connection with our review of the Posttrial Order, we defer to the court's findings that the testimony of President Trump, Donald Trump, Jr., Eric Trump, Jeffrey McConney and Allen Weisselberg were not credible, and that the testimony of Michael Cohen was credible. The court cited various reasons for finding that the individual defendants' testimony was not credible which, depending on the witness, included obfuscation, equivocation, evasiveness, gaps in memory, and initial denials until being confronted with contrary evidence. Although Michael Cohen acknowledged at trial that he had pled guilty to perjury, the court nevertheless found his testimony credible, noting the general plausibility of his statements, his demeanor, and the fact that his testimony was corroborated by other trial evidence.

While he is silent concerning Supreme Court's findings that the individual defendants were not credible witnesses, Justice Friedman chooses to devote a number of pages to his own analysis of Cohen's lack of credibility. He quotes at length from Cohen's testimony and draws his own conclusions about its veracity. We do not parse Justice Friedman's exegesis on Cohen's credibility—and do not conduct our own credibility determinations of Cohen or of any other witness—because that is not the job of an appellate judge. Credibility determinations are for the judge who presides at a bench trial. "In a nonjury trial, we defer to the findings of the trial court 'unless it is obvious that the court's conclusions could not be reached under any fair interpretation of the evidence, especially when the findings of fact rest in large measure on considerations relating to the credibility of witnesses'".

Applying the appropriate standard of review, we find that the record amply supports Supreme Court's determination that the Attorney General established, by a preponderance of the evidence, that the individual defendants violated Executive Law § 63(12) by violating New York Penal Law §§ 175.05 (falsifying business records in the second degree), 175.45 (issuing a false financial statement), 176.10 (insurance fraud in the fifth degree),[FN52] and 105.00 (conspiracy in the sixth degree). The evidence, in turn, also established the liability of the corporate defendants by operation of Penal Law § 20.20.

Although the court heard at trial all of the expert testimony that Justice Higgitt viewed as necessary to decide this lawsuit at the summary judgment stage, he nevertheless concludes that defendants were deprived of a fair trial. According to Justice Higgitt, the court's improper "focus and reliance on magnitude of disparity" at the summary judgment stage continued into the trial and affected the court's assessment of whether the individual defendants possessed the requisite intent to defraud under the relevant Penal Law provisions. Justice Higgitt also maintains that the court improperly admitted evidence related to time-barred transactions, which, when superimposed on the court's misunderstanding of materiality, requires a new trial.

We disagree. Because this Court's authority in reviewing a nonjury decision is as broad as that of the trial court and because the trial record before us is clear and complete, there is no need for a new trial. In other words, we are not bound by any legal or fact-finding errors made by Supreme Court at trial.[FN55] In addition, contrary to Justice Higgitt's position, the court's misunderstanding of materiality at the summary judgment stage had no bearing on the court's assessment of the individual defendants' intent to defraud in connection with the relevant Penal Law provisions. As Justice Higgitt acknowledges, intent to defraud is an element under the Penal Law (but is not an element under Executive Law § 63[12]) and looks only to a defendant's state of mind.

The remaining question is whether the disgorgement levied against the defendants in this case is an excessive fine barred by the Eighth Amendment. We believe that it is.

A fine is excessive when it is "grossly disproportional to the gravity of the defendant's offense". Defendants' attempt to deny the gravity of their actions with blithe claims that none of the counterparties were harmed ignores a core reality: a bank making a loan seeks not only repayment, but also compensation for the possibility of default. Nicholas Haigh, the managing director of the Deutsche Bank Private Wealth Management Division, the entity that approved the three loans issued by that Bank herein, testified that "just getting repaid on the principal" of the loan "doesn't address at all whether we got properly recompensed for the risk we were taking." However, while harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State. It is a virtue of the statute that the Attorney General may act, as she did in this case, before a potential catastrophe occurs, to deter further fraudulent business behavior by defendants specifically, and to police market behavior generally. However, having achieved these goals the State is not entitled to compound its victory with a massive punitive fine.

The Attorney General did not carry her initial burden. Indeed, the calculation of the disgorgement in this case was far from a reasonable approximation. Contrary to Supreme Court's finding, the profits from sales of the Ferry Point License and the sale of the OPO Lease (which, in tandem, accounted for $194.8 million of the disgorgement awarded plus a substantial amount of interest) were not "reasonable approximation[s] of profits causally connected" to defendants' wrongdoing.

For the foregoing reasons, we vacate the portions of the Posttrial Order directing disgorgement in its entirety.

This does not leave the Attorney General without a remedy. In contrast to its order on disgorgement, Supreme Court properly granted injunctive relief.

On the record before us, we find that Supreme Court properly exercised its discretion in awarding injunctive relief. Defendants persistently and intentionally inflated the asset values reported in their SFCs from 2014 to 2021, for numerous assets per each SFC. Despite the wrongfulness of their conduct, Supreme Court believed that defendants lacked remorse. Indeed, when asked at trial whether he still approved of McConney and Weisselberg's work in preparing the SFCs, President Trump stated "[y]ou haven't shown me anything that would change my mind."

Contrary to defendants' arguments, Supreme Court's injunctive relief was not "breathtakingly overbroad." The Court of Appeals recognized in Greenberg that lifetime bans on business activity may not "be a justifiable exercise of a court's discretion". Even so, the majority of Supreme Court's injunctive relief spanned two or three years. The court's only permanent injunction barred McConney and Weisselberg—who were primarily responsible for preparing the SFCs and maintaining the Trump Organization's books and records—from controlling the finances of a New York corporation or business entity. Considering the significant likelihood that defendants would reoffend, Supreme Court's injunctions were measured and fair.

(2) Higgitt, joined by Rosado: The convictions should be vacated for a new trial. However, in the interest of finality, we will concur in Moulton's opinion so that it has a majority and can be appealed to the state Court of Appeals (supreme court), rather than having Engoron's opinion "vacated by an equally divided court".

We and our colleagues generally agree on the facts and evidence. On the import of those facts and evidence, however, we differ with our colleagues—in reasoning, result, or both—on a number of fundamental issues, and the path this action should now take.

For the reasons that follow, we conclude that the judgment must be vacated and a new trial ordered.[FN2]

[FN2]Notwithstanding our analysis, as reflected in our writing, that vacatur of the judgment and a new trial is the appropriate resolution, Justice Rosado and I, after much consideration, with great reluctance and with acknowledgement of the incongruity of the act, join the decretal modifying the judgment to the extent of vacating the disgorgement and sanctions awards. Under the truly extraordinary circumstances here, where none of the writings enjoys the support of a majority, we are moved to take this action to permit this panel to arrive at a decision and to permit the parties and the Court to avoid the necessity of reargument. Moreover, joining the decretal effectuates the core point of agreement among the members of this panel: that the judgment, as entered by Supreme Court, cannot stand. The parties must have a decision on this matter and, concomitantly, the option of further review of this matter by the Court of Appeals, as recognized by Justice Friedman. We must therefore agree with Justice Friedman in his observation that a remarkable situation has necessitated a remarkable solution.

Our colleagues have thoroughly and thoughtfully examined and analyzed the parties' arguments and proof and Supreme Court's determinations, reaching opposite conclusions. We find that the application of the same well-known fundamental summary judgment principles leads to the conclusion that summary judgment was improperly granted to the Attorney General. Supreme Court did not view the evidence in the light most favorable to defendants, as the nonmovants; it resolved, rather than identified, questions of material fact; and it did so by applying its own interpretive standard to the evidence without explicitly finding defendants' experts to be incredible as a matter of law or rejecting the bases for their multi-pronged analyses. Central to the motions and Supreme Court's decision, and indeed the action itself, was the valuation of the various assets listed in the SFCs. Defendants argue that Supreme Court's rejection of the expert evidence they submitted in opposition to the Attorney General's motion affected every valuation decision Supreme Court made, and fatally infected the subsequent trial.

Supreme Court found (correctly) that materiality was not an element of the Executive Law § 63(12) fraud claim but recognized (correctly) that it is "relevant" to determining "tendency or capacity." Supreme Court found that the magnitude of the difference between defendants' and the Attorney General's valuations, alone, was material and, in essence, the single factor informing "tendency or capacity." According to Supreme Court,

OAG has submitted conclusive evidence that between 2014 and 2021, defendants overvalued the assets reported in the SFCs between 17.27-38.51%; this amounts to a discrepancy of between $812 million and $2.2 billion dollars. Even in the world of high finance, this Court cannot endorse a proposition that finds a misstatement of at least $812 million dollars to be 'immaterial.' Defendants have failed to identify any authority for the notion that discrepancies of the magnitude demonstrated here could be considered immaterial.

Supreme Court's rejection of defendants' evidence reduces to an unwarranted (i.e. the Attorney General had not offered competent competing evidence) rejection of the notion of a subjective appraisal. In doing do, Supreme Court relied on an inapt case, its interpretation of which was flawed. Supreme Court stated, "Accepting defendants' premise would require ignoring decades of controlling authority holding that financial statements and real property valuations are to be judged objectively, not subjectively".

For the proposition that subjectivity has no place in real property valuation, Supreme Court cited Matter of FMC Corp. and Assured Guar. Mun. Corp. v DLJ Mortg. Cap. Inc. For the proposition that market value is the most reliable valuation method, it cited Matter of Great Atl, & Pac. Tea Co. v Kiernan and Matter of Consolidated Edison Co. of N.Y., Inc. v City of New York. These cases are of little to no value with respect to examination, let alone resolution, of the issues presented by the motions.

It bears noting that no one, including Supreme Court, identified, as a matter of law or fact, singular, correct inputs from which valuation methods should have emanated. Supreme Court declined to acknowledge the validity of alternate valuation methods, disregarding that every method of valuation ultimately seeks the same goal. Therefore, Supreme Court's usage of the word "appraisal" did very little to help us stratify valuation methods into echelons of accuracy. Our jurisprudence with respect to property interests teaches us that every parcel of property is unique, meaning, therefore, that similarly situated properties cannot be presumed to have identical value for comparison. Further, value is made up of many intangible factors, such as proximity to a geographical or topographical feature, remoteness from the nearest neighboring property, and cache, none of which has anything to do with the features of the actual parcel or the construction of the actual structures. The premise from which Supreme Court set out, therefore, was a false one. This is borne out by the fact that the Attorney General was able to identify only very specific misstatements that were truly, objectively "wrong," as opposed to inflated or creative, even expansively so, which is not necessarily fraudulent, given the breadth of permissible valuation methods.

Considering the effect of our prior determination and all applicable tolls afforded by the agreement and the various Executive Orders issued during the coronavirus pandemic, the correct date for determining the timeliness of all claims against all defendants is July 13, 2014. Supreme Court thus erred when it considered instances of false statements with respect to the Doral and Chicago loans, both of which closed prior to July 13, 2014, in calculating damages, awarding injunctive relief, and in directing judgment against any defendants alleged to have participated in only those transactions. The exclusion of untimely transactions significantly reduces Supreme Court's disgorgement award. The $168,040,168 award based on interest rate differentials must be reduced by the $72,908,308 attributable to the Doral loan and the $17,443,359 attributable to the Chicago loan, for a reduced total of $77,688,500, assuming Supreme Court used the correct metrics in making the award.

The impact of Supreme Court's erroneous interpretation of our prior holding with respect to the statute of limitations on its posttrial disgorgement award is not harmless. This is true not merely mathematically, but also foundationally. Given the unique nature of the Executive Law § 63(12) cause of action and the relief afforded by it, we cannot know the evidentiary significance of otherwise-excludable SFCs and transactions to the primary determinations required for a successful Executive Law § 63(12) claim. We cannot know whether or to what extent the consideration of otherwise-excludable SFCs or transactions influenced the finding of repetition or persistence of defendants' acts or statements, or whether their consideration produced a course of repetition or persistence that influenced the decision to grant any aspect of the injunctive and other non-monetary relief awarded, whether at the motion or trial stage, the type of relief, the nature of the relief, or the severity of the relief, such as its duration or breadth.[FN29] While the granting of such relief is not mandatory when the cause of action is made out, it bears noting that this is the primary form of relief envisioned by Executive Law § 63(12).

Accordingly, Supreme Court's statute of limitations finding, together with the other fundamental errors described above, merits, among other things, a new trial.

We and our colleagues agree that granting the motion for sanctions was an improvident exercise of discretion; that defense counsels' conduct could not be fairly characterized as "egregious," "preposterous," "inscrutable," "risible," "obstreperous," or "bogus"; and that such determination should be reversed on the non-parties' appeal. That Supreme Court's prior decisions had been affirmed on appeal did not render defendants' repetition of the arguments insupportable: our pronouncements with respect to the Attorney General's authority to pursue the action and the availability of disgorgement as a remedy were statements of general law appropriate for a CPLR 3211 dismissal analysis where the sole question was the complaint's statement of a cognizable cause of action.

(3) Friedman: The convictions should be reversed.

This action essentially turns section 63(12) on its head. The leniency with which the courts have construed the requirements for pleading and proving fraud under section 63(12)—a leniency that has been extended for the purpose of facilitating the use of the provision to prevent the exploitation of unsophisticated consumers, investors and small businesses—is here being used by Attorney General Letitia James to apply section 63(12) to a scenario to which that provision has never before been applied, or even thought to apply. Specifically, the Attorney General in this case has utilized the flexibility afforded her under section 63(12) to unwind complex financial transactions that were negotiated, face-to-face and at arm's length, between a privately held real estate organization—that of defendant Donald J. Trump, the former president and current president—and ultra-sophisticated banks, insurance companies and government entities, which were advised by equally sophisticated lawyers, accountants, and other business professionals.

The Attorney General complains, and Supreme Court found, that the statements of financial condition (SFCs) that President Trump provided to the counterparties in connection with the transactions at issue overvalued certain of his assets. However, each of the SFCs included written disclaimers advising, in no uncertain terms, that President Trump's valuations of his various properties were estimates that had not been audited and were not beyond dispute. Each counterparty was further warned that it should do its own due diligence and draw its own conclusions about President Trump's net worth, which each counterparty actually did, as it was obligated to do for its own protection as a matter of New York law. Moreover, President Trump paid all the principal, interest, and premiums he owed, and no counterparty ever registered any complaint about the deals before the Attorney General began publicly accusing President Trump of issuing fraudulent SFCs. Had any counterparty been dissatisfied with its transaction, it would have had the incentive and resources to seek redress for violation of its rights through private litigation—litigation that, according to the Attorney General, would have yielded scores of millions of dollars of damages in some cases. No such lawsuit was ever filed.

On this appeal from the nearly half-billion dollar judgment against President Trump and his codefendants, two of my colleagues have cited scores of cases in an attempt to shoehorn this case into section 63(12). They have gone so far as to claim that the Attorney General, by bringing this action, has possibly saved the world from a replay of the financial meltdown of 2008; how this might be is not explained. Despite their efforts, they are unable to point to a single precedent—not even one—for the use of section 63(12) to target transactions such as those at issue here—bilateral, negotiated, arm's-length transactions between highly sophisticated parties, which had no effect on any public market, and which were, so far as the parties to the transactions were concerned, complete successes. Given the absence of any public interest in unwinding these deals, I would not stretch the scope of section 63(12) to reach them.

Moreover, even if bringing this action were within the scope of the Attorney General's power under section 63(12), Supreme Court erred both in granting her summary judgment as to liability on her first cause of action and in rendering a decision in her favor on all causes of action after trial. As explained below, the Attorney General simply failed to prove her case. Accordingly, I would reverse the judgment and dismiss the complaint. Thus, while I concur in the decretal's vacatur of the constitutionally unsound (and otherwise defective) half-billion dollar disgorgement award, I respectfully dissent insofar as the decretal affirms the judgment as to liability and as to the award of nonmonetary relief to the Attorney General.

I note that, of the four justices voting for the decretal, two — Justice Higgitt and Justice Rosado — do not actually agree with the resolution of the appeal for which they are voting. As stated in Justice Higgitt's opinion, he and Justice Rosado believe that the grant of summary judgment to the Attorney General (as to liability on the first cause of action) should be reversed, the judgment vacated, and the matter remanded for a new trial on all causes of action. I commend Justices Higgitt and Rosado for their selflessness in putting aside their personal views to allow this Court to dispose of this appeal. However, I find it remarkable that, although a three-justice majority of this five-justice panel believe that the judgment in favor of the Attorney General should not stand, as she has not carried her burden of proving a violation of the statute, the result of the appeal is the affirmance of the judgment, albeit as modified to eliminate the disgorgement award. To draw a sports analogy, it is as if a team is awarded a touchdown without crossing the goal line. In any event, it seems to me that the result I would reach is more consistent with the outlook of Justices Higgitt and Rosado than the affirmance of the judgment, as modified, for which they are voting.

This leads me to explain why, given that I am alone on this panel in my view that the complaint should be dismissed, I am not voting for the result favored by Justices Higgitt and Rosado — namely, vacatur of the judgment and remand for a new trial. First, I do not believe that we can ignore the fact that ordering a new trial of a case in which the primary defendant and witness is the sitting president of the United States (and will remain so for approximately another 3½ years) would disrupt the political life of the United States and would undermine its national interest, particularly at a time of high global tension, with ongoing conflicts in Europe and the Middle East. Second, while it is obvious from the divergence of opinions among the justices of this panel that this case calls out for further appellate review, an order by this Court directing a retrial is not immediately appealable to the Court of Appeals unless the appellant stipulates to be bound by the prior judgment in the event his further appeal is unsuccessful. It seems inconceivable that defendants would stipulate to a judgment carrying a half-billion dollar award against them. Finally, even if Justice Higgitt is correct that neither side should have been granted summary judgment on their dueling pretrial motions, I agree with Justice Moulton that the record before us—more than 100 volumes, comprising nearly 50,000 pages—is more than sufficient to decide the case without holding another trial. In that regard, I agree with defendants, and respectfully disagree with my colleagues, on the standard of proof applicable to the Attorney General's claims. In my view, the Attorney General should be required to prove her claims under section 63(12) by clear and convincing evidence, not by a mere preponderance of the evidence.

I turn first to the question of whether defendants' present argument is precluded by this Court's decision on the earlier appeal. At that juncture, in rejecting defendants' attempt to have the action dismissed at the pleading stage based on the absence of a state interest, we wrote: "The Attorney General is not suing on behalf of a private individual, but is vindicating the state's sovereign interest in enforcing its legal code—including its civil legal code—within its jurisdiction". It must be borne in mind that this statement was made in reviewing the disposition of a pre-answer motion to dismiss, made at the outset of the action, before the development of a full record. The Court's decision does not state that the Attorney General could ultimately prevail in this action without establishing some sort of state interest, differentiated from the interests of the sophisticated institutional "victims" of defendants' alleged misconduct, of the kind that has historically been recognized as conferring parens patriae standing "to commence an action to protect a public interest". Accordingly, in my view, the doctrine of law of the case does not preclude us from considering defendants' standing argument on the merits.[FN11]

[FN11]As I shall discuss subsequently, even if the law of the case doctrine would otherwise apply, I believe that the unique circumstances presented—and, in particular, the constitutional concerns raised by the Attorney General unprecedented use of the statute in this case—justify departing from the doctrine in this instance. In either case, I do not, as Justice Moulton asserts, "ignore[]" this Court's prior consideration of this issue in Trump I.

Neither Justice Moulton nor Justice Higgitt cites any precedent holding that privately actionable conduct—standing alone, and without proof of any grounds for a belief that the public good would be jeopardized if enforcement of the relevant rules were left to private litigation by the parties concerned—suffices to support a judgment in favor of the Attorney General under section 63(12). Indeed, Justice Higgitt candidly admits that in this case, "we are confronted with an unprecedented use of the statutory power" conferred by section 63(12).

Justice Higgitt is correct in stating that the manner in which section 63(12) is being used in this action is unprecedented. Earlier uses of section 63(12) all involved a specifically public interest, apart from any injury to sophisticated commercial parties fully able to monitor their own interests and to seek redress through private litigation for any violations of their rights. For example, such actions often target deceptive or otherwise unlawful commercial conduct directed toward the general public, most of whom are unsophisticated and whose individual losses may not be large enough to justify private litigation. Section 63(12) has also been used to attack deceptive conduct that influences the price of a publicly traded security, which is bought and sold anonymously on exchanges where traders rely on the issuer's public disclosures and do not conduct independent due diligence. But neither the Attorney General nor either of my colleagues has identified any prior case in which section 63(12) was used, as it is being used here, simply to assert a claim that a sophisticated commercial party was duped, in a face-to-face, arm's-length transaction, into accepting a lower interest rate, or a lower insurance premium, than it would have accepted absent the alleged deception.

In adopting the Attorney General's reading of the statute, my colleagues are empowering her office to attack, at will, virtually any business transaction, regardless of its success or failure, and in the absence of any discernable effect on the public. This is because—as a moment's reflection will disclose—a substantial business deal that goes awry (which none of the transactions at issue did) typically will give rise to a claim by the losing party that, in hindsight, the transaction was induced by some misrepresentation made by the counterparty. This is not surprising, since it is easy for inaccuracies to creep into the description of large business enterprises and certain kinds of representations — such as estimates of value, the kind of representation chiefly at issue here—are inherently subjective and disputable. Indeed, every day on which appeals are argued before this Court, at least one of the appeals (and frequently more than one) involves allegations of fraud in business transactions between sophisticated persons or entities—allegations frequently more serious than those made by the Attorney General in this case. By the reasoning of my colleagues, the Attorney General has the power to involve her office in any one of these disputes and to bring her own suit under section 63(12) against any defendant accused of "repeated" fraud, even if the counterparty's suit falls short under the more exacting rules applicable to common-law fraud claims. By holding that section 63(12) authorizes the Attorney General to pore over the records of private transactions, even successful deals, years after they closed, in the hope of finding at least two inaccurate or disputable statements on which to predicate a lawsuit, without any need to identify a greater public interest at stake, my colleagues invite arbitrary, unpredictable, and inevitably selective use of the judicial system for political ends, and not to "vindicate[] [any] public purpose".

And regrettably, the record makes plain that in this matter, we see an attempt to use section 63(12) and the judicial system for political ends. The proof of this is found not in anything written by me but in the words of the Attorney General herself. Specifically, as previously noted, the Attorney General, in her 2018 election campaign for her current office, repeatedly promised the voters that her top priority, upon being sworn in, would be to bring down President Trump and his real estate empire. The Attorney General made these statements long before February 27, 2019, the date of the supposed trigger for her investigation of President Trump and the other defendants—namely, the testimony before the House of Representatives Committee on Oversight and Reform (the House Oversight Committee) of Michael Cohen, the convicted perjurer and disbarred attorney, in which he claimed that the SFCs of President Trump, his former client, contained inflated valuations of his assets.

As previously noted, the test for fraud under section 63(12) is whether the targeted act "has the capacity or tendency to deceive, or creates an atmosphere conducive to fraud". In adjudicating this case, Supreme Court quoted this standard but disregarded it. In the order disposing of the summary judgment motions, the court held that the Attorney General was required only to prove that the SFCs were "false and misleading," and that the defendants had "repeatedly or persistently used the [SFCs] to transact business" to sustain the standalone Executive Law § 63(12) claim—nothing more. Likewise, in its decision after trial, the court held that plaintiff need only prove that "defendants used false statements in business." Thus, under Supreme Court's view, falsity was all that is required to be shown. In effect, the court adopted a strict liability standard for business representations. This was error.

Contrary to Justice Moulton's mischaracterization of my position, I am not arguing that the determination of whether a defendant has violated section 63(12) should be "tie[d] . . . to whether a counterparty exercised due diligence or justifiably relied on the [allegedly] fraudulent conduct." I agree that whether the particular counterparty in fact conducted due diligence, or in fact justifiably relief on the subject representation, is not a necessary element of the Attorney General's case under the statute. However, to reiterate, whether a defendant's representations to professionals in a given industry had a "capacity or tendency to deceive" or created "an atmosphere conducive to fraud" cannot be determined in a vacuum, without considering the generally accepted conventions and usages of that industry. If the universal practice in the relevant industry is not to take representations such as the SFCs at face value, to hold that the SFCs nonetheless had a "capacity or tendency to deceive" is to fashion an artificial construct of fraud — to treat the sophisticated, professional recipients of the SFCs as if they were naÏve consumers or small investors. Nothing in section 63(12) or the case law thereunder requires us to ignore reality in this fashion.

Turning first to the nature of the asset valuations, Supreme Court apparently took the view that valuations are "objectively" either right or wrong. However, expert testimony in the record establishes that, for a unique asset for which a current market value cannot be obtained with certainty, an appraiser has a choice of different methodologies by which to value the asset, and these different methodologies may yield significantly different valuation figures. As defendants' accounting expert Dr. Eli Bartov testified, a valuation is "an opinion on price derived from a valuation model" and, as an opinion, "can never be objective." Valuations of an asset are "subject to substantial variation," depending on the definitions, assumptions, and methodologies chosen by those preparing the valuation. Thus, the valuation process is inherently subjective, and the Attorney General's disagreement with the valuations of certain assets set forth in the SFCs, and with the supporting opinions of defendants' experts, did not establish "fraud" within the meaning of section 63(12).

In my view, the Attorney General failed to prove her case under any of the Penal Law causes of action for the same reason she failed to prove her case on the stand-alone section 63(12) cause of action — the valuations in the SFCs, as plainly labeled subjective estimates of value of unique assets, simply were not false, even if disputable, in the professional context in which they were used. That being the case, I really need not say more about the Penal Law causes of action. However, some comment is warranted on the dubious evidence on which the Attorney General relied to establish the intent element of these causes of action.

To prove intent in support of the Penal Law causes of action against President Trump, the Attorney General relied almost entirely on the testimony of Michael Cohen, the disbarred lawyer who pleaded guilty to (among other offenses) willful tax evasion, making false statements to a financial institution, and perjury. As summarized by Justice Moulton, Cohen testified that he and defendant Allen Weisselberg were, on occasion, "direct[ed]" by President Trump to "reverse engineer" the valuations in the SFCs to reach a "desired goal." To this end, Cohen testified, he would search for comparable properties on the Internet and base valuations of President Trump's assets on the results of his search so as to reach the predetermined goal. For several reasons—perhaps the same reasons that the Attorney General has, as previously noted, avoided referring to Cohen by name in her appellate brief, and has limited her citation of his testimony to the absolute minimum—Supreme Court's crediting of this testimony does not, in my view, warrant the deference that Justice Moulton extends to it.

Initially, as Justice Moulton acknowledges, Cohen's credibility is undeniably undermined by the crimes to which he pleaded guilty in federal court, which included willful income tax evasion (over a period of five years), making a false statement on a personal credit application to a financial institution, perjurious testimony before a congressional committee, and making an illegal political campaign contribution. A harsh but illuminating light is cast on Cohen's character by the Government's sentencing memorandum, dated December 17, 2018, that was submitted in his case to the United States District Court for the Southern District of New York. Cohen's unreliability as a witness is further demonstrated by his testimony in this case specifically disavowing his guilty pleas to the tax evasion and false statement charges. Cohen went so far as to testify, under oath, that he had been lying to the federal court when he pleaded guilty to those offenses.

Since my view is that the complaint should be dismissed in its entirety, both for the Attorney General's lack of standing and for the failure of her proof, and given that I am in dissent, I need not reach the issue of the statute of limitations. Nonetheless, I note that I agree with Justice Higgitt on this issue to the extent he holds that, with regard to defendants bound by the relevant tolling agreement, the Attorney General's claims are time-barred to the extent they are based on the issuance of SFCs pursuant to transactions that closed before July 13, 2014. This is the necessary implication of our holding in the previous decision that "claims are time barred if they accrued—that is, the transactions were completed—before [the applicable cut-off date]".

(Rather hilariously, when I originally clicked on this HTML opinion, it contained several element-nesting errors (unclosed <b> and <i> elements), and even some mojibake at the top. But it looks like those problems were fixed between then and when I finished writing this comment.)

Articles: AP, Reuters

Enlighten my ignorance. I'm going by headlines I see online, so is it that the court decided the damages awarded against Trump were too high so they were struck down, but the charges can stand?

And what does this mean for the NY AG Letitia James? Is she okay on the grounds that the charges were legit to bring against him, or is this going to damage her?

My guess is that under the hood this was a political grenade and everyone deemed this the easiest way to defuse it without causing other problems. The reality of the law was likely subordinate to getting out as clean as possible.

So we get this - and move on.

The trial judge convicted Trump of fraud, and on that basis imposed on Trump two separate punishments—disgorgement of several hundred megadollars, and disqualification from serving as an officer or director of any New York business for several years. Disgorgement is, not really punitive, but compensatory, meant to undo any damages that were done. The appeals panel ruled that the prosecutor failed to prove the quantity of damages caused by Trump's fraud, so the disgorgement had no basis. But the punitive disqualification still stands.

I have no opinion on what effect this will have on the prosecutor's reputation.

True but a majority of the court would’ve voted to vacate or overturn the entire conviction. But they couldn’t agree on vacate v overturn.

I dunno, feels pretty fair as an opinion. The book-cookers get blocked from business, Trump gets a shorter-term injunction for orchestrating it, but because no real harm was done, the penalties are struck down as deranged and vindictive. I don’t see a better way of threading the needle between condoning fraud if you’re important enough and deciding on damages based on how much our feelings are hurt.

Reducing the financial penalty (and the sanctions that looked like they were aimed to discourage preserving an argument for review) helps a lot of the most egregious abuses, here, but it's still an absolute mess of the case and an opinion, here. Friedman's "However, I find it remarkable that, although a three-justice majority of this five-justice panel believe that the judgment in favor of the Attorney General should not stand, as she has not carried her burden of proving a violation of the statute, the result of the appeal is the affirmance of the judgment..." isn't inexplicable, but it's hard to read as anything but a strong bet by two judges that the state supreme court is willing to do their dirty work for them.

Is it because she didn’t carry the burden, or is it because the “divided court” somehow ruins a retrial? I don’t understand why that isn’t an option.

I think only Friedman found a case-wide failure to carry the burden of proof; the rest of the judges mostly focus on the burden of proof for disgorgement aka the high fines.

In New York, as in most other jurisdictions, appeals courts can only overturn an action from a lower court with a full majority of the appeals court judges. Here, there's a majority (5/5) on the fines and sanctions, and division on everything else, and it's not even clear that Higgitt and Rosado want a retrial here so much as think it would be appropriate in a non-Trump case.

Beyond that, there's also just a lot of issues with this specific case getting a retrial -- Higgitt/Rosado might have settled for a dissental because they couldn't get a third signing onto a retrial, but they might have not really wanted a retrial in this case and only argued it for others in the future. Everyone else gives a different reason why they don't want a retrial. From the Moulton/Renwick:

Returning this action to Supreme Court for a new trial as urged by Justice Higgitt is both unnecessary and likely terminal. It is difficult to imagine that a trial could proceed while one of the principal defendants, and a central witness, is President of the United States. The inevitable elapse of time and the attendant difficulties in recreating a vast record of testimony and documents — an exercise that is both Sisyphean and unneeded, because an extensive trial record already exists — would likely consign this meritorious case to oblivion.

From Friedman:

First, I do not believe that we can ignore the fact that ordering a new trial of a case in which the primary defendant and witness is the sitting president of the United States (and will remain so for approximately another 3½ years) would disrupt the political life of the United States and would undermine its national interest, particularly at a time of high global tension, with ongoing conflicts in Europe and the Middle East.[FN3] Second, while it is obvious from the divergence of opinions among the justices of this panel that this case calls out for further appellate review, an order by this Court directing a retrial is not immediately appealable to the Court of Appeals unless the appellant stipulates to be bound by the prior judgment in the event his further appeal is unsuccessful (CPLR 5601[c], 5602[b][1]; see Trezza v Metropolitan Transp. Auth., 23 NY3d 1011, 1011 [2014]; Maynard v Greenberg, 82 NY2d 913, 914-915 [1994]). It seems inconceivable that defendants would stipulate to a judgment carrying a half-billion dollar award against them.[FN4] Finally, even if Justice Higgitt is correct that neither side should have been granted summary judgment on their dueling pretrial motions, I agree with Justice Moulton that the record before us — more than 100 volumes, comprising nearly 50,000 pages — is more than sufficient to decide the case without holding another trial.

This is not a very substantive comment, but you are most lawyer-brained non-lawyer I know. It's impressive (and I mean this as a compliment), I had a career counselor once suggest I take my wordcel self down that path, and I'd have probably gone insane.

I don't think that merely summarizing court opinions is an appropriate basis for being considered "lawyer-brained".

My brother in $deity, you do this every week, and also in the Fun Thread. I look forward to those posts, but I think it makes a powerful statement.

Calling a random civil engineer who reads court opinions for fun and summarizes them for karma "lawyer-brained" is an insult to the multiple actual lawyer denizens of this forum.

According to the US Bureau of Labor Statistics:

Lawyers typically do the following:

  • Advise and represent clients in criminal or civil proceedings and in other legal matters

  • Communicate with clients, colleagues, judges, and others involved in a case

  • Conduct research and analysis of legal issues

  • Interpret laws, rulings, and regulations for individuals and businesses

  • Present facts and findings relevant to a case on behalf of their clients

  • Prepare and file legal documents, such as lawsuits, contracts, and wills

Lawyers, also called attorneys, research the intent of laws and judicial decisions and determine whether they apply to the specific circumstances of their client’s case. They act as both advocates and advisors for one party in a criminal (offense against the state or the nation) or civil (matters between individuals or organizations) proceeding.

An actual lawyer-brained person would argue with other users about complicated issues, would complain to the moderators regarding poorly worded rules, and would present his learned legal interpretations of various cases. I do none of those things.

Calling a random civil engineer who reads court opinions for fun and summarizes them for karma "lawyer-brained" is an insult to the multiple actual lawyer denizens of this forum.

If anything, it's a compliment to the actual lawyer denizens here. Or at least compared to the many other insults I've heard.

Hi, one of the 'actual lawyer' denizens speaking, you're doing great, please keep that up.

Being able to summarize legalese in human-readable terms is probably the most immediately useful part of being a lawyer.

Arguing over the definition of "lawyer-brained" is about the most lawyer-brained thing there is. I legitimately can't tell if you're trying to satirize yourself here. Either way, I love it.

…this can’t have been any easier than including a paragraph or two of your own commentary.

I will rule that it does clear the bar, but dang, I’d have preferred page numbers instead of block quotes.

This can’t have been any easier than including a paragraph or two of your own commentary.

I don't have any opinion on which judges are correct.

I’d have preferred page numbers instead of block quotes.

Preliminary "slip" opinions from New York's appeals panels are published in HTML without page numbers, not in PDF with page numbers. I have seen people refer to a 320-page PDF, but it's not official.

(Weirdly, New York's trial courts publish slip opinions in a mixture of HTML and PDF.)

I suppose you’d know better than I.

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