It made big news last week when a panel of N.Y.S. Appellate Division judges threw out the $500 million civil fraud penalty against President Trump imposed in the celebrated case brought by N.Y.S. Attorney General Letitia James. James had maintained that Trump persistently overvalued his properties that supported his loan applications to banks in order to secure more favorable interest rates and that this amounted to actionable civil fraud and requested the presiding judge, Arthur Engoron, to impose the unprecedented, massive fine.
For us and most other observers, the case against Trump was part of the lawfare effort to exploit various laws in order to destroy Trump’s political career. In fact, when Ms. James first ran for the AG position, she said that she was running in order to be in a position to bring him down. What struck us was that the banks did not claim to have been misled and no money was lost and the law had been only previously to protect every day, unsophisticated investors from being fleeced. So, we could not fathom the rationale for bringing the case or the size of the fine. Nor did Judge Engoron, who thought differently, provide any.
At all events, the Appellate Division seems to have had the same concerns.
Judge Peter Moulton wrote in the lead opinion – there were three separate ones – that “While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half-billion-dollar award to the state… A fine cannot be proportionate to the offense [which it is supposed to be] unless it is reasonably calculated to encompass only the actual proceeds that defendants realized from their fraud.”
But it was left to Judge David Friedman to bring it all home: “[The law applied] against Mr. Trump” has never been used in the way it is being used in this case – namely to attack successful, private, commercial transactions, negotiated at arm’s length between highly sophisticated parties and all profited. Plainly, Ms. James’s ultimate goal was the derailment of President Trump’s political career and the destruction of his real estate business.” All in all, a remarkable declaration.
Friedman had pushed for the case to be dismissed, “My colleagues are empowering [AG James’s] office to attack at will, virtually any business transaction, regardless of its success or failure, and in the absence of any discernible effect on the public.”
However, although the court, by invalidating the fine, literally gutted the lawsuit and neutralized it, there was not a majority who were prepared to formally throw out the case altogether. This, notwithstanding that even the judges who did not want to dismiss the case entirely still agreed that the monetary penalty was unconstitutionally excessive.
Yet, as expected, the liberal media led by The NY Times highlighted the failure of the court to dismiss the case, headlining its front-page report on the decision, “Court Halts Trump’s Half-Billion-Dollar Penalty, but Upholds Fraud Case.”
But, given the fact that there were no defenders of the size of the fine, and the unprecedented application of the statute, it would seem that the lawsuit has all the earmarks of an impermissible selective prosecution and we trust that the Court of Appeals, where the case is likely headed, will take due note.
