Trump appeals massive civil judgment against real estate empire

Former President Donald Trump formally notified the New York courts on Monday he will appeal a judgment that found his real estate business liable for rampant fraud and ordered him to pay $364 million in fines.

Lawyers for Mr. Trump, his two eldest sons and the Trump Organization are hoping the First Judicial Department Appellate Division will overturn the judgment, saying Mr. Trump was politically targeted for prosecution and the ruling will ruin the Empire State’s legal and business reputation.

“We trust that the Appellate Division will overturn this egregious fine and take the necessary steps to restore the public faith in New York’s legal system,” said Trump legal spokeswoman and lawyer Alina Habba.

Judge Arthur Engoron this month sided with New York Attorney General Letitia James, a Democrat who alleged Mr. Trump repeatedly submitted false information on statements of financial condition to gain favorable terms on loans and insurance.

Mr. Trump’s attorneys say the judge was biased against the former president and his associates from the start and misinterpreted basic real estate practices. They said banks were happy to lend money to Mr. Trump and were repaid, no victim exists.

The former president recently got a boost from businessman and “Shark Tank” star Kevin O’Leary, who said the ruling will scare investors away from New York.

“We’re very worried, every investor is worried because where is the victim? Who lost the money? This is some arbitrary decision a judge made,” Mr. O’Leary said on Fox Business. “What does this say about the bar? About the legal bar in New York? Aren’t they going to question this judge? What is this?”

During a multiweek trial, Mr. Trump defended his practices by saying, if anything, he undervalued properties and that banks made money off him, so no one was hurt. He also pointed to disclaimers on his financial statements that urged lenders to do their due diligence.

Mr. Trump says Ms. James should be focused on migrant-fueled crime in her state instead of his business.

“Letitia James is a horribly corrupt attorney general, and it’s all having to do with election interference,” Mr. Trump said from his Mar-a-Lago estate in Florida after the ruling. “Frankly, if we are not successful [on appeal] New York state is gone. People are moving out of New York state. Because of this, they are going to move out at a much faster rate.”

The debate around whether Mr. Trump was unfairly targeted reached Albany, where New York Gov. Kathy Hochul reassured similar businesses they wouldn’t fall into legal hot water.

“I think that this is really an extraordinary, unusual circumstance that the law-abiding and rule-following New Yorkers who are business people have nothing to worry about, because they’re very different than Donald Trump and his behavior,” said Ms. Hochul, a Democrat.

Even though banks appeared happy to work with Mr. Trump, Ms. James took on the ex-president under a New York state law known in the legal code as 63(12). 

It empowers the state attorney general to go after entities that engage “in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business.”

Ms. James also has wielded the law against “pharma bro” Martin Shkreli and ExxonMobil.

Judge Engoron has defended his decision in applying the law, saying he narrowed in on blatant falsehoods in Mr. Trump’s financial documents.

Falsehoods, the judgment said, included misrepresenting the size of Mr. Trump’s Manhattan penthouse; crafting a budget for 40 Wall Street that showed a positive net operating income despite it running repeated deficits; valuing Trump Park Avenue based on an offering price that failed to reflect that the apartments were rent-restricted; and valuing Mar-a-Lago in Florida as if it could be sold as a single-family residence despite deed restrictions that require it to be a social club.

The ruling, if upheld, would be a financial blow to Mr. Trump as he pursues the GOP nomination for president.

With interest, the judgment exceeds $400 million. Combined with the judgment in a defamation case brought by former magazine columnist E. Jean Carroll, it brings Mr. Trump’s legal bills to around half a billion dollars.

Judge Engoron also suspended Mr. Trump from serving as an officer or director of a New York company for three years. His sons Eric Trump and Donald Trump Jr. are suspended from similar roles for two years, making it difficult for the Trump Organization to make major decisions.

Mr. Trump has 30 days to come up with the money or guarantee the funds through a bonding company.

The former president’s team wanted Judge Engoron to delay the enforcement of the judgment. He refused.

“You have failed to explain, much less justify, any basis for a stay,” Judge Engoron wrote to the attorneys. “I am confident that the Appellate Division will protect your appellate rights.”