The appeal of Donald Trump’s New York business fraud case has become a test of how far states can go to police alleged misconduct in private financial transactions. Attorneys general from 17 states are urging the New York Court of Appeals to uphold the case, arguing that enforcement authority doesn’t depend on whether lenders or insurers complain of harm.
The case, brought in 2022 by New York Attorney General Letitia James under the state’s Executive Law, concerns financial statements that allegedly overstated the value of Trump’s Mar-a-Lago property and Trump Tower penthouse. A September 2023 ruling by Manhattan Justice Arthur Engoron found Trump, his sons and other defendants liable for fraud, concluding that they had inflated Trump’s net worth by billions of dollars annually on records submitted to banks and insurers.
Dispute over who must be harmed
Trump’s appeal argues that the state should not have pursued the case because the financial institutions involved were sophisticated, did not claim they had been defrauded and received full payment. The appeal says the Trump Organization paid all principal, interest and insurance premiums on time or early, and that the counterparties earned more than $100 million in profits.
His lawyers also argue that New York has previously used the Executive Law to address persistent fraud or illegality involving widespread consumer deception and harm. They describe the action as politically motivated. “None of the four lenders or insurers ever complained—before, during, or after trial—that they were even injured, let alone defrauded,” the lawyers wrote, urging the court to end the case.
The state attorneys general counter that New York’s law gives the state a broader role in preventing fraud, including when private parties choose not to seek remedies themselves. Their brief says states have a “well-recognized sovereign interest in preventing all kinds of fraud,” particularly in banking and insurance, and that this public interest applies even when the parties are “ultrasophisticated.”
Connecticut Attorney General William Tong said the authority should apply regardless of a target’s wealth or the identity of the alleged victim. “Fraud is fraud, whether you’re cheating an individual or a multibillion-dollar bank,” he said.
Broader state enforcement stakes
The brief was joined by attorneys general from Arizona, California, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Vermont, Virginia and Washington. They point to laws in many states that authorize attorneys general to pursue deceptive business practices even without a complaint from those directly involved.
That argument puts the case’s reach beyond the parties’ claims about whether the banks and insurers suffered losses. The court’s decision could clarify how New York applies its fraud statute when counterparties are sophisticated and do not seek redress, a point with wider relevance to state enforcement of business conduct.
Appeal and penalty history
Trump asked the state’s highest court in April to vacate the liability finding. His appeal also challenges the credibility of key witness Michael Cohen, his former lawyer, citing a Substack post in which Cohen said he felt “compelled and coerced” to testify against Trump. Trump has accused James and Engoron of bias against him because he is a Republican.
Last August, a Manhattan appellate court vacated the $464 million penalty imposed in the case, ruling that the amount was unconstitutionally excessive. The court nevertheless found that Trump had broken the law by inflating asset valuations. A lower-court order temporarily barring Trump and his sons from serving as corporate officers in New York has also remained on hold.
The pending appeal therefore concerns the liability finding and the state’s enforcement authority, while the financial penalty has already been set aside. The New York Court of Appeals will determine whether the case can stand under the state law the attorneys general say is intended to reach fraud even when private counterparties report no injury.
