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NYC Mayor Indicted On 5 Federal Corruption Charges; Hurricane Helene Rapidly Intensifying, Expected To Hit FL Tonight; Appeals Court Hearing Arguments In Trump $454M Fraud Judgment. Aired 12-12:30p ET

Aired September 26, 2024 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[12:00:00]

SHIMON PROKUPECZ, CNN SENIOR CRIME AND JUSTICE CORRESPONDENT: But this is a key line, I think that is really troubling for the government. Is that the Turkish officials here, they built a multiyear scheme to buy favor from Eric Adams, a politician in this country. And final, they allege, when they needed a favor, which is that Turkish House, he came through for them, and that is really significant.

PAMELA BROWN, CNN ANCHOR: Yeah. And that -- I think that is going to be the biggest point of contention in this case for Mayor Adams and his team to fight claiming. Look, these weren't official acts. I wasn't doing it because of these benefits. This is just part of the job.

Thank you all so much for bringing your insights analysis. Thank you for joining us. You can follow me on Instagram, TikTok, X (@PamelaBrownCNN. Stay with us. Inside Politics with Manu Raju begins right now.

MANU RAJU, CNN ANCHOR, INSIDE POLITICS: Welcome to Inside Politics. I'm Manu Raju, in for Dana Bash. We're following major breaking news on multiple fronts. First, moments ago, New York City's mayor indicted. Prosecutors just announced five federal public corruption charges against Eric Adams, including bribery and wire fraud.

And moments from now, a New York appeals court will hear arguments of Donald Trump's push to overturn a civil fraud judgment, that could unravel his business empire and cost him half a billion dollars.

And then there's Hurricane Helene. 86 million people are on alert as it rapidly intensifies, and officials warn of life-threatening storm surges. We'll bring you updates from our team on the ground. And we're expected to hear later this hour from the FEMA director at the White House.

But I want to start with a high stakes appeal surge for Donald Trump, former president, fighting a $454 million fine after Judge Arthur Engoron ruled that he carried out a years' long scheme of inflating assets. Trump's lawyers say, the decision is egregious and unconstitutional, while the New York attorney general's office argues, it's backed by overwhelming evidence.

So, I'm lucky to be joined by great journalists and lawyers who've been following Donald Trump's legal problems in this case over for many years now, former federal prosecutor Shan Wu, CNN's Laura Coates, CNN's Paula Reid, and CNN's Kristen Holmes. Thank you all for joining me on this busy, busy news hour.

Let's start about this case. Just to remind viewers about what we expect to see here. In just a matter of minutes, Paula, and the arguments that we expect to hear from the insides --

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: So, attorneys for former President Trump are undertaking appeals against several civil judgments in addition to his criminal conviction in New York, but this specific case is about the Trump organization. They were hit with this enormous, multi hundred million dollar fine for a fraud.

This was a trial before a judge, not a jury, and it was really the most personal case for the former president that we've seen over the past few years, because this was about his empire, his business, not only his business, but also his family. His two adult sons were both also involved in this case.

Trump attended much of this trial. It covered it day in and day out. He also testified during this case, even though he faces many civil and criminal cases. This one really, I think, cut really to the heart for him because it's about his identity as a successful businessman.

And here, this judge found that he was committing fraud, that he was really lying about his net worth, about the value of some of his properties. And of course, it was expected that they would appeal, unclear, though they'll be successful.

RAJU: And just to remind viewers about the possible consequences for Trump right now, about this, in this New York civil fraud trial against him, up to $454 million in fine, plus interest. That's actually growing substantially each day. And the longer this goes on, the longer he bigger fine. He could get hit if he -- this is not overturned. In addition to all the other everything else, including a three-year ban on top roles in New York businesses.

Kristen Holmes, you cover the Trump campaign, and Trump is going to speak this afternoon. He's not expected to be here, but this afternoon, what are you hearing about his mindset?

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Well, first of all, it was give and take whether or not he was actually going to be here. There was a lot of interest from the former president in showing up today and listening to these oral arguments, something that he wanted to do.

Now, ultimately decided not to his campaign decided that he wouldn't, but he is going to speak at 4:30, and you can expect to hear him talk about this. We have seen this time and time again when Donald Trump has these legal cases, particularly now that they're kind of stretched out in terms of hearings appeals. He then goes to the camera --

RAJU: Kristen, I got to go to the hearing. Right now, we're taking it live. Let's listen in. JOHN SAUER, ATTORNEY FOR DONALD TRUMP: In the law of the case doctrine. Last year in Trump one at 217, 83rd, page 611, this court held that no liability could be assigned for transactions that were completed prior to February of 2016, or 2014.

UNIDENTIFIED MALE: Mr. Sauer, you're that -- that's premised on the fact that the statements of financial conditions cannot give rise on their own to a new violation of 63(12), right?

SAUER: That is correct.

UNIDENTIFIED MALE: Then, then why didn't we say that in the earlier decision on the motion to dismiss when we were reviewing the motion to dismiss?

SAUER: I think that's what the phrase the continuing wrong doctrine does not apply to delay or extend limitations period means, because that is the continuing wrong doctrine. To say that, like a 2017 or 2018 statement, you know, is a new discrete wrong that's distinct from the original transaction that closed way back in 2012. That just is the continuing wrong doctrine.

[12:05:00]

UNIDENTIFIED MALE: You don't think it applies to Ivanka Trump's arguments on that appeal or to the attorney general's now discarded theory that there was somehow a large, amorphous fraud that somehow told the statute of limitations all the way back to 2011. Isn't that statement applicable to either of those two arguments made on the motion to dismiss appeal?

SAUER: Your Honor, if I understand the question, the dismissal of Mr. Trump strongly supports our interpretation of the prior opinion, because, of course, the allegations with her and the complaint are virtually identical to the allegations against the other individual appellants.

So, if you look at the complaint, you see virtually identical claims and theories as to those two. And once this court held, she's not covered by the tolling agreement. She was completely dismissed from the case. The same should apply to anyone who's not covered by the tolling agreement here.

And I would emphasize further, though, that there's really two errors here because even if the continuing wrong doctrine did apply, it still doesn't allow the trial court to do what it did, which is to go way back in time to 2011 and 2012 and assign liability and major consequences, huge financial consequences, based on analysis that never looked at a 2017 or 2015 statement said, what liability flows from just that statement that comes much later in the course of conduct --

UNIDENTIFIED MALE: And ones which closed long ago?

SAUER: Exactly, right, Your Honor. And again, this court addresses squarely in the Henry decision, which is cited in Trump won. The CWCapital decision, which is cited in Trump won. What Henry says is, even if you apply the doctrine, it only applies to allow liability for statements within the limitations period.

But that's not what the trial court did here. That's not what the attorney general's office contended. They said, oh, we're going to apply the continuing wrong doctrine, that contradicts Trump ones. So that was the first error.

But then the second error is, once we've done that, we're going to pretend there's no statute of limitations at all, and we're going to go all the way back in time and assign crippling financial liability for transactions that concluded again in 2011 and 2012.

So, there's a direct contradiction, a direct disregard of the prior -- this court's prior opinion. It becomes really clear, I think. When you look at, for example, there's a citation of the Yin-Shing Woo decision by the trial court. And trial court says, this shows this is a continuous series of wrongs, each of which gives rise to its own liability.

When there is an opinion from this court, three months earlier, saying the continuing wrong doctrine does not apply. That makes it very good --

UNIDENTIFIED MALE: But again, shouldn't we have said, or wouldn't we have said these statements of financial condition that fall within the limitations period, don't give rise to a 63(12) claim. Shouldn't we have just said that would save everyone a lot of time?

SAUER: I think it's very -- I think that's clearly what the continuing wrong doctrine means if you applied. And again, the dismissal of Mr. Trump strongly supports that. In any event, Your Honor, even if the court doesn't agree with that, there's still a massive violation of the continuing -- of the statute of limitations.

Because, again, under Henry and versus Bank of America and under the CWCapital decision, the most the trial court could have done is looked at the 2017 statements and said, what liability can I assess that? Can I oppose that? And that is not at all what happened in the trial court. There was just a complete disregard of statute of limitations and an analysis that, again and again goes all the way back to 2012.

UNIDENTIFIED MALE: Even if we agree with you on the statute of limitations point that would not result in the complaint, its entirety being dismissed. There would still be several transactions that would be non-time-barred or timely. So, what is your response to or what is your strongest argument as to the Ford dismissal of those claims, those exit non-time-barred claims?

SAUER: There would be two of the 10 that were charged in the complaint that we've identified that would only apply to those covered by the tolling agreement, like Mr. Trump. If you're not covered by the tolling agreement, it's all gone, essentially. But in answer to Your Honor's question. We argue that there was a complete failure of proof on the critical element of capacity, or tendency to deceive, which is an element required of any 63(12). UNIDENTIFIED MALE: I can stop you there. Are you talking about a failure of proof at trial?

SAUER: Absolutely, Your Honor, as well as in summary judgments, we raise --

UNIDENTIFIED MALE: OK. But cause of action number one, which is the fraud-based claim under 63(12), liability on that was not tried, right? That was determined at summary judgment?

SAUER: That is correct, Your Honor. It's a challenge -- yes.

UNIDENTIFIED MALE: I don't believe we can look at the trial record to answer any questions about the sufficiency, of cause, of action number one, based on fraud. Don't we have to confine our review to the summary judgment motion record?

SAUER: Well, to the extent that the trial court in the final decision was repeatedly referring to reinforce its prior holding and summary judgment, yes. Now our position, of course, is that the failure of proof is even more defined, even more clear when you look at the summary judgment record.

For example, just a couple of citations to put this in context. Summary judgment record, page 13, 965, of the record is a Deutsche Bank witness uncontradicted, saying if his net worth had been as low as $1 billion for example, he would have gotten exactly the same deal. It would have been exactly the same transaction. That's uncontradicted. It's reinforced by the --

[12:10:00]

UNIDENTIFIED MALE: But could the trial court have credited Mr. Hayes statement? He's also Deutsche Bank employee, correct? And he said that, if the facts were -- if the SFCs were incorrect, then they didn't properly assess the risk on these loans. You said that. You would say that in your brief, I believe.

SAUER: He made a much more generic. If you look at that particular citation, he made a much more generic content that we want to make sure we're being, you know, compensated for our risk. What is not -- what is not disputed is the testimony that, if the net worth had been as low as 1 billion, and again, this is the testimony of Williams.

If the net worth had been as low as 1 billion, the deal would have been exactly the same. And so, it's astonishing. If you look at, for example, page 18, 82 of the record, which is their schematic that they cite nine times in their brief. They concede that President Trump's net worth range between -- on their view, $3 billion and $4.7 billion throughout this entire period, which is miles above --

UNIDENTIFIED MALE: If you're talking about -- if you're talking about summary judgment, isn't it basic that you don't make credibility determinations on the motion?

SAUER: Absolutely correct, Your Honor. And we have a repeated violation of that, as we point out in our briefing, for example. They're sort of kind of astonishing credibility determinations to disregard, unrebutted in the summary judgment record expert testimony.

So, if you look at 17, 916, the summary judgment affidavits of Bartov, where he explains how all these representations, virtually everything they challenge is consistent with generally applicable accounting standards. They're gap compliant statements.

That's unrebutted in the summary judgment record. It goes beyond merely being disputed, and you couldn't decide it by a credibility determination. There's really nothing to the contrary. And again, these errors are all reinforced at trial, so we are challenging both of those.

And if you look particularly at Professor Bartov's testimony, you have this clear explanation that all the things that they say are misleading are things that are specifically approved in ASC 274.

UNIDENTIFIED FEMALE: Creating an issue of fact, correct?

SAUER: Exactly right, Your Honor. That's exactly right, Your Honor. That's just -- at the very least, that's a disputed issue of fact. It isn't just Professor Bartov. There's a whole series. There's Professor Fleming. There's a whole series of experts. When you get to -- you know that, yes, Your Honor.

DIANNE RENWICK, PRESIDING JUSTICE, NY STATE SUPREME COURT APPELLATE DIVISION: Well, you finished that, but then I have a question for you about the scope of the statute.

SAUER: Go right ahead, Your Honor.

RENWICK: OK. Yeah. So, I just looking at the language of the statute, it says that it's enacted to promote the honesty and integrity and commercial marketplace in New York by stopping fraud and legal business. So, to accomplish this, the statute authorizes the attorney general that whenever a person shall engage in repeated fraudulent, I know that you're challenging that or legal acts, that they can bring such an action.

So why isn't the language of the statute here referring to the repeated and fraudulent illegal acts or persistent fraud or legality? Why doesn't that define the scope of the statute? Why do we need to go to harm or threat of harm?

SAUER: Yes, Your Honor. So, the standard is that, as this court held, for example, in general electoral, there has to be a capacity or tendency to deceive or atmosphere conducive to fraud. And what we've pointed out is that you have a situation where there were no victims, no complaints, no evidence of causation, materiality or reliance.

There were sophisticated counterparties who the understanding of the relevant marketplace, as this court said in the Nordbank decision, understood that they would be doing their due diligence. They did do their own due diligence. The uncontradicted testimony in the summary judgment record is, everything we did was independent. We didn't rely on the numbers.

That's the Williams testimony in the summary judgment record. All that is evidence as the -- for example, the Domino's Pizza decision that we cited, powerfully makes this point where all of that is lacking, all that is powerful evidence that there was no capacity or tendency to see, which ties into our point that everything --

PETER MOULTON, NEW YORK APPEALS COURT JUDGE: What about the issue --

SAUER: That's exactly the same.

MOULTON: Sorry, Counsel. What about deterrence? In other words, the A.G. would have the argument that maybe this -- these deals went down fine, as far as all the parties were concerned in these deals. But in the future, some deal might not go down well, and someone would be harmed by that. And so, we need to deter parties from putting in, you know, fallacious statements of financial state. Go ahead?

SAUER: May I respond that?

RENWICK: Yes.

SAUER: Just to answer that question, the deterrence interest goes entirely opposite direction, where we have a situation where the Supreme Court disregarded unrebutted expert testimony that these are gap compliant, these are consistent with accounting standards, which don't require perfection.

MOULTON: No. But the attorney general points out that whether or not they're consistent with GAP principles. It's the factual inaccuracies that are important. So, in other words, you might be following GAAP principles, but if you're -- if your data is terrible, then you're creating a fallacious statement.

SAUER: I respect to that completely dis -- I mean, that disregards, or at least misinterprets. Our expert testimony, which look at what they say is factual data that's misinterpreted, for example, appraisals. I mean, essentially, the Supreme Court said, if you got an appraisal in your file, you got to rely on that. You can't rely on your own independent judgment.

[12:15:00]

They say that's a factual inaccuracy. GAAP says the opposite. But at least that's the unrebutted testimony in the summary judgment record. And I would direct the court to page 17, 916, the beginning of Professor Bartov's summary of opinions on that.

DAVID FRIEDMAN, NEW YORK APPEALS COURT JUDGE: I want to turn your attention to a different subject, because your time -- your red light is on. I am trying to figure out about the valuation of Mar-a-Lago. I noticed that your expert, Mr. Mohns, valued it at over a billion dollars.

He also said that if it was in the hands of a new owner, club memberships, 500 club memberships could be sold. Generating $250 million and generates revenue of over $50 million a year in 2022 and 2023. And Supreme Court values it at $18 to $27 million because of restrictions. Do you have anything to say about those restrictions taking it down in value to such an extent?

SAUER: Those are -- I take two things in response to that. First, the Shubin affidavit directly addresses that that was improperly kind of disregarded.

FRIEDMAN: There are no restrictions on it. He says, there aren't -- Shubin says, there are no restrictions.

SAUER: He says, you have to interpret -- he says, the trial court looks at one document in isolation, the deed of conservation. Mr. Shubin says, you got to look at all five documents, including the historical practice there to understand what the actual policy is. And for example, they say he couldn't value it as a private residence, but he's been using as a private residence since 1995 continuously to this day.

But the more fundamental point is that valuation, where he relied on a tax assessment, illustrates the hazards to the marketplace as a whole here, from having the Supreme Court cite things like Chico Marx and Footnote Nine of the summary judgment position. I know it when I see its standard from obscenity law, from Justice Potter Stewart to decide what's a misrepresentation in these statements.

When you have expert testimony unrebutted that says these are gap consistent. If we have a system where you can issue perfectly accounting, you know clear -- basically, statements that comply with GAAP and your hell. Well, we have another standard. I know when I see it, that's good, that's bad. People can't do business in real estate. Thank you, Your Honor.

FRIEDMAN: Thank you.

RENWICK: Oh. I'm sorry. There's another question.

JOHN HIGGITT, NEW YORK APPEALS COURT JUDGE: Sir, are you asking us to draw any bright line rules as to the contour of the A.G.'s authority under 63(12) or are you asking us to scrutinize the evidence that was adduced either at summary judgment with respect to claim number one, and then at trial with respect to two through seven?

SAUER: The letter, Your Honor. So, argument is on the unique facts of this case. We cannot come to the conclusion that the plain language of the statute was violated. And we argue obviously that they raises constitutional questions as well under Grasso and under the excessive fines clause and so forth. We make all those interpretive arguments. But the fundamental point is, if you look at these unique facts on this case, the statute just doesn't cover it. If it does, it has no limitations.

UNIDENTIFIED MALE: Your position that under the facts of this case, 63(12) didn't support the taking the action that was taken?

SAUER: That's exactly right, Your Honor. Thank you. BRIAN ISAAC, APPELLATE ATTORNEY: Good afternoon, Your Honors. Brian Isaac, as you know, I represent the non-party appellant attorneys. My argument is not as sexy as the other arguments. But I think it's a hugely important argument to me as an appellate litigator.

I think that the New York state judicial system is the best in the world. I don't think it's better -- I don't think it's better arithmetically. I think it's better geometrically. And I think most of the credit goes to you, but some of it goes to us also. You can't do your job in exemplary fashion unless we do our job competently.

And every single lawyer who practices in New York knows it's not what you get at the trial level, it's what you keep in the Appellate Division. It is an absolutely horrible idea, in my judgment, to sanction attorneys making motions for summary judgment in cases where they have to do it to preserve the issue. Not only here, Your Honors.

UNIDENTIFIED MALE: You're going to take a chance on the appellate court saying, oh, they didn't preserve the issue.

ISAAC: Judge, it's not only here. This is a Trump case. Like him, don't like him, it doesn't matter. This case is a case that definitionally could go to the court of appeals. Look at 520 2b 41. Look at Selena against Erie preserve. Look at the number of amicus briefs that you had. I couldn't even read them. You have to preserve these issues.

And there's one fact that I want to bring to bring to your attention. I know you know it, but we probably should have brought it out in the brief more. You have interest of justice jurisdiction. You can if you want, decide unpreserved issues. You almost never do it.

[12:20:00]

If you don't believe me. Just run my name, Brian J. Isaac, in quotes, within eight put preserved, unpreserved, not preserved. See how good I've been. I'm not over five, I'm not over 10, I'm over three decades on that. But this court can do it. The Court of Appeals can't. They do not have any interest of justice jurisdiction. They are not allowed to decide mixed questions of law, in fact. They can't decide damage issues. They can't decide that a case is against the credibility of the evidence.

How can a competent attorney, and these people or competent attorneys' risk, a $440 million malpractice claim by not raising an argument. That's a tenable argument, and I'm not going to go over my time, because I don't -- but I just -- I wanted to say something to you.

The attorney general and the trial judge excoriated the lawyers for making a motion for summary judgment on disgorgement at the summary judgment level. One of the cases they rely on is people against Ernst & Young, which you know.

Can I read to you what you said? This isn't Brian Isaac. It's not Michael Ross who wrote the brief for me. This is the appellate division first apartment. I'm reading it verbatim, quote, therefore, while the attorney general does not allege direct injury to the public or consumers as a result of defendants alleged collusion with Lehman Brothers in committing fraud. The equitable remedy of disgorgement is available in this action.

Here's the key point. And it was premature to categorically precluded at the pleading stage. That's verbatim. That is exactly what these lawyers did. And to be sanctioned for it is just wrong and threatens the integrity of what I think is the greatest juridical system we've seen. You shouldn't allow it.

RENWICK: Thank you. So, you have 10 minutes. You have 10 minutes on this.

JUDY VALE, DEPUTY SOLICITOR GENERAL, NEW YORK STATE ATTORNEY GENERAL: I don't know if it's easier, Your Honor. Since we're the appellees, I'm happy to just take the full 15 minutes as the appellee and that --

UNIDENTIFIED FEMALE: OK.

VALE: I think that maybe simplifies things, that -- may I please the court, Judith Vale, for the New York Attorney General's office. All of the defendants repeatedly, violented --

UNIDENTIFIED MALE: Ms. Vale, can you identify any previous case which the attorney general sued under Executive Law 63(12) to upset a private business transaction that was between equally sophisticated partners, where the supposed victim had the ability and legal obligation to discover the allegedly misrepresented matters by conducting its own due diligence, where the supposed wrongdoer advised the supposed victim, through written disclaimers, to conduct its own due diligence and to draw its own conclusions, where the alleged misrepresentation almost entirely concerned inherently subjective valuations of properties and businesses.

VALE: Yes.

UNIDENTIFIED MALE: And where the victim never complained about any fraud in the transactional losses from it. Because I've gone through the cases, which you've cited, and all of them always involved the consumer protection aspect. It involved protection of the market.

UNIDENTIFIED FEMALE: And I want to add to his question, and little to no impact on the public marketplace.

VALE: Well, maybe I'll take that first, Your Honor, and work backwards. There was absolutely a public impact and a public interest here. There are at least four different public harms from the kind of misconduct here. First of all, when deceptively hidden risks are injected into the market, that does hurt the counterparties and there was harm to the counterparties here.

But it also harms other market participants and the market as a whole, because they are not understanding the risks. They are not pricing them in properly, and they are not prepared for what might happen if the true risks come to pass. Also, as the legislature made clear in passing 63(12), it was concerned with harms to the honest businesspeople. The honest businesspeople who don't do the misconduct, and therefore don't get the kind of benefit that they got here.

UNIDENTIFIED MALE: I suppose you're referring to the fact that Trump received a lower interest rate than he might otherwise have received. But doesn't -- didn't have -- haven't you yourself conceded that the assets were sufficient to get the lower interest rate of the private wealth management direction?

VALE: Absolutely not, Your Honor. That is not conceded one bit. And the evidence is to the contrary. If you look at the what the Deutsche Bank witnesses testified to, Haig said that the financial strength of the guarantor affects the pricing in terms of the loan that's in the record at 28167268. And it affects whether the private wealth management group would be allowed to do this deal at all. That's at 28150, of the record.

And you have to remember something. As the net worth statement -- as the statements were coming in, the Deutsche Bank was doing a stress test. So, if without the fraud, the net worth and liquidity would have started much lower. And then you do the stress test, and it takes it down much lower.

[12:25:00]

It does not look like such a strong financial guarantee anymore. It does not look like an ironclad guarantee anymore. And it was absolutely a fair inference that Deutsche Bank would not have given these loans without the financial strength being inflated. That was also evident from Haig and McCarty testifying about the incredible --

UNIDENTIFIED MALE: Doesn't Mr. Haig -- doesn't Mr. Haig testify that there were 14 factors, and this was the least important factor?

VALE: Well, there were -- certainly there are multiple factors that go into the risk assessment, but both for materiality and for disgorgement, the issue is not whether there's only one factor. There's often a lot of factors that are being considered.

For materiality, it's whether it's important to the overall total mix of information, and this was absolutely critical to the overall mix of information, not only because they were looking specifically at what the net worth was in order to decide the terms of the loan, in order to figure out whether they would take on this risk.

But also, the financial statements were coming in each year, and they were important, critical to the loans each year because Deutsche Bank was reassessing the risk every single year, and it was using --

UNIDENTIFIED MALE: I'm sorry. But what's being described sounds an awful lot like a potential commercial dispute between private actors?

VALE: Well, to go back to the first question about whether there's other examples of this, there are other examples of this. In the First American case, the attorney general brought a 63(12) case where the transaction at issue was between a very big bank, Wells Fargo, and a professional appraisal firm.

UNIDENTIFIED MALE: But it wasn't the debt, weren't -- wasn't the concern there that the public would ultimately be negatively impacted, affected by what those corporate actors were doing?

VALE: And that's -- that concern is here as well, because when you have hidden risks getting injected into the market, that hurts the market and honest participants in the market. And the legislature also decided, contrary to what defendants think, that making sure that business in New York stays honest is the way to attract and keep business.

RENWICK: To that point, the executive law 63(12). I just want to read a section of it. Well, not exactly, but was enacted to promote and protect honesty and integrity. It's the same question I asked the other side. In commercial marketplaces in New York, by stopping fraudulent and illegal businesses.

To accomplish this purpose, the statute authorizes the attorney general to bring civil enforcement proceedings on behalf of the people. Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on conducting or transacting of business.

I don't read harm or threat of harm in that, but the other side is saying that that is to be read into the statute. Are there any cases where the language harm or threat to harm limits the scope of the attorney general?

VALE: No, Your Honor. Not as to liability, and not in cases like this, where the -- what the attorney general is seeking is injunctive relief and disgorgement. Greenberg from the New York Court of Appeals and Ernst & Young from this court make clear that reliance by a counterparty and actual harm to a counterparty are not required for liability for any of the claims here.

And remember to think about the illegality claims as well, because it's not just fraud --

(CROSSTALK)

VALE: So, for the illegality claims, you look to the underlying penal law provisions. And for something like issuing false financial statements, there's no requirement for reliance, there's intent, and there's materiality, which was proved at trial.

But if someone issues a false financial statement to their counterparty, the counterparty gets it and is not fooled, picks up the phone and calls the enforcement authorities. The crime has still been committed, even though the counterparty didn't rely on it at all.

FRIEDMAN: So that's -- you're pointing to Ernst & Young. You're pointing to First American. Ernst & Young, you're dealing with the collapse of Lehman Brothers. First American you're dealing with an action brought against an appraiser were overvalued properties at the behest of a lender, perpetrating a scheme to induce unsophisticated consumers into taking out home loans that they could not afford.

It hardly seems that that justifies bringing an action to protect against President Trump, which is what you have here. I mean, you've got two really sophisticated parties in which no one lost any money. And that was the point in my initial question.

Every case that you cite, involved where there was damage to consumers, damage to the market price. You've got a scheme to get unsophisticated consumers to take out home loans. You got a collapse of Lehman Brothers. You don't have anything like that here.

VALE: Well, first of all, Your Honor, the statute doesn't require that whatsoever for liability. And the statute is written broadly because the legislature wants the attorney general to go in and stop fraud and illegality, whether it's --

UNIDENTIFIED MALE: Counsel, an example of what you're talking about, I think, is people versus Allen, isn't it? There was just a dispute among partners.