THE VIOLATIONS OF EXECUTIVE LAW 63 (12) BASED ON FALSE “STATEMENTS OF FINANCIAL CONDITION” (SFC’S) SUBMITTED TO OBTAIN LOANS FOR TRUMP ENTITIES WERE AFFIRMED ON APPEAL; HOWEVER THE RELATED “DISGORGEMENT” OF NEARLY HALF-A-BILLION DOLLARS WAS DEEMED AN EXCESSIVE FINE AND WAS VACATED (FIRST DEPT).

The First Department, in three decisions issued by a divided court with no majority, determined the defendants violated Executive Law section 63 (12) by submitting deceptive business records to banks, insurance companies, and the NYC Parks Department. The suit alleged, for example, President Donald Trump submitted false “statements of financial condition” (SFC”s) to banks to obtain better loans for Trump entities. Supreme Court had ordered “disgorgement” of nearly half-a-billion dollars. The First Department held the “disgorgement” was an improper, excessive “fine” and vacated it. The fraud-based violations of the Executive Law remain standing, however. All expect the case to go to the Court of Appeals:

Defendants appeal from two decisions (and the resulting judgment) holding that defendants violated Executive Law § 63(12) by repeatedly submitting deceptive business records to banks, insurance companies, and the New York City Parks Department.

Presiding Justice Renwick and I [Justice Moulton] find that Supreme Court correctly found defendants liable. We agree with Supreme Court that the Attorney General acted well within her lawful power in bringing this action, and that she vindicated a public interest in doing so. We also find that Supreme Court properly ruled only on claims that are timely under the applicable statute of limitations. However, we would modify the remedy ordered by Supreme Court. While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, the court’s disgorgement order, which directs that defendants pay nearly half a billion dollars to the State of New York, is an excessive fine that violates the Eighth Amendment of the United States Constitution.

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. People v Trump, 2025 NY Slip Op 04756, First Dept 8-21-25

Practice Point: Here “disgorgement” of nearly a half billion dollars for fraud-related violations of the Executive Law (stemming from submission of false “statements of financial condition” to obtain loans for Trump entities) was deemed an excessive fine and was vacated by the First Department.