New York

2 Looming Rulings Could Shape Trump’s Fraud Trial in New York

After four years of investigating and litigating, Letitia James was finally due for her day in court against Donald J. Trump.

But with that day fast approaching — a trial in her civil fraud lawsuit against him is scheduled to start on Oct. 2 — the former president’s lawyers threw a legal Hail Mary that could delay the case and seeks to gut it altogether.

The last-ditch move that left the trial in limbo came in a familiar form for the famously litigious Mr. Trump: He filed a lawsuit.

His targets were Ms. James, the New York attorney general, and the judge overseeing the trial, Arthur F. Engoron. Mr. Trump’s lawsuit argues that they ignored a June appeals court ruling that excused Mr. Trump’s daughter, Ivanka, from the case and also raised the notion that some of the accusations against the former president and his company might be too old to go to trial.

Mr. Trump’s lawsuit — and in turn the fate of Ms. James’s case against him — hinges on a passage in the June appeals court ruling that has become a legal Rorschach test of sorts, in which each side sees what they want. Mr. Trump’s lawyers are convinced that the June ruling effectively tossed out the claims against him, while Ms. James’s team has argued that it had little effect on the accusation at the heart of her case — that Mr. Trump overstated his net worth by billions of dollars in his annual financial statements.

Christopher M. Kise, a lawyer for Mr. Trump, recently argued to Justice Engoron that Ms. James’s legal strategy was predicated on ignoring the appeals court’s decision.

“The foundation of the case is ignore everything except for what they want you to focus on,” he said. Mr. Kise separately asked the appeals court to delay the trial while it considered Mr. Trump’s lawsuit against Ms. James and Justice Engoron. One of the appeals court judges granted a provisional delay, which teed up the case to be considered by the full appellate court panel.

The attorney general’s office called Mr. Trump’s lawsuit “brazen and meritless,” saying in court papers that it reflected a complete misunderstanding of the June appeals court decision. The decision, Ms. James’s office argued, left it up to Justice Engoron to decide which claims against Mr. Trump can stay and which are so old that they must go.

The high-stakes battle is coming to a head this week, with Justice Engoron expected to issue his ruling by Tuesday. He has already expressed sympathy with some of Ms. James’s arguments: At a court appearance last week, addressing Mr. Kise, Justice Engoron pounded his fist in apparent frustration and remarked, “You cannot make false statements and use them in business.”

After Justice Engoron decides which of Ms. James’s claims can proceed to trial, the appeals court is expected to rule on Mr. Trump’s lawsuit against Ms. James and Justice Engoron, perhaps as soon as Thursday, according to a spokesman for the New York State Court system.

When the appeals court issues its ruling, there is no telling whether it will resolve the confusion about its original decision in June. It could simply decide that the timing of Mr. Trump’s lawsuit was improper and allow the trial to proceed as planned, potentially with major repercussions for the future of the former president’s family business. (Ms. James is seeking a roughly $250 million penalty and wants to oust Mr. Trump and his adult sons from leading their own company).

But if the appeals court sides with Mr. Trump, it could delay or defang the case before the trial even begins.

Some legal experts said that was unlikely to happen. David B. Saxe, who served nearly 20 years on the same appeals court, said the lawsuit seemed like an attempt to interfere with Justice Engoron’s implementation of that court’s June order. “I think it won’t fare well,” he said.

A lawyer for the New York court system, Michael Siudzinski, declined to comment on the lawsuit against Justice Engoron.

The legal battle traces back to last year, when Ms. James sued Mr. Trump, his family business and three of his children, including Ivanka Trump. Ms. James accused them of lying about the former president’s net worth to secure favorable loans and other financial benefits. The Trumps, she said, fraudulently inflated the value of his assets, some years by more than $2 billion, on annual financial statements they submitted to banks and insurers.

Ms. James accused the Trump family business of lying about the former president’s net worth.Credit…Evan Vucci/Associated Press

Mr. Trump’s lawyers moved to dismiss the complaint, arguing in part that Ms. James was dredging up conduct that was so old that she had missed her window to bring the case. They also tried to change judges — they no longer wanted to contend with Justice Engoron, who oversaw issues that arose during the investigation and who held Mr. Trump in contempt last year for failing to comply with a subpoena.

But Justice Engoron remained on the case and rejected Mr. Trump’s arguments for dismissal, prompting the former president to appeal.

Mr. Trump’s daughter, Ms. Trump, represented by her own legal team, appealed as well. And in June, the appeals court agreed to dismiss her from the case, ruling that the claims against her were too old to proceed.

But the decision was less clear-cut when it came to her father.

The appeals court raised the prospect that some of the claims against Mr. Trump, his two adult sons and his company might also be too old. But instead of explicitly throwing out those claims, the court’s ruling used an opaque legal term.

The court ruled that any claims that “accrued” before February 2016 were off limits to Ms. James and effectively left it up to Justice Engoron to sort out what that meant for Mr. Trump. The decision also left Justice Engoron to decide whether Mr. Trump was bound by an agreement between his company and Ms. James — which he did not personally sign — that allowed her to reach back and include conduct that “accrued” as early as July 2014.

Soon, the meaning of “accrued” came up for debate among the lawyers scrutinizing the decision. The appeals court tried to explain itself in its ruling, defining “accrued” as the point at which “transactions were completed.” Which led, naturally, to confusion about the meaning of both “transactions” and “completed.”

It did not stop there. Another, even more convoluted legal concept was introduced in the appellate court ruling as well: the so-called continuing wrong doctrine. Ms. James had argued that Mr. Trump’s financial statements — which she said were chock-full of fraud — represented a series of “continuing wrongs” because he submitted them annually to banks after receiving the loans. So even if Mr. Trump received the loans before February 2016, his annual submissions of the financial statements allowed Ms. James to cite the loans at trial.

But the appeals court wrote that the continuing wrong doctrine did not extend the legal deadline for filing the case, commonly known as the statute of limitations.

To Mr. Trump’s lawyers, that sentence was the magic bullet they needed to kill the case. Given that the majority of the loans that Ms. James included in her lawsuit were completed before February 2016, they filed papers with Justice Engoron over the summer arguing that the appeals court had effectively thrown out most of the attorney general’s case.

Amid all the confusion, Mr. Trump’s lawyers also recently asked Justice Engoron to delay the trial. They argued that until the outstanding questions are answered, they do not know exactly who was going on trial, or for what.

In asking for the trial delay, they made their beliefs about the appellate ruling plain: “This clear directive leaves no doubt certain of the N.Y. A.G.’s claims are in fact dismissed,” they wrote of the appeals court’s ruling, adding that Justice Engoron had “no discretion.”

Justice Engoron signaled his disagreement in a terse handwritten order in which he declined to delay the trial: “Defendants’ arguments are completely without merit,” he wrote.

Soon after, Mr. Trump sued him.

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