By Jonathan Stempel

NEW YORK A New York appeals court on Tuesday signaled it was unlikely to grant Donald Trump's request to dismiss state Attorney General Letitia James' civil lawsuit accusing him, his family business and three of his children of a "staggering" fraud.

The Appellate Division in Manhattan was considering Trump's appeal from a January lower court ruling allowing James to sue.

James accused Trump of lying to lenders and insurers from 2011 to 2021 about asset values at the Trump Organization, as well as his own net worth.

She is seeking at least $250 million of damages, and to stop the Trumps from running businesses in New York. Trump's children Donald Jr, Eric and Ivanka are also defendants.

Christopher Kise, a lawyer for Trump, told the five-judge appeals court panel that James sued too late, and lacked broad authority to police a wide range of transactions that the parties thought were legitimate.

"The greater risk is allowing a government official to come along five or six or seven or eight or 10 years later to interject itself into successfully consummated private transactions," he said.

But some judges suggested that James had a role, and that whether fraud occurred could be decided at the scheduled Oct. 2 trial.

"You keep saying that because the two parties to the alleged fraud aren't complaining of it, therefore the AG can't address it," Justice Saliann Scarpulla told Kise. "That is the argument that I'm having difficulty accepting."

Judith Vale, a lawyer for James, warned against giving the attorney general no oversight.

"These transactions don't take place in a vacuum," she said. "There are real estate markets, there are insurance markets, there are banking markets. The honest participants ultimately end up subsidizing the cost when there is fraud and dishonesty."

The appeals court appeared more receptive to arguments by Ivanka Trump's lawyer Bennet Moskowitz that James may have sued her too late.

James' case is separate from a 34-count criminal indictment obtained by Manhattan District Attorney Alvin Bragg against Trump over hush money payments to a porn star, to which Trump has pleaded not guilty.

Trump is the Republican front-runner for the 2024 presidential election. He has called the probes by James and Bragg, who are both Democrats, a "witch hunt."

The appeals court did not say when it will rule.

The case is New York v Trump et al, New York State Supreme Court, Appellate Division, 1st Department, No. 2023-00717.

(Reporting by Jonathan Stempel in New York; Editing by Howard Goller)