An appeals court has overturned a $500 million penalty previously imposed on President Donald Trump in a New York civil fraud trial last year.
Judge Arthur Engoron had mandated the substantial fine after finding Trump liable for significantly inflating the value of the Trump Organization’s assets to secure favorable loan terms.
In a detailed ruling issued Thursday, judges from the New York Supreme Court’s Appellate Division determined that while Trump was indeed liable for fraud, the nearly half-billion-dollar penalty was excessive and potentially violated constitutional safeguards against unduly severe punishment.
The case originated with Judge Engoron ordering Trump to pay $355 million, which, with accrued interest, exceeded $500 million.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state,” Judge Peter Moulton wrote.
On his social media platform, Truth Social, Trump characterized the decision as a “total victory.”
“I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision that was hurting Business all throughout New York State,” he stated. “It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.”
The New York Attorney General’s Office, which initiated the case against Trump, also presented the ruling as a partial success. They emphasized that Trump’s liability for fraud was upheld, and other non-monetary penalties remained in place. The office intends to appeal the decision on the fine to the state’s highest court, the Court of Appeals.
In a statement, the attorney general’s office affirmed that the judges “affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud.”
“It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit,” the office added.
In the original case, which involved Trump, his two adult sons, and the Trump Organization, Judge Engoron also barred Trump from serving as a company director or obtaining loans from New York banks for three years.
Thursday’s ruling preserved these and other nonmonetary penalties imposed by Judge Engoron.
The 323-page ruling, comprising three extensive opinions, revealed disagreements among the five judges on the panel.
The primary point of contention centered on the merits of the initial lawsuit brought by Attorney General Letitia James, who accused Trump and his sons of “persistent and repeated fraud.”
While several judges affirmed that she was “within her lawful power in bringing this action,” one judge believed the case should have been dismissed, and two advocated for a new trial with a more limited scope.
However, those two judges joined the decision to overturn the fine “for the sole purpose of ensuring finality,” Judge Moulton noted.
Judge Moulton also commented that American voters had “obviously rendered a verdict” on Trump’s political career, and “this bench today unanimously derails the effort to destroy his business.”
The ruling comes nearly a year after the panel heard oral arguments on the appeal, during which several judges expressed skepticism regarding the civil fraud case.
Eric Trump, Trump’s son who was also involved in the case, celebrated the decision in a social media post.
“After 5 years of hell, justice prevailed!” he wrote.
Will Thomas, an assistant professor of business law at the University of Michigan, described the ruling as a “judicial version of kicking the can down the road.”
“By its own admission, the Appellate Courts is punting the real legal decision up to the New York Court of Appeals, noting that its unusual decision was made ‘for the sole purpose of ensuring finality,'” he stated.
“It’s hard to take any conclusions from this … except that we’ll have to continue to wait that much longer to find out the ultimate outcome in James v Trump.”
In September 2023, Judge Engoron determined that Trump was liable for business fraud, concluding that he had misrepresented his wealth by hundreds of millions of dollars. A subsequent trial in 2024 was held to determine the appropriate penalty.
In one specific instance, the judge found that Mr. Trump’s financial statements had falsely claimed that his Trump Tower penthouse was almost three times its actual size.
Trump has maintained that the case, brought by Attorney General James, a Democrat, was politically motivated.
Mark Zauderer, a veteran appellate attorney in New York, suggested that Thursday’s unusually lengthy ruling reflected the unique challenge of handling a significant fraud case involving a former president.
“Would you have a 300-page opinion if this were Joe Smith the businessman, and not Donald Trump?” Mr. Zauderer questioned.
Additional reporting by Kayla Epstein
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