A New York appeals court has thrown out the massive civil fraud penalty against Donald Trumpruling on Thursday in the state’s lawsuit accusing him of exaggerating his wealth.
The decision, which was not unanimous, came seven months after the Republican returned to the White House. A panel of five judges in New York’s mid-level appellate division said the verdict, which stood to cost Trump more than $515m and rock his real estate empire, was “excessive”.
After finding that Trump engaged in fraud by flagrantly padding financial statements that went to lenders and insurers, judge Arthur Engoron ordered him last year to pay $355m in penalties. With interest, the sum has topped $515m.
The total – combined with penalties levied on some other Trump Organization executives, including Trump’s sons Eric and Donald Jr – now exceeds $527m, with interest.
“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,” judges Dianne T Renwick and Peter H Moulton wrote in one of several opinions shaping the appeals court’s ruling.
Engoron had also barred Trump and his sons from corporate leadership roles for several years. Those restrictions were paused pending appeal, and Trump delayed payment by posting a $175m bond.
The appeals court dismissed the financial penalty imposed by Engoron but left room for further appeals to the state’s highest court. The panel took nearly 11 months to issue its decision, far longer than is typical.
Trump has denied wrongdoing, calling himself “an innocent man” and claiming the case was a “fraud on me”. He continues to argue that the lawsuit is politically motivated.
In the aftermath of the ruling making headlines, Trump posted on Truth Social that it was a “great win for America”. In another post, he claimed: “these were all Political Trials in an effort to destroy my viability as a Presidential Candidate before, during, and after the Election.” He continued to claim that the Biden-Harris administration attacked him and that “all of these Judges should be ashamed of themselves for allowing them to happen.”
Trump continued with another lengthy screed, calling the penalty “a Political Witch Hunt, in a business sense” and “a Case of Election Interference by the City and State trying to show, illegally, that I did things that were wrong when, in fact, everything I did was absolutely CORRECT and, even, PERFECT.”
That same post also took aim at New York attorney general Letitia James and judges Juan Merchan and Lewis Kaplan.
James, who brought the suit on the state’s behalf, has said the businessman turned politician engaged in “lying, cheating, and staggering fraud”. On Thursday afternoon, she released a statement saying she will be seeking an appeal.
“The First Department today affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud. The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York. It should not be lost to history: yet another court has ruled that the president violated the law and that our case has merit,” James’s statement read.
Trump’s justice department has subpoenaed James for records related to the lawsuit, among other documents, as part of an investigation into whether she violated the president’s civil rights. James’s personal attorney, Abbe D Lowell, has said that investigating the fraud case is “the most blatant and desperate example of this administration carrying out the president’s political retribution campaign”.
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Joining Trump in celebration was the former Trump lawyer Alina Habba, who called the ruling “a resounding victory for President Trump and his company”.
“The court struck down the outrageous and unlawful $464 million penalty, confirming what we have said from the beginning: the Attorney General’s case was politically motivated, legally baseless, and grossly excessive,” Habba said on X. “President Trump won – and justice won with him.”
Trump’s defense maintains his financial statements were not misleading, pointing to disclaimers and the fact that lenders were repaid. During an appellate court hearing in September, Trump’s lawyers argued that many of the case’s allegations were too old, an assertion they made unsuccessfully before trial.
He also argued his reported assets were underestimated, despite discrepancies such as tripling the size of his Trump Tower penthouse.
State lawyers countered that the inflated figures misled lenders into riskier deals and gave Trump unfair advantages over honest borrowers. They argue the penalty was justified by the profits he gained through favorable loan terms offered to wealthy borrowers. The case is one of several legal challenges Trump has faced. In January, he received an unconditional discharge in his criminal hush-money case, leaving his conviction intact but avoiding jail or fines. He is appealing against the conviction.
Separately, a federal appeals court upheld a jury’s finding that Trump sexually abused and defamed writer E Jean Carroll, affirming a $5m judgment. He lost a subsequent attempt to get the court to reconsider the rejected appeal in June.
The president is also appealing another verdict that requires him to pay Carroll $83.3m for additional defamation claims.
