In a significant legal development, a New York appeals court has dismissed a civil fraud penalty that could have cost former President Donald Trump and his business associates nearly half a billion dollars. The court characterized the fine as “excessive,” exemplifying the ongoing legal battles surrounding Trump and his business dealings.
On Thursday, a five-judge panel from New York’s Appellate Division reached its decision after deliberating Trump’s appeal for almost 11 months. The ruling invoked the Eighth Amendment of the United States Constitution, which prohibits excessively harsh penalties. The case originated from a civil lawsuit initiated by New York Attorney General Letitia James, who accused Trump of inflating his financial records to gain advantages from various financial institutions, including banks and insurance companies.
A lower court had previously mandated Trump to pay $355 million in penalties, which, due to accumulating interest, had escalated to approximately $515 million. The appeals court panel expressed concern over this amount, questioning its validity. Judges Dianne T. Renwick and Peter H. Moulton stated, “While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, the court’s disgorgement order is an excessive fine that violates the Eighth Amendment.”
Following the court's ruling, Trump took to his social media platform, Truth Social, to express his approval. He labeled the decision as a “TOTAL VICTORY” in the case led by Letitia James, claiming that the court demonstrated the courage to overturn what he called an “unlawful and disgraceful” penalty that adversely affected businesses throughout New York State.
While the penalty was dismissed, the judges were divided on the lower court’s findings, which identified Trump and his co-defendants as having misrepresented their wealth in “fraudulent ways.” Republican-appointed judge David Friedman accused James of aiming to undermine Trump’s political career and destroy his real estate business.
The panel's decision leaves room for further appeals, and Letitia James’s office has announced its intention to challenge the ruling at the Court of Appeals. The statement emphasized that another court has recognized that Trump violated the law and that their case maintains merit.
Judge Arthur Engoron, who presided over the original case, described the fraudulent activities as shocking. In his 92-page ruling, Engoron criticized Trump’s refusal to acknowledge discrepancies in his financial documents and highlighted the defendants’ apparent lack of remorse. He stated, “Their complete lack of contrition and remorse borders on pathological.” Engoron concluded that while plaintiffs inflated asset values for profit, the infractions were not as severe as more criminal actions.
Trump and his co-defendants, including his sons Eric Trump and Donald Trump Jr., faced a combined financial penalty exceeding $527 million, inclusive of interest. Although Engoron’s ruling left the Trump Organization intact, it barred Trump’s sons from holding executive roles for two years. At the time, Trump was campaigning for re-election in 2024 and branded the fraud case as “election interference.”
While denying any wrongdoing, Trump is currently embroiled in several other legal battles, including civil cases related to sexual abuse and defamation brought by writer E. Jean Carroll, and multiple criminal indictments on both state and federal levels.
Letitia James, the first woman and first Black person to serve as New York’s attorney general, has been a prominent figure in Trump’s legal struggles. Since her election in 2019, she has pursued investigations into Trump’s business practices, asserting that he engaged in deceptive practices. In a February 2024 statement, she reaffirmed her commitment to ensuring that “everyone must play by the same rules,” regardless of wealth or power.
In recent weeks, the Trump administration has escalated pressure on James, reportedly issuing a subpoena for records linked to her investigations. Trump has publicly criticized James, dubbing her actions as politically motivated and racially charged.
The recent court ruling signifies a critical moment in the ongoing legal challenges faced by Donald Trump and his associates. As both sides prepare for potential further appeals, the implications of this case extend beyond financial penalties, impacting Trump's political future and the broader discourse on accountability for powerful figures in business and politics.
