Trump civil fraud fine thrown out by New York appeals court

A New York state appeals court on Thursday tossed out a massive monetary fine for civil business fraud imposed on President Donald Trump, his company, and other defendants related to a lawsuit by state Attorney General Letitia James.

The appeals court said the eye-popping penalty — which rose to more than $500 million since it was imposed in early 2024 — violates the U.S Constitution‘s Eighth Amendment, which prohibits “excessive fines.”

But the court in the same ruling upheld Manhattan Supreme Court Judge Arthur Engoron‘s finding that Trump and the others committed business fraud by overstating the value of real estate assets owned by the Trump Organization to boost Trump’s purported net worth. Those actions helped the company get better loan terms and other financial benefits.

The ruling Thursday also upheld nonmonetary sanctions imposed by Engoron on the defendants, saying they were “well crafted to curb defendants’ business culture.”

The decision was issued by a five-judge panel of the First Judicial Department of the New York Supreme Court’s Appellate Division.

James said she will ask the state’s highest court to overturn the decision related to the fine.

The ruling, which came 11 months after oral arguments in the case, was split several ways, with one judge, David Friedman, saying he would have dismissed James’ lawsuit outright.

In a concurring opinion on the fine being voided, Judge Peter Moulton wrote, “While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half-billion-dollar award to the state.”

James “did not carry her initial burden” of establishing the rough total of the profits “causally connected” to the defendants’ violations, Moulton wrote.

“Indeed, the calculation of the disgorgement in this case was far from a reasonable approximation,” Moulton wrote.

Trump crowed about the ruling in a post on Truth Social.

“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” Trump wrote.

“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,” the president said.

“Others were afraid to do business there. The amount, including Interest and Penalties, was over $550 Million Dollars. It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.”

Eric Trump, the president’s son and one of the defendants in the lawsuit, in a social media post, wrote, “Total victory in the sham NY Attorney General case!!! After 5 years of hell, justice prevailed!”

Eric Trump, with his brother Donald Trump Jr., operates The Trump Organization. Both Donald Trump Jr. and the company were defendants as well.

James, in her statement saying she would ask the New York Court of Appeals to restore the fine, also said, “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,” James said.

“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 trial judge, Engoron, in February 2024 ordered Trump to pay around $454 million in total penalties after holding him liable for business fraud.

Engoron found that Trump’s statements of financial condition, signed between 2014 and 2021, overvalued his assets from between $812 million and $2.2 billion.

With interest, the penalty imposed on Trump and other defendants in the case has grown to more than $500 million.