Appeals court overturns major civil fraud fine against President Donald Trump
A New York appeals court on Thursday wiped out a massive financial penalty against President Donald Trump but upheld a key part of a lower court’s ruling that found he committed fraud by overstating his wealth for years. The decision spares Trump and his two oldest sons from paying over half a billion dollars in fines but leaves in place a temporary ban on their serving as corporate officers.
Trump hailed the outcome as a “TOTAL VICTORY,” arguing the lawsuit — brought by New York Attorney General Letitia James — was politically motivated. “They stole $550 million from me with a fake case, and it was overturned,” he said in Washington, D.C., echoing earlier posts on social media.
James, a Democrat, focused on the part of the ruling that went in her favor, noting it affirmed the finding of fraud against Trump, his company, and two of his children.
The appellate decision came seven months into Trump’s return to the White House and followed a string of legal battles. A divided five-judge panel issued a sprawling 323-page set of opinions, with no single majority view. A majority agreed the penalty imposed last year by Judge Arthur Engoron — originally $355 million, growing to over $515 million with interest — was excessive under the Eighth Amendment.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half-billion-dollar award,” wrote Judges Dianne Renwick and Peter Moulton, both Democratic appointees. They described the penalty as constitutionally excessive. Trump had delayed paying the judgment by posting a $175 million bond.
Engoron’s other sanctions, including the corporate leadership ban, were allowed to stand, but remain paused while appeals continue. Trump Jr. mocked James in a social media post referencing her past public tally of the penalty amount: “I believe you mean $0.00.”
The appeals court’s unusual split reflects differing judicial views on James’ case. Some judges felt she proved fraud but went too far on penalties; one questioned her authority to bring the lawsuit at all, saying no lenders had claimed injury; another said Engoron erred by ruling before trial that Trump committed fraud.
Judge David Friedman, a Republican appointee, criticized James sharply, suggesting her real motive was political. “Her ultimate goal was not market hygiene but political hygiene,” Friedman wrote, accusing her of trying to end Trump’s political career and destroy his business. “The voters have obviously rendered a verdict on his political career. This bench today unanimously derails the effort to destroy his business.”
Trump and his co-defendants have consistently denied wrongdoing, arguing that his financial statements included disclaimers and that lenders and insurers conducted their own analyses. Trump has claimed his estimates of his wealth were conservative, despite evidence he overstated figures, such as tripling the size of his Trump Tower penthouse.
During appellate arguments last fall, Trump’s attorneys also contended some allegations were too old and that James misused a consumer protection statute for private business dealings. State lawyers countered that Trump’s exaggerations induced riskier loans and undermined fair competition.
The fraud case is just one of several legal challenges Trump faces as he serves his second term. Earlier this year, he received an unconditional discharge in his criminal hush money case, leaving the conviction on the books but imposing no penalty. He is appealing that conviction. A federal appeals court also upheld a $5 million jury award to writer E. Jean Carroll for sexual abuse and defamation, and Trump is challenging an additional $83.3 million defamation verdict.
The appeals court’s ruling allows Trump to avoid immediate financial fallout while leaving open the possibility of further review by New York’s highest court. In the meantime, he remains barred from corporate leadership roles for several years, as the legal battles continue.
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