A New York appeals court threw out the roughly $500 million civil fraud penalty against President Trump on Thursday, but it declined to toss the case entirely.
It deals a significant blow to New York Attorney General Letitia James’s (D) sprawling case against the president and his business.
In a deeply divided decision, the court upheld a lower court’s finding that Trump, his eldest sons and another executive conspired to alter his net worth for tax and insurance benefits.
However, the eye-popping financial penalty against the president and his business will not stand, with the judges saying it amounts to an unconstitutional excessive fine. The ruling enables the case to move toward New York’s top court.
The case, brought in 2022, made James one of the president’s most prominent adversaries, as it threatened his billionaire status and the future of the business that built his fame — and paved his path to the White House.
A bench trial culminated in a $464 million judgment against Trump and his business, plus interest that has mounted every day. The total had reached more than $527 million, including interest, as of Thursday.
Beyond the agreement that the fine must be tossed, the decision was deeply split. Two judges said Judge Arthur Engoron’s findings at the trial level were justified, another two wanted to order a new trial while the fifth judge voted to dismiss the case outright.
“It is difficult to imagine that a trial could proceed while one of the principal defendants, and a central witness, is President of the United States,” the first pair wrote.
“The inevitable elapse of time and the attendant difficulties in recreating a vast record of testimony and documents – an exercise that is both Sisyphean and unneeded, because an extensive trial record already exists – would likely consign this meritorious case to oblivion,” they said.
But the 2-2-1 split left no opinion garnering a majority. So to ensure finality, the second pair agreed to join the first in upholding the lower decision, providing a clean path for the case to proceed to a higher court.
The elimination of the nine-figure sum has left Trump and his sons painting the ruling as a win.
“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” Trump wrote on Truth Social. “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.”
Trump’s eldest sons, Donald Trump Jr. and Eric Trump, similarly celebrated the ruling as a “massive win” and “total victory.”
It’s not entirely so.
The panel found that the trial court’s injunctive relief barring Trump, his sons and other executives from serving in key leadership roles in the near term was justified.
Judges Peter Moulten and Dianne Renwick, the first pair who wrote the principal opinion, said that the trial record supports the lower court’s finding that Donald Trump Jr. and Eric Trump, possessed the “requisite intent to defraud,” in addition to top executives Allen Weisselberg and Jeffrey McConney.
“Considering the significant likelihood that defendants would reoffend, Supreme Court’s injunctions were measured and fair,” the judges wrote.
The second pair, Judges John Higgitt and Mary Rosado, would’ve sent the case back for another trial with more limited scope. The judges said some claims were barred by the statute of limitations, an argument Trump’s lawyers made throughout the trial but was rebuffed.
And the final judge, David Friedman, voted to dismiss the case entirely. He said state law provided James no power to bring such a prosecution, she didn’t prove her allegations even if she had such power and the case “certainly appears” to be retaliation for Trump running for president.
“The Attorney General simply failed to prove her case,” Friedman wrote.
In a statement Thursday, James pointed to the fact that the panel affirmed the trial court’s finding that Trump and his company are liable for fraud and upheld the injunctive relief her office won against them.
“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 said.
She added that her office will appeal the ruling.
Alina Habba, one of Trump’s attorneys at trial and now Acting U.S. Attorney for the District of New Jersey, said in a statement that ruling proves James’s case was “politically motivated, legally baseless, and grossly excessive.”
At trial, Trump’s legal team accused James and Engoron, the judge, of weaponizing the courts for political gain. Both the court and attorney general’s office repeatedly refuted the notion as baseless.
The appeals court took unusually long to rule, weighing the appeal for nearly 11 months after arguments before issuing its decision.
The civil fraud trial marked the start of Trump’s courtroom campaign, as he vied for the White House while also beating back a flurry of civil cases and four criminal indictments.
Updated at 1:37 p.m. EDT
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