A New York state appeals court on Thursday overturned a half-billion-dollar civil fraud penalty imposed on President Donald Trump, ruling that the monetary judgment violated the U.S. Constitution's protection against excessive fines, but it upheld findings that Trump and his company committed fraud.
The Appellate Division of New York's First Judicial Department struck down the penalty, which with interest had grown to more than $500 million, calling it unconstitutional under the Eighth Amendment. "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.
Despite tossing out the financial penalty, the five-judge panel upheld non-monetary sanctions, including restrictions on Trump and his sons' ability to serve as corporate officers in New York. The court also affirmed the finding by Manhattan Supreme Court Judge Arthur Engoron that Trump and the Trump Organization inflated asset values on financial statements provided to lenders and insurers.
Engoron's original order in February 2024 required Trump to pay $454 million, which with interest exceeded $515 million. The judge also barred Trump, Eric Trump and Donald Trump Jr. from holding corporate leadership positions for a period of years. That ban was temporarily paused during the appeals process after Trump posted a $175 million bond.
Trump celebrated the ruling on Truth Social, posting: "TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case! 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." He added: "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 echoed his father's reaction, writing on social media: "Total victory in the sham NY Attorney General case!!! After 5 years of hell, justice prevailed!"
New York Attorney General Letitia James, who brought the case, said she would appeal to the state's highest court. "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," James said in a statement. "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."
Judge Peter Moulton, in a concurring opinion, emphasized the limits of the state's case for damages. "While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half-billion-dollar award to the state," Moulton wrote. He said James "did not carry her initial burden" of establishing a reasonable approximation of profits connected to the violations.
One judge, David Friedman, went further in partial dissent, saying he would have dismissed James' lawsuit outright.
Trump and his attorneys argued throughout the proceedings that his financial statements came with disclaimers and were never relied on exclusively by banks, which conducted their own valuations and were repaid in full. James countered that inflating asset values led lenders to take on more risk and undermined the fairness of financial markets.
The ruling adds another layer to Trump's ongoing legal battles. In addition to civil fraud litigation, he faces defamation judgments tied to E. Jean Carroll, including an $83.3 million verdict earlier this year, and is appealing a criminal conviction in his New York hush money case.
