A New York appeals court has thrown out the $500 million civil fraud penalty imposed on President Donald Trump, ruling that the fine was “excessive” and likely violated constitutional protections against disproportionate punishment. While the court upheld Trump’s liability for fraud, the staggering financial penalty was struck down, handing both sides a reason to claim victory.
Judges Say Penalty Went Too Far
The ruling, released Thursday by the New York Supreme Court’s Appellate Division, found that Judge Arthur Engoron’s original $355 million penalty, ballooned to over $500 million with interest, was excessive given the scale of harm.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award,” wrote Judge Peter Moulton.
The case centered on accusations that Trump inflated the value of Trump Organization assets to secure favorable loans. In one example, his Trump Tower penthouse was falsely claimed to be nearly three times its actual size.
Trump Declares “Total Victory”
On his platform Truth Social, Trump hailed the ruling as a triumph: “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. It was a Political Witch Hunt… the likes of which no one has ever seen before.”
His son, Eric Trump, also celebrated: “After 5 years of hell, justice prevailed!”
Attorney General Pushes Back
The New York Attorney General’s Office, which brought the case, emphasized that the decision still upheld Trump’s fraud liability. Non-monetary penalties, including Trump’s three-year ban on serving as a company director or taking loans from New York banks, remain in place.
“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 AG’s office said in a statement. The office now plans to appeal to the New York Court of Appeals, the state’s highest court.
Judges Divided, Case Far From Over
The 323-page opinion revealed deep divisions among the five-judge panel. Some judges believed the attorney general acted lawfully in bringing the case, while others argued it should have been dismissed or narrowed. Ultimately, they agreed to strike the fine “for the sole purpose of ensuring finality.”
Legal experts say the ruling merely delays the real fight. “This is a judicial version of kicking the can down the road,” said Will Thomas, professor of business law at the University of Michigan.
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A Historic Legal Dilemma
Observers note that the unusual length of the ruling reflects the historic challenge of handling a massive fraud case involving a sitting president. “Would you have a 300-page opinion if this were Joe Smith the businessman, and not Donald Trump?” asked appellate attorney Mark Zauderer.
For now, the legal saga of James v. Trump is far from finished. While Trump avoided a half-billion-dollar payout, the final verdict on his business empire’s fate rests with the state’s highest court.
