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A New York appeals court on Thursday threw out a $500 million civil fraud penalty against President Donald Trump and his companies, ruling that while the former president engaged in fraud by inflating his property values, the fine imposed was an “excessive” punishment.
The state Appellate Division’s First Department issued a 323-page decision that left the fraud finding intact but vacated the nearly half-billion-dollar award originally levied by Judge Arthur Engoron in early 2024. The ruling was deeply divided, with no majority opinion and three separate writings from the five-judge panel.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State,” two judges wrote in explaining their decision to strike down the penalty.
Trump hails ‘total victory’
Trump, who had been facing ballooning interest payments on the judgment, celebrated the ruling as a vindication.
“I had a victory today,” Trump told a gathering of law enforcement officers in Washington, D.C. “They stole $550 million from me with a fake case, and it was overturned. This was a witch hunt.”
On Truth Social, he declared the decision a “total victory,” blasting Engoron as “one of the most overturned judges in history” and labeling New York Attorney General Letitia James, who brought the case, “a political hack.”
Trump’s sons also cheered. Eric Trump called it “the biggest victory in the world” in an interview with NBC News, while Donald Trump Jr. posted on X that the case was “a massive win” and “election interference.”
James vows to appeal
James said in a statement that the ruling upheld the core of her office’s case: that Trump, his company, and two of his children engaged in fraud by manipulating asset valuations.
“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 confirmed plans to appeal to New York’s highest court.
The attorney general’s office had argued Trump reaped “hundreds of millions of dollars in ill-gotten gains” by lying to banks and insurers. Engoron’s original decision described Trump’s “persistent fraud” and said his lack of contrition “borders on pathological.”
A divided panel and unusual compromise
The appellate ruling revealed unusual divisions. Two judges favored upholding the fraud finding but eliminating the financial penalties; two wanted a new trial; and one would have dismissed the case entirely. To break the stalemate, the judges seeking a new trial signed on to the opinion striking down the fine, allowing the case to proceed to the Court of Appeals.
“Under the truly extraordinary circumstances here, where none of the writings enjoys the support of a majority, we are moved to take this action,” Judge John Higgitt wrote.
What’s next for Trump
The penalty had grown to more than $507 million with interest by June, threatening Trump with escalating daily costs of over $100,000. To secure the appeal, he posted a $175 million bond earlier this year after arguing it was impossible to raise the full amount.
The ruling spares Trump a crushing financial hit but leaves intact the finding that he and his company repeatedly manipulated financial statements. He still faces appeals in two other civil cases brought by writer E. Jean Carroll, totaling about $90 million in judgments.
Trump has denied wrongdoing in all the cases, framing them as politically motivated.
