Appeals Court Overturns Trump’s $500m Civil Fraud Penalty but Upholds Liability

 

A New York appeals court has overturned the $500 million civil fraud penalty imposed on Donald Trump but upheld the ruling that he, his company, and two of his children committed fraud. The decision, released Thursday, said that while harm was caused by Trump inflating the value of his real estate assets to secure loans, the half-billion-dollar fine was excessive and likely unconstitutional. Judge Arthur Engoron had originally ordered Trump to pay $355 million, a figure that grew to over $500 million with interest. The appeals panel found that the penalty did not match the scale of harm caused.

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Judge Peter Moulton wrote that while Trump’s actions were serious, they did not amount to the “cataclysmic harm” that would justify such a large award to the state. The ruling, totaling 323 pages, reflected divisions within the five-judge panel, with some questioning the original case’s scope and whether it should have been narrowed or even dismissed. However, the court agreed to strike down the fine “for the sole purpose of ensuring finality,” acknowledging the unusual circumstances of ruling on a sitting president.

Despite this reprieve, Trump remains liable for fraud, and other non-financial penalties imposed by Engoron continue to stand.

The non-monetary penalties, which remain in place, include banning Trump from serving as a company director or applying for loans from New York banks for three years. The ruling keeps intact a significant restriction on his business operations despite removing the financial penalty. Trump celebrated the decision on Truth Social, calling it a “total victory” and again labeling the case a politically motivated “witch hunt.” His son Eric Trump also welcomed the outcome, saying “justice prevailed” after years of legal battles.

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The New York Attorney General’s Office, which brought the case, insisted the decision still represented a win. In a statement, it said the ruling reaffirmed that Trump and his family committed persistent fraud and that “yet another court has ruled the president violated the law.” The AG’s office plans to appeal the dismissal of the fine to the New York Court of Appeals, the state’s highest court.

Legal experts described the outcome as the appellate court effectively “punting” the issue up to the higher court. Observers note that the sheer length of the ruling underscored the complexity and sensitivity of handling a fraud case involving a sitting U.S. president. Trump continues to argue the case is politically driven.