"Trump's Fraud Penalty Dropped as Court Calls Fine 'Excessive' Despite Guilt"

An appeals court in New York has ruled that the $515 million civil fraud penalty against Donald Trump was excessive, despite affirming that he engaged in fraudulent activity by exaggerating his wealth for decades. The decision, issued by the Appellate Division of the New York Supreme Court, marks a significant development in a case that has drawn intense political and legal scrutiny [1].

Judge Arthur Engoron originally ruled in 2023 that Trump had committed fraud by inflating the value of Trump Organization properties to secure favorable loans. The court ordered him to pay $355 million in penalties, which grew to over $515 million with interest. The appeals court, however, determined that the financial penalty violated the Eighth Amendment of the U.S. Constitution, which prohibits excessive fines [2]. Judges Dianne T. Renwick and Peter H. Moulton specifically noted that while Trump’s actions caused harm, the magnitude of the fine was disproportionate to the damage incurred [3].

The appeals court’s decision to overturn the monetary portion of the penalty was reached after a nearly 11-month review of the case, an unusually prolonged timeline for appeals. The panel was sharply divided, issuing 323 pages of opinions that reflected differing views on the merits of the original lawsuit. While some judges supported the finding of fraud, they disagreed on the appropriate remedy. The ruling preserved nonmonetary penalties, including a three-year ban on Trump and his eldest sons from corporate leadership roles and restrictions on obtaining loans from New York banks [4].

New York Attorney General Letitia James, who brought the case on behalf of the state, framed the decision as a partial victory, emphasizing that the court upheld the finding of fraud and left the door open for further appeals. The attorney general’s office plans to seek review by the New York Court of Appeals, the state’s highest court [5]. The ruling also highlighted ongoing tensions between Trump and the legal system. The and his legal team have long argued that the case was politically motivated, a claim they reiterated following the decision. Trump labeled the lawsuit a “political witch hunt” and claimed victory on social media, asserting that the ruling benefited New York businesses [6].

The case is one of several legal challenges Trump has faced in recent months. He has also been convicted in a criminal hush money case, with an appeal currently pending. Additionally, a federal appeals court upheld a $5 million verdict in a civil case involving allegations of sexual abuse and defamation against writer E. Jean Carroll. Trump is also appealing a separate $83.3 million judgment in a related defamation case [7].

The decision underscores the complex legal and political landscape surrounding Trump, with implications for how courts handle high-profile cases involving public figures. Legal experts noted that the appeals court’s ruling may prompt further litigation, as the state seeks to enforce the original financial penalties or reach a settlement. Meanwhile, Trump’s legal team continues to argue that the financial statements in question were not deceptive, citing disclaimers and independent evaluations by lenders and insurers [8].

The ruling also drew attention to the broader debate over the application of consumer protection laws in civil fraud cases. State attorneys argued that the case was justified under existing legal frameworks, even if the alleged fraud did not directly harm everyday consumers. Conversely, Trump’s legal team contended that the state overreached by using a consumer protection statute to police private business transactions that resulted in no actual harm [9].

Source:

[1] Court throws out massive Trump civil fraud penalty (https://apnews.com/article/trump-fraud-lawsuit-appeal-db39d93feff322eeeeedbc1ff75ccaf3)

[2] Massive civil fraud penalty against President Trump tossed ... (https://www.npr.org/2025/08/21/g-s1-84246/civil-fraud-penalty-president-trump-appeal)

[3] Appeals court throws out Trump's $500m civil fraud penalty (https://www.bbc.com/news/articles/c5y09q1zgg8o)