A New York appeals court has thrown out President Donald Trump's $500 million civil fraud penalty, delivering a major legal victory while upholding his liability for business fraud.
The New York Supreme Court's Appellate Division ruled Thursday that while Trump was liable for fraud, the nearly half-billion-dollar fine was excessive and likely violated constitutional protections against severe punishment.
"While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half-billion-dollar award to the state," wrote Judge Peter Moulton in the 323-page ruling.
Judge Arthur Engoron had originally ordered Trump to pay $355 million, but with interest, that amount grew to more than $500 million. The penalty stemmed from Trump massively inflating the value of Trump Organization properties to secure favorable loans.
Trump celebrated the decision on his Truth Social platform, calling it a "total victory." He said he respected "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, in a business sense, the likes of which no one has ever seen before," Trump added.
The New York Attorney General's Office, which brought the original case, also claimed victory. They pointed out that the court upheld Trump's fraud liability and kept other non-financial penalties 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 attorney general's office said in a statement. They plan to appeal the fine decision to the state's highest court.
The case against Trump, his two adult sons, and the Trump Organization included additional penalties beyond the massive fine. Judge Engoron had banned Trump from serving as a company director or taking out loans from New York banks for three years.
Thursday's decision kept these non-monetary penalties intact, meaning Trump still faces business restrictions despite the financial reprieve.
The lengthy ruling revealed significant disagreement among the five-judge panel. They were primarily divided over the merits of Attorney General Letitia James's original lawsuit, which accused Trump and his sons of "persistent and repeated fraud."
While several judges said James was "within her lawful power in bringing this action," one believed the case should've been dismissed entirely. Two others said there should be a new trial with a more limited scope.
Those two judges joined the decision to throw out the fine "for the sole purpose of ensuring finality," Judge Moulton wrote.
In a notable comment, Judge Moulton said American voters had "obviously rendered a verdict" on Trump's political career, and "this bench today unanimously derails the effort to destroy his business."
Eric Trump, who was involved in the case, celebrated on social media: "After 5 years of hell, justice prevailed!"
The ruling came almost a year after the panel heard oral arguments, during which several judges appeared skeptical of the civil fraud case.
Will Thomas, an assistant professor of business law at the University of Michigan, called the ruling a "judicial version of kicking the can down the road."
"By its own admission, the Appellate Courts is punting the real legal decision up to the New York Court of Appeals," Thomas said, noting the court's unusual decision was made "for the sole purpose of ensuring finality."
In September 2023, Judge Engoron had ruled Trump liable for business fraud, finding he misrepresented his wealth by hundreds of millions. A separate trial in 2024 determined the penalty amount.
In one instance, the judge found Trump's financial statements wrongly claimed his Trump Tower penthouse was almost three times its actual size.
Trump had consistently argued the case brought by James, a Democrat, was politically motivated.
Mark Zauderer, a longtime New York appellate attorney, said the unusually lengthy ruling reflected the historic nature 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?" Zauderer asked.
The decision represents a significant legal victory for Trump, who's faced multiple court cases while serving as president. While he remains liable for fraud under the ruling, the removal of the massive financial penalty eliminates a major threat to his business empire.
The case now moves to New York's highest court, where the attorney general's office will attempt to restore the $500 million penalty.
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