NEW YORK A New York appeals court narrowly upheld a ruling that President Donald Trump committed fraud by inflating his wealth for decades, but on Thursday it overturned the hefty financial punishment imposed by a state judge. The decision prohibits Trump and his two oldest sons from holding company leadership positions for a few years, but it spares him from a possible fine of half a billion dollars.
In one social media post, Trump asserted “total victory.”
“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,” he stated.
Seven months after the Republican’s return to the White House, the decision was made. In New York’s mid-level Appellate Division, a five-judge panel that was starkly divided on many of the points cited in Trump’s appeal agreed that the monetary punishment was “excessive.”
Last year, Judge Arthur Engoron ordered Trump to pay $355 million in penalties after he was found to have blatantly fabricated financial statements that were sent to lenders and insurers. The total has surpassed $515 million with interest. The total, including interest, is $527 million after further fines were imposed on a few other Trump Organization executives, including Trump’s sons Eric and Donald Jr.
An “excessive” fine
Judges Dianne T. Renwick and Peter H. Moulton wrote in one of several opinions that influenced the appeals court’s decision that “the court’s disgorgement order, which directs that defendants pay nearly half a billion dollars to the State of New York, is an excessive fine that violates the Eighth Amendment of the United States Constitution, even though the injunctive relief ordered by the court is well crafted to curb defendants’ business culture.”
During Trump’s appeal, Engoron’s other penalties—which the appeals court upheld—were put on hold, and the president was allowed to post a $175 million bond to delay the collection of the money.
In addition to dismissing the full penalty, the court, which divided on the merits of the case and Engoron’s fraud finding, left open the possibility of an appeal to the Court of Appeals, the highest court in the state. According to the judges’ ruling, Trump and his co-defendants may attempt to prolong the period before any penalties are imposed.
With 323 pages of opposing and agreeing views and no majority, the panel was polarized. Instead, the court was able to make a decision because certain judges supported some of their colleagues’ conclusions while condemning others.
Although New York Attorney General Letitia James had proven her case and her action against Trump and his enterprises was justified, two judges concluded that the punishment was too harsh. According to one, James went above her legal power in filing the lawsuit, stating that Trump’s lenders could have filed their own lawsuits against him if they felt defrauded, but none did. According to one judge, Engoron made a mistake by declaring before the trial started that the attorney general had demonstrated Trump’s involvement in fraud.
Judge David Friedman, who was nominated to the court by Republican Governor George Pataki, was harsh in his criticism of James for initiating the lawsuit in his portion of the decision.
“Plainly, her ultimate goal was not ‘market hygiene’ … but political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business,” Friedman stated. “It is clear that the electorate has decided on his political career. Today’s bench unanimously rejects the attempt to ruin his company.
Following oral arguments last fall, the state’s trial court’s appeals court, the Appellate Division, took an abnormally long time to make a decision—nearly 11 months. Appeals are typically resolved within a few weeks or months.
According to James, Trump committed “lying, cheating, and staggering fraud.” Following the judgment on Thursday, her office did not immediately comment.
Political claims in play
Trump denied any misconduct, as did his co-defendants. After a trial that lasted months, Trump said in January 2024 that he was “an innocent man” and that the case was a “fraud on me” in a sort of six-minute summary. The Republican has argued on multiple occasions that James and Engoron, both Democrats, used the case and the verdict as political ploys.
As part of an inquiry into whether James violated the president’s civil rights, the Justice Department of Trump has subpoenaed her for papers pertaining to the case, among other things. According to Abbe D. Lowell, James’ personal lawyer, the fraud case investigation is “the most blatant and desperate example of this administration carrying out the president’s political retribution campaign.”
Since his financial filings had disclaimers stating they weren’t audited, Trump and his attorneys claimed they weren’t misleading. The defense also pointed out that the loans were paid back after independent analyses by lenders and insurers.
He argued the financial records were, at most, lowball estimations of his wealth, despite disparities like increasing the size of his Trump Tower apartment.
Trump’s attorneys contended at an appellate court hearing in September that James had abused a consumer protection legislation to sue Trump over private commercial transactions that were acceptable to the parties involved and that many of the case’s accusations were too old.
Although Trump maintains that the financial statements did not harm anyone, state attorneys stated that his exaggerations caused lenders to make riskier loans and that legitimate borrowers lose out when others falsify their net worth figures.
Legal challenges
Trump faced a number of legal challenges during his campaign, election, and transition to a second term as president, including the civil fraud action.
He was given what is known as an unconditional discharge in his criminal hush money case on January 10th, which keeps his conviction on file but spares him from jail time, probation, a fine, or other penalties. He is contesting the verdict.
Additionally, in December, a federal appeals court upheld a $5 million judgment against Trump, upholding a jury’s verdict that he had sexually assaulted and later defamed writer E. Jean Carroll in the mid-1990s. In June, the appeals court turned down a reconsideration. Trump may still attempt to have his appeal heard by the Supreme Court.
Additionally, Trump is contesting a later decision that mandates he reimburse Carroll $83.3 million for further defamation allegations.
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