Trump’s $500 million civil fraud penalty has been tossed by a New York appeals court

An appeals court on Thursday overturned a roughly $500 million civil fraud penalty against President Donald Trump and his family business, delivering a major legal win for the former president in a case he consistently labeled a political stunt by New York Attorney General Tish James.

The court, however, left the underlying fraud case intact, leaving open the possibility that Trump could appeal to New York’s highest court. The panel’s three separate opinions highlighted deep divisions among the five judges, with one describing the split as “profound.”

Judge Peter Moulton wrote, “While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, 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.”

The ruling is a setback for James, who had promoted the large financial penalty and made Trump a focus of her campaign. She said Thursday that the appeals court “affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud,” and announced plans to appeal to New York’s top court.

Trump hailed the decision on social media as a “total victory,” calling it a “Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.” His trial attorney, Alina Habba, described the outcome as a “resounding victory,” arguing that the case was politically motivated, legally baseless, and excessive.

In February 2024, a Manhattan judge found that Trump, his adult sons Don Jr. and Eric, and other associates had inflated his net worth and property values to secure favorable loans and insurance. The three-month trial was contentious, with Trump repeatedly criticizing James and Judge Arthur Engoron, resulting in a gag order and two fines for violations.