NY appeals court voids the roughly $500 million civil fraud penalty against Trump

By Kara Scannell, Lauren del Valle, Jeremy Herb, CNN

(CNN) — A New York appeals court has thrown out the roughly half-billion dollar judgment against President Donald Trump in the civil fraud case brought by the state’s attorney general.

Thursday’s decision, which was not unanimous, leaves Trump still liable for fraud. The judges upheld his liability and tossed the penalty so the case could move forward for further appellate review.

New York Attorney General Letitia James plans to appeal the ruling.

In the prevailing opinion, the judges 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 appeals court’s ruling is yet another instance where legal action taken against Trump has been either reduced or wiped away completely.

Trump was indicted four times in 2023, in addition to facing the civil fraud case brought by New York Attorney General Lettia James. Both federal cases against him — one over efforts to overturn the 2020 election and another related to the mishandling of classified documents — were dropped and dismissed. An election-related state case in Georgia never moved forward and his May 2024 conviction in the New York hush money case resulted in a sentence with no penalties once he won the White House. Trump is still appealing that conviction, too.

CNN senior legal analyst Elie Honig said the “monumental” ruling was unusual due to it taking the court nearly a year to reach this decision.

“This is a huge win for Donald Trump, any way you cut it. And this is a stinging rebuke to James,” Honig said on CNN’s “The Situation Room.”

Trump claimed “total victory.”

“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case! 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,” Trump wrote on Truth Social. “It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.”

Former Trump lawyer Alina Habba, meanwhile, called the ruling “a resounding victory for President Trump and his company.”

“The court struck down the outrageous and unlawful $464 million penalty, confirming what we have said from the beginning: the Attorney General’s case was politically motivated, legally baseless, and grossly excessive,” Habba, who was on Trump’s legal team in the case and is now an acting US Attorney in New Jersey, said on X. “President Trump won – and justice won with him.”

James said in a statement she would appeal Thursday’s ruling to New York’s highest appellate court.

“The First Department today affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud,” James said. “The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York. It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit.”

James brought the sweeping civil case against Trump, his adult children and the Trump Organization in 2022, alleging they inflated the value of its properties to mislead lenders and insurers. Trump, his adult sons and his company were found liable in a February 2024 decision, where Judge Arthur Engoron leveled a $354 million fine.

Four judges agreed that the lower state court correctly found Trump and the other defendants liable for fraud and agreed that James had the right to bring the civil action under New York’s Executive Law 63(12) – a long-debated interpretation of the statute.

“We agree with Supreme Court that the Attorney General acted well within her lawful power in bringing this action, and that she vindicated a public interest in doing so,” the opinion says.

The prevailing decision supported Engoron’s finding that Trump and others engaged in years of fraud by issuing falsified financial statements that inflated the value of his properties and misled insurers and lenders.

Split decision outlined in 322 pages

The majority decision by members of the appellate panel means that Trump sheds the immense financial pressure he faced to satisfy the $354 million judgment, which with interest totals roughly $500 million.

Last year, the appeals court agreed to lower the bond Trump was required to post to $175 million – down from the full amount – to stop the New York attorney general’s office from beginning to collect the judgment while he appealed. Now that money will come back to Trump once the appeals are exhausted.

The split panel wrote three decisions in response to Trump’s appeal argued last September.

Two judges thought the matter should be retried to address errors by Engoron, though the others disagreed.

Justice Peter Moulton said a retrial would be “unnecessary and likely terminal.”

“It is difficult to imagine that a trial could proceed while one of the principal defendants, and a central witness, is President of the United States,” Moulton wrote.

A fifth panelist, Justice David Friedman, argued in a standalone opinion that the entire complaint should be dismissed and accused James of being driven by political motivations.

“Plainly, her ultimate goal was not ‘market hygiene,’ as posited by Justice Moulton, but political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business. The voters have obviously rendered a verdict on his political career. This bench today unanimously derails the effort to destroy his business,” Friedman wrote.

Trump DOJ investigating James

Trump’s Justice Department has launched multiple investigations into James since he’s taken office, as part of a broader pattern of retribution against Trump’s perceived political enemies.

The DOJ is investigating James for bringing this case, as part of a probe into an alleged deprivation of rights, which means violating someone’s constitutional rights. The US attorney’s office for the Northern District of New York has issued subpoenas seeking information about James’ activities.

The Justice Department is also investigating claims of mortgage fraud, a probe being led by DOJ official Ed Martin, head of the Justice Department’s Weaponization Working Group. Martin has called for James’ resignation and posed for photos outside her home last week.

Abbe Lowell, an attorney for James, said of the DOJ probes, “Investigating the fraud case Attorney General James won against President Trump and his businesses has to be the most blatant and desperate example of this administration’s carrying out the president’s political retribution campaign.”

During the 11-week civil fraud trial, which took place in 2023 and 2024, Trump frequently went after James personally, both speaking outside of court and while he testified on the witness stand.

“This is a political witch hunt and I think she should be ashamed of herself,” Trump said of James during a day’s worth of combative testimony.

CNN’s Shania Shelton contributed to this report.

This story has been updated with additional developments.

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