NY Appellate Court Overturns Trump’s $500M Civil Fraud Penalty

A New York appellate court has struck down the $500 million civil fraud penalty against President Donald Trump, ruling that the massive disgorgement ordered by Attorney General Letitia James was an excessive fine in violation of the Eighth Amendment.

The Appellate Division’s five-judge panel upheld the finding that Trump and the Trump Organization were liable and that James acted within her authority, but removed the financial penalty of $364 million plus interest, which had ballooned to roughly $500 million.

Following the ruling, Trump declared a “total victory” on Truth Social, slamming James and trial judge Arthur Engoron.

“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” Trump wrote. “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. Others were afraid to do business there. The amount, including Interest and Penalties, was over $550 Million Dollars. It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.”

Trump also called the case “election interference,” pointing out that it played out during his 2024 presidential campaign. He praised Justice David Friedman, who issued a partial dissent.

In his dissent, Friedman argued the case was politically driven and should have been dismissed outright. He said James’ “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 criticized James’ use of Section 63(12) of New York’s Executive Law, which grants broad authority to pursue civil fraud. He said its application here was unprecedented and political, granting the attorney general “essentially limitless power to prosecute her political enemies.”

He also noted that Trump’s business deals involved sophisticated parties who profited without causing public harm. “Section 63(12) has never been used in the way it is being used in this case – namely, to attack successful, private, commercial transactions, negotiated at arm’s length between highly sophisticated parties fully capable of monitoring and defending their own interests,” Friedman wrote.

Because the panel split on liability, the case is now expected to proceed to New York’s highest court, the Court of Appeals.