On August 21, 2025, a New York appellate court delivered a significant victory for President Donald Trump by throwing out a $527 million civil fraud penalty imposed against him, his family, and the Trump Organization. The ruling, issued by a five-judge panel in New York’s Appellate Division, First Department, declared the fine “excessive” and unconstitutional under the Eighth Amendment, which prohibits unduly harsh penalties. The decision marks a major setback for New York Attorney General Letitia James, who brought the lawsuit accusing Trump of inflating his wealth to secure favorable loan and insurance terms.
The case originated from a 2022 civil fraud lawsuit filed by James, alleging that Trump, his sons Eric and Donald Jr., and other Trump Organization executives misrepresented property values and Trump’s net worth over a decade. In February 2024, Judge Arthur Engoron ordered Trump to pay $355 million, which, with interest, ballooned to over $515 million, and imposed additional sanctions, including a three-year ban on Trump holding corporate leadership roles in New York. The total penalty, including those against other defendants, reached approximately $527 million. Trump denied wrongdoing, arguing that no one was harmed as lenders were repaid and profited from the deals.
The appellate court’s 323-page ruling upheld the lower court’s finding that Trump and his co-defendants engaged in fraud but struck down the monetary penalty, citing its disproportionate nature. Judges Dianne T. Renwick and Peter H. Moulton wrote that while the court’s injunctive relief was “well crafted to curb defendants’ business culture,” the financial penalty violated constitutional protections. The court left non-monetary sanctions, such as the temporary business bans, intact but paused during the appeal process. Trump had secured a $175 million bond to delay enforcement of the penalty, which will now be returned to the Trump Organization.
The decision was not unanimous, with two judges arguing the case should be retried due to errors by Judge Engoron, and a fifth, Justice David Friedman, asserting that James misused her authority and that the case should not have been brought. James announced plans to appeal to New York’s highest court, the Court of Appeals, emphasizing that the ruling affirmed Trump’s liability for fraud and preserved the injunctive measures limiting the Trump Organization’s operations in New York.
Trump celebrated the ruling on Truth Social, calling it a “total victory” and labeling the case a “political witch hunt.” His attorney, Alina Habba, echoed this, stating the penalty was “outrageous and unlawful.” Eric Trump and Donald Trump Jr. also praised the decision, with Eric posting on X, “Total victory in the sham NY Attorney General case!!! After 5 years of hell, justice prevailed!”
The ruling, which took nearly 11 months to deliberate, reflects the case’s complexity and high stakes. It comes amid Trump’s ongoing legal battles, including a criminal hush money case and defamation judgments, as he navigates his second term in office. While the decision alleviates significant financial pressure, the upheld fraud finding and potential for further appeals ensure that Trump’s legal saga in New York is far from over.
Sources: Newsweek, CNBC, PBS News, CNN Politics, The New York Times, Axios, The Guardian, ABC News, CBS News, Reuters, Washington Post, Al Jazeera, NBC New York
SOURCES:
New York Attorney General Letitia James accused of possible mortgage fraud – CBS New York
New York appeals court throws out $527 million penalty in Trump civil fraud case – CBS News
New York Appeals Court Throws Out $527 Million Penalty Against Trump in Fraud Case – Newsweek
Trump civil fraud fine thrown out by New York appeals court
NY appeals court voids the nearly $500 million civil fraud penalty against Trump | CNN Politics
6 things to know about Trump’s appeal of his $489 million civil fraud verdict | PBS News
Trump’s Huge Civil Fraud Penalty Draws Skepticism From Appeals Court – The New York Times
Donald Trump’s civil fraud case: New York appeals court slashes massive penalty
Court throws out $500m civil fraud penalty against Donald Trump | New York | The Guardian
Appeals court throws out Trump’s $454 million civil fraud judgment – ABC News
New York appeals court throws out $527 million penalty in Trump civil fraud case – CBS News
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