A New York appeals court has overturned the $500 million penalty imposed on former US President Donald Trump in a civil fraud case, while upholding his liability for inflating property values to secure favourable loans.
The unanimous ruling, delivered Thursday by the Appellate Division of the New York Supreme Court, found that although Trump and his company committed fraud, the financial penalty was “excessive” and likely unconstitutional.
Judge Arthur Engoron had originally ordered Trump to pay $355 million in 2024, a sum that ballooned to over $500 million with interest. But Justice Peter Moulton, writing for the appellate panel, argued the punishment far exceeded the harm done.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state,” Moulton wrote.
Reacting on his Truth Social platform, Trump hailed the decision as vindication.
“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 said, calling the case a “political witch hunt.”
His son, Eric Trump, also celebrated on social media: “After 5 years of hell, justice prevailed!”
The New York Attorney General’s Office, led by Letitia James, struck a different note, saying the decision still affirmed Trump’s fraud liability.
“It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit,” the office said in a statement. It confirmed plans to appeal the penalty ruling to the state’s highest court, the Court of Appeals.
While the appellate court struck down the monetary award, it upheld other sanctions imposed by Judge Engoron, including a three-year ban preventing Trump from serving as a company director or obtaining loans from New York banks.
The lengthy 323-page decision reflected internal division among the five-judge panel. Three backed James’s authority to pursue the case, one thought it should have been dismissed, and two called for a narrower retrial but joined in voiding the fine “for the sole purpose of ensuring finality.”
The ruling comes nearly a year after oral arguments, where judges had signaled skepticism about the scale of the penalties.
Trump was found liable for fraud in 2023, after Judge Engoron determined he misrepresented his wealth by hundreds of millions of dollars including inflating the size of his Trump Tower penthouse nearly threefold.
The appellate court’s decision now sets up another round of litigation before New York’s Court of Appeals, prolonging the high-stakes legal fight.
Legal experts say the unusual length of the ruling underscores the political and legal weight of the case.
“Would you have a 300-page opinion if this were Joe Smith the businessman, and not Donald Trump?” asked appellate attorney Mark Zauderer.
Will Thomas, a business law professor at the University of Michigan, described the outcome as “a judicial version of kicking the can down the road.”
For now, Trump remains legally liable for fraud but shielded from the half-billion-dollar penalty at least until the state’s highest court weighs in.
Erizia Rubyjeana
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