President Donald Trump speaks to the media as, left to right, Secretary of Commerce Howard Lutnick, Secretary of Labor Lori Chavez-DeRemer and Secretary of Education Linda McMahon look on after signing executive orders in the Oval Office at the White House on April 23, 2025 in Washington, D.C. (Photo by Chip Somodevilla/Getty Images)
A New York state appeals court on Thursday overturned as overly punitive a nearly $500 million civil penalty against President Donald Trump, but left in place a finding of fraud based on records that inflated the value of Trump’s business holdings.
A five-judge panel of the New York Appellate Division for the First Department disagreed over aspects of the case and the trial court’s ruling that awarded $465 million to the state after finding Trump liable for fraud, issuing three opinions that spanned more than 300 pages.
Two judges concluded that the finding of liability against Trump was correct, two said errors in the trial court meant a new trial should be held, and one judge said the case was wrongly decided.
Still, all five judges agreed the penalty was excessive, and the two judges who’d called for a retrial joined the two upholding the decision “for the sole purpose of ensuring finality, thereby affording the parties a path for appeal” to the state’s highest court, according to the decision.
Loan applications
A New York state court found last year that Trump committed financial fraud by submitting loan applications that exaggerated the value of some of his real estate assets, which resulted in more favorable loan terms from banks.
Writing the determinative opinion Thursday, Appeals Justice Peter Moulton said New York Attorney General Letitia James was within her power to sue over the statements, even though they were between private parties and did not involve the state.
The state has an interest in upholding “market hygiene” and discouraging fraudulent behavior, he wrote. But the fine went too far, he said.
“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,” Moulton wrote.
The amendment says that “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”
Trump celebrates
One judge, Justice David Friedman, said he would have thrown out the case entirely, arguing that James overstepped her authority by bringing the civil case because no one was actually harmed. Most of the valuations were not fraudulently high and even if they were, would have resulted in the same favorable terms Trump received, Friedman wrote.
“All parties to these private transactions profited handsomely from the deals, from which there was no discernable negative effect on the public interest,” he wrote. “This action does not serve to protect the consuming public… This action does not protect the integrity or operation of the public securities market…, given that defendants do not issue publicly traded securities.”
In a post to his social media site, Truth Social, Trump exaggerated the court’s finding, saying it cleared him of wrongdoing.
“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” Trump posted. “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… 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.”
In a statement, James pledged to appeal the opinion, while highlighting that the appeals court had affirmed the finding of fraud.
“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,” she wrote. “It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit.”
Thursday’s order does not affect Trump’s May 2024 criminal conviction on 34 felony counts of falsifying business records related to hush money payments to adult film actress Stormy Daniels.
