New York, NY – August 22, 2025 – In a significant development in the civil fraud case against President Donald Trump, his company, and his sons, Eric and Donald Trump Jr., a New York appeals court has issued a mixed ruling. The Appellate Division of the New York Supreme Court vacated a financial penalty exceeding $500 million, ruling it “grossly disproportionate” under the Eighth Amendment’s prohibition on excessive fines. However, the court upheld the lower court’s finding that Trump and the Trump Organization engaged in a years-long scheme of fraudulent financial practices to mislead lenders and insurers.
The case, initiated by New York Attorney General Letitia James in 2022, alleged that Trump and his company inflated asset values, such as misrepresenting the size of Trump’s Trump Tower penthouse, to secure favorable loan and insurance terms. In February 2024, Judge Arthur Engoron imposed a $355 million penalty, which grew to over $515 million with interest, plus additional penalties on other Trump Organization executives, totaling $527 million. Non-financial sanctions included a three-year ban on Trump serving as a company director in New York, a two-year ban for his sons, and ongoing oversight by an independent monitor.
The appeals court’s 323-page decision, split across three opinions, reflected deep divisions among the five-judge panel. Justices Dianne T. Renwick and Peter H. Moulton found the fraud undeniable but argued the penalty was excessive, stating, “The financial harm does not justify a penalty of this magnitude.” Justices John Higgitt and Llinét Rosado pushed for a new trial, citing procedural issues, while Justice David Friedman questioned the Attorney General’s authority to bring the case. Four judges agreed to vacate the financial penalties, paving the way for further review by New York’s Court of Appeals.
Trump celebrated the ruling on Truth Social, calling it a “complete vindication” and labeling the case a “politically driven attack.” His attorney, Alina Habba, described the decision as a “triumph for justice,” asserting the case lacked legal grounding. Attorney General James, however, emphasized the upheld fraud findings, stating, “This ruling confirms Trump’s fraudulent conduct,” and vowed to appeal to restore the penalties.
The decision alleviates significant financial pressure on Trump, who had posted a $175 million bond to pause collection during the appeal. This ruling follows other legal developments, including the dismissal of federal criminal cases against Trump due to his re-election and Justice Department policies. Nonetheless, Trump faces ongoing legal challenges, including a criminal conviction on 34 counts of falsifying business records and defamation judgments totaling $88.3 million in favor of E. Jean Carroll.
The appeals court’s 11-month deliberation, unusually long for such cases, underscores the case’s complexity and political weight. Legal experts suggest the ruling could shape future fraud prosecutions, particularly regarding the scale of penalties. As the case heads to the Court of Appeals, it remains a pivotal chapter in Trump’s legal saga.
Sources: NPR, NBC News, BBC, Axios, PBS News, POLITICO, CNN, The New York Times, Al Jazeera, USA Today, ABC News, CBS News, The Guardian, Courthouse News Service, CNBC, Newsweek, Reuters