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A New York City appeals court has overturned a $500 million civil fraud penalty against President Donald Trump, ruling the fine excessive under the Eighth Amendment.
Some shit you should know before you read: Back in 2022, New York Attorney General Letitia James filed a civil lawsuit accusing Donald Trump, his adult sons, and the Trump Organization of fraudulently inflating asset values on financial statements to secure favorable loans, insurance, and tax benefits. The state argued that Trump had exaggerated his net worth by hundreds of millions (in some cases over $2 billion) across several years, misleading lenders and insurers in violation of New York’s Executive Law 63(12). The trial, led by Judge Arthur Engoron, sided with the state in 2024, issuing a $454 million penalty, which, with interest, swelled to more than $500 million. Trump denied wrongdoing, calling the case politically motivated and arguing that valuations were subjective and caused no financial harm.
What’s going on now: In a notable development, the New York City appeals court overturned the more than $500 million civil fraud penalty previously imposed on former President Donald Trump and his co-defendants, ruling that the financial sanction violated the Eighth Amendment’s prohibition against excessive fines. While the court upheld the lower court’s findings that Trump, his adult sons, and the Trump Organization were liable for fraud, the judges concluded that the scale of the monetary judgment lacked a reasonable connection to the actual profits gained from the misconduct. In the court’s majority opinion, the justices wrote that the penalty “directs that defendants pay nearly half a billion dollars to the State of New York” and is “an excessive fine that violates the Eighth Amendment of the United States Constitution.”
Judge Peter Moulton added in a concurring opinion that Attorney General Letitia James “did not carry her initial burden” of properly calculating the amount of money that should be disgorged, calling the state’s estimate “far from a reasonable approximation.”
Four of the five judges agreed Trump committed fraud; two called for a new trial, and one argued for full dismissal. Although the disgorgement order was struck down, the court maintained several key non-monetary sanctions, including restrictions on Trump and the Trump Organization’s ability to operate in New York’s business environment. These remaining measures were described as “well crafted to curb defendants’ business culture” and remain in force unless reversed by a higher court.
Trump said the ruling was a “TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” He added, “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.”
In a statement, AG Letitia James said, “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. The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York.” James also made clear that her office would appeal the overturned financial penalty to the New York Court of Appeals.
