Appeals Court Dismisses Trump's $500 Million Fraud Penalty, Ruling Partially in His Favor

Thu Oct 23 2025 00:44:44 GMT+0300 (Eastern European Summer Time)

A New York appeals court reverses a significant civil penalty against Donald Trump, while affirming his liability for fraud in a closely watched case.

In a pivotal ruling, a New York appeals court has nullified a $500 million penalty imposed on Donald Trump for fraud, citing the excessive nature of the financial punishment, while maintaining the former President's liability for fraudulent activities. The decision came amid contrasting views on the influence of politics in the judicial proceedings.

An appeals court in New York has unexpectedly dismissed a massive $500 million civil penalty against former President Donald Trump linked to fraud, recognizing his liability while criticizing the penalty imposed last year as excessive. The ruling emerged from a civil trial where Judge Arthur Engoron found Trump had inflated the values of properties belonging to the Trump Organization to secure favorable loan conditions.

On Thursday, the New York Supreme Court's Appellate Division released a comprehensive 323-page decision stating that while evidence supported claims of fraud, the financial sanction was likely unconstitutional due to its severe nature. Lead judge, Peter Moulton, emphasized that the consequences inflicted by Trump’s actions, though significant, did not warrant a penalty amounting to nearly half a billion dollars.

"While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state," wrote Judge Moulton. In previous rulings, Trump was ordered to pay $355 million, but with accrued interest, it escalated beyond the half-billion mark. Following the ruling, Trump took to social media platform Truth Social, declaring it a “total victory” and branded the trial a "Political Witch Hunt."

The New York Attorney General's Office, which initially brought the allegations against Trump, portrayed the ruling as a mixed outcome, confirming his fraud liability while preparing to appeal the court’s decision on the penalty. The attorney general's statement stressed that the court upholds the trial court's findings, which held Trump and his family accountable for fraudulent activities.

Further complicating matters, the ruling maintains that Trump, along with two of his adult sons, is not permitted to operate as company directors or secure state loans for three years—a non-monetary penalty introduced by Judge Engoron, which remains intact. The lengthy decision revealed varied opinions among the five-judge panel regarding the merits of the original case, with some judges expressing support for the actions taken by Attorney General Letitia James, while others recommended the case either be dismissed or tried anew with limited scope.

The discussion raised questions about the judiciary's ability to navigate such a high-profile case involving a sitting president. Commentators, including appellate attorney Mark Zauderer, pointed out the significant length of the ruling, questioning whether similar treatment would have been extended to non-political figures. Meanwhile, Trump’s son Eric celebrated the ruling on social media, deeming it a moment of justice after years of legal challenges.

In essence, while the financial penalty was dismissed, the case still looms, with the Attorney General's Office poised to take further action. As observers await developments, legal experts note that the ultimate judicial resolution regarding Trump's business practices may still be a long way off.