A judge said the penalty violated the Eighth Amendment’s prohibition on excessive fines.
A New York appeals court has thrown out the half-a-billion-dollar penalty that President Donald Trump received in his business fraud case.
The decision on Aug. 21 was issued after a hearing in 2024 in which the appeals court seemed skeptical of the case against Trump.
“In essence,” one of the judges said, the penalty Trump faced “amounted to something close to a commercial death penalty.”
A concurring opinion from Justice Peter Moulton said that the lower 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.”
New York Supreme Court Justice Arthur Engoron ruled against Trump in February 2024, leaving him with a judgment exceeding $460 million, with interest accruing. Trump posted a bond of $175 million, and the appeals process played out in the New York Appellate Division’s First Judicial Department.
As a whole, the appeals court ultimately affirmed the judgment from Engoron, but the panel of five judges was divided, with three separate opinions, including partial dissents. The court also allowed a path forward for another appeal before New York’s highest court, the Court of Appeals.
Two of the judges–Moulton and Justice Dianne Renwick–said they thought Attorney General Letitia James “acted well within her lawful power in bringing this action, and that she vindicated a public interest in doing so.” However, both disagreed with the high penalty.
A majority of the court thought the judgment should be vacated in addition to the penalty, and one of the opinions noted that James “has not yet proven her case.”
Justices John Higgitt and Llinét Rosado joined an opinion saying Engoron’s judgment should be vacated and a new trial ordered.
“Notwithstanding our analysis, as reflected in our writing, that vacatur of the judgment and a new trial is the appropriate resolution, Justice Rosado and I, after much consideration, with great reluctance and with acknowledgement of the incongruity of the act, join the decretal modifying the judgment to the extent of vacating the disgorgement and sanctions awards,” Higgit wrote.
“Under the truly extraordinary circumstances here, where none of the writings enjoys the support of a majority, we are moved to take this action to permit this panel to arrive at a decision and to permit the parties and the Court to avoid the necessity of reargument.”
James said her office would pursue an appeal and emphasized the court’s decision to uphold Engoron’s judgment.
“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 said in a statement on X.
“The court upheld the injunctive relief we won, limiting Donald Trump and The Trump Organization officers’ ability to do business in New York.”
Justice David Friedman was critical of the Supreme Court’s ruling and James’s action, accusing her of being interested in “political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business.”
He said that the court’s decision “unanimously derails the effort to destroy his business.”
In a post declaring “TOTAL VICTORY,” Trump said on Truth Social that he was “so honored by Justice David Friedman’s great words of wisdom.”
Acting U.S. Attorney for New Jersey Alina Habba, who also represented Trump in his fraud trial, praised the appeals court ruling on social media.
“Today’s ruling by the New York appeals court is a resounding victory for President Trump and his company,” she said in a statement posted to X.
“The court struck down the outrageous and unlawful $464 million penalty, confirming what we have said from the beginning: the Attorney General’s case was politically motivated, legally baseless, and grossly excessive. President Trump won—and justice won with him.”
The splintered decision came roughly a year after oral argument in September 2024 and amid a flurry of litigation involving the administration. Before Trump took office, James’s prosecution was one of several cases facing him—each was dismissed or petered out with no penalty.
Apart from his civil fraud case, Trump was found guilty on 34 felony counts of falsifying business records in 2024. New York Supreme Court Justice Juan Merchan issued a largely symbolic sentencing against Trump in January as the president prepared to enter his second term of office. That case is currently awaiting a decision from a federal appeals court, which heard oral arguments in June over Trump’s attempt to transfer the case out of state court.
In both cases, Trump proclaimed his innocence amid accusations that his business documents were fraudulent. James’s case initially also targeted Trump’s children, but Trump’s daughter Ivanka was dismissed from the case after the First Judicial Department stated that the allegations against her were too old.
Engoron eventually granted summary judgment, finding Trump liable for fraud. He also prohibited Trump’s former financial officer, Allen Weisselberg, from controlling the finances of any New York corporation. Moulton and Renwick both defended this prohibition and other orders from Engoron, such as extensive monitoring of the defendants’ operations.
“On the record before us, we find that the Supreme Court properly exercised its discretion in awarding injunctive relief,” Moulton’s opinion reads, joined by Renwick. “Defendants persistently and intentionally inflated the asset values reported in their [statements of financial condition].”
Besides Trump’s share of the penalty, his sons Donald Jr. and Eric were ordered to disgorge $4,013,024 each, and Weisselberg was ordered to disgorge $1 million he received as severance.
In their opinion, Moulton and Renwick said James did not carry her burden of establishing a reasonable approximation of profits connected to alleged violations.
“Indeed, the disgorgement in this case was far from a reasonable approximation,” Moulton’s opinion reads.
Higgit and Rosado focused on a summary judgment that Engoron issued before the trial took place. Engoron failed to properly evaluate the evidence, and his “error in granting summary judgment permeated the ensuing trial,” they said.
Friedman criticized James’s case at length and said that “nothing in the alleged misconduct (if there was any misconduct) has the slightest bearing on the public interest.” The fact that three of the five judges opposed Engoron’s judgment also concerned him, he said.
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