A New York appeals court on Thursday overturned a $464 million fraud penalty against US President Donald Trump and his company, handing him a significant legal and financial victory.
The decision, issued by a five-judge panel in Manhattan, found that while Trump broke the law by inflating the value of marquee properties, the penalty imposed was unconstitutionally “excessive.”
The ruling erases one of the largest financial liabilities facing Trump, who has been battling multiple legal challenges before and after being reelected as the US president.
It also places renewed pressure on New York Attorney General Letitia James, whose high-profile civil case against Trump is now under federal scrutiny.
Appeals Court reduces Trump’s financial fine
The appellate panel concluded that Trump had violated state law by overstating the worth of assets such as Mar-a-Lago and his Trump Tower penthouse.
However, in three separate opinions, the majority ruled that the $464 million fine imposed was disproportionate.
The decision comes nearly two years after James filed her civil lawsuit in September 2022, alleging Trump engaged in persistent fraud by inflating valuations to secure favorable loans.
Following an 11-week trial, James secured a victory, but Thursday’s ruling effectively nullifies the massive financial penalty.
Trump had argued throughout the case that his valuation methods were consistent with industry practices and that disclaimers on his financial statements instructed lenders to perform independent due diligence.
He also emphasized that no banks suffered losses on loans tied to his valuations—a point the state did not contest.
Federal probe into Attorney General James
The ruling arrives as James faces scrutiny of her own.
According to a Bloomberg report in early August, the US Justice Department has convened a grand jury and issued subpoenas to James’s office as part of a federal probe into whether her civil lawsuit against Trump violated his legal rights.
The inquiry, run out of Albany, is also examining her separate case against the National Rifle Association.
Abbe Lowell, a lawyer representing James, criticized the investigation as politically motivated, calling it a “blatant and desperate example of this administration carrying out the president’s political retribution campaign.”
The appellate decision may force James to consider appealing to New York’s highest court in Albany to reinstate the penalty.
Trump’s broader legal cases
Thursday’s ruling is the latest development in Trump’s wide-ranging legal battles.
Most of his pending cases diminished following his election victory, with the Justice Department dropping two federal criminal prosecutions due to a longstanding policy against indicting a sitting president.
Trump was convicted in a Manhattan hush money case earlier this year, but a judge imposed no jail time, citing a US Supreme Court decision granting broad presidential immunity.
He is appealing both that conviction and two civil jury verdicts in defamation and sex abuse lawsuits brought by E. Jean Carroll, which together resulted in nearly $90 million in damages.
The appeals court decision not only relieves Trump of a major financial burden but also raises new questions about the trajectory of legal cases brought against him and the political dynamics surrounding their enforcement.
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