Trump’s $464 Million NY Civil Fraud Penalty Tossed on Appeal (2)

A New York appeals court struck down a $464 million fraud penalty against President Donald Trump and his company, even as it upheld the finding that he broke the law by inflating the value of assets like Mar-a-Lago.

A five-judge panel in Manhattan on Thursday agreed with Trump that the size of the fine was unconstitutionally “excessive.” The long-awaited ruling by New York’s intermediate appeals court is a major victory for Trump over New York Attorney General Letitia James, whose office brought the case, though other aspects of the April 2024 judgment remain intact.

On top of the financial penalty, Trump and his sons faced a temporary ban on serving as corporate officers in New York. The company was also ordered to submit its financial records for review by an independent monitor. Those sanctions stand, though they remain on hold for possible further appeal by Trump.

In a statement, James said her office would challenge Thursday’s ruling at the New York Court of Appeals, the state’s highest court. She also stressed that “yet another court has ruled that the president violated the law.”

Still, the nearly half-billion-dollar fine had been the heart of Justice Arthur Engoron’s judgment. Its elimination adds to the list of Trump’s legal woes that have essentially melted away since he won reelection as president. The Justice Department dropped two federal criminal cases against him, citing a longstanding policy against prosecuting a sitting president. Though he was convicted of falsifying business records to conceal hush-money payments to porn star Stormy Daniels, he was sentenced to no jail time.

On Truth Social, Trump hailed the appellate decision as “A GREAT WIN FOR AMERICA!!!”

James sued Trump and his sprawling real estate company in September 2022, more than two years before his successful bid to retake the White House. She won after an 11-week trial in which she presented extensive evidence that Trump inflated the value of assets, including his Palm Beach, Florida, club as well as his Trump Tower penthouse on Fifth Avenue, for years to get better terms on loans. The conduct saved Trump millions of dollars in lower interest rates, which the state sought to claw back.

Trump argued that his method of valuing his real estate was typical of the industry and that disclaimers on his financial statements advised banks they should do their own valuations anyway. One of his biggest defense arguments was that no banks lost money on his loans, and the state didn’t dispute that.

One of the five judges who issued Thursday’s ruling dissented from the others and said the verdict should have been thrown out along with the penalty. Justice David Friedman accused James, a Democrat, of bringing the case for “partisan political motives” in the hopes of destroying both the Republican president’s political career and his real estate business.

“The voters have obviously rendered a verdict on his political career,” Friedman wrote. “This bench today unanimously derails the effort to destroy his business.”

Two other judges on the panel suggested that James’ case was weak but agreed on Trump’s liability solely for the purpose of allowing the court to issue a final decision the president can appeal.

The ruling puts fresh pressure on James, who has become the focus of a federal probe into whether her lawsuit violated Trump’s legal rights.

Read More: Trump Gets No Punishment After Conviction in Hush Money Case

On Aug. 8, people familiar with the federal probe into James’ case against Trump said Justice Department officials had convened a grand jury in Albany, New York, and sent subpoenas to James’ office. The subpoena also seeks information on James’ case against the National Rifle Association, said one of the people. The state attorney general won a court case last year accusing the gun-rights group of misusing donor funds.

Abbe Lowell, a lawyer for James, has said the investigation is a “blatant and desperate example of this administration carrying out the president’s political retribution campaign.”

Trump has long criticized James as well as Engoron, who oversaw the non-jury trial, calling both of them politically biased against him.

Trump has also appealed his conviction in the hush-money case, seeking to erase his criminal record. He has also appealed two civil jury verdicts against him in lawsuits brought by New York writer E. Jean Carroll, who claims Trump raped her in a department store dressing room in the 1990s. She sued him for sex abuse and defamation and won nearly $90 million in total damages. Trump has consistently denied Carroll’s allegations.

(Updates with more detail on the ruling and the dissenting judge.)

To contact the reporter on this story:
Erik Larson in New York at elarson4@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Anthony Lin, Anthony Aarons

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