A New York appellate court on Thursday overturned the $515 million civil fraud penalty imposed on former President Donald Trump, handing him a major legal victory in one of the most consequential cases brought against his business empire.
The five-judge panel of the state’s mid-level Appellate Division ruled that the penalty, stemming from Attorney General Letitia James’s civil fraud lawsuit, was unconstitutional and excessive. The decision strikes down Judge Arthur Engoron’s 2024 order that had levied an initial $355 million fine against Trump — an amount that had grown to more than $515 million with accrued interest.
The court’s ruling also wiped out financial penalties against Trump’s sons, Eric Trump and Donald Trump Jr., which had raised the Trump Organization’s total liability to over $527 million. Other restrictions ordered by Engoron — including temporary bans preventing Trump and his sons from serving in corporate leadership roles — remain paused as the appeals process continues.
Trump had previously avoided immediate collection of the fine by posting a $175 million bond earlier this year.
The case originated with James’s 2022 lawsuit alleging that Trump and his company fraudulently inflated property values to obtain favorable loans and insurance terms. Engoron ruled against Trump last year, imposing sweeping financial penalties and business restrictions. Trump’s legal team appealed, arguing that the judgment was disproportionate and violated the Eighth Amendment’s prohibition on excessive fines.
While the appellate decision does not overturn Engoron’s underlying fraud finding, it significantly reduces Trump’s financial exposure and relieves immediate pressure on his real estate holdings. Analysts noted that had the penalty remained in place, the Trump Organization might have been forced to sell off properties or restructure operations to meet its obligations.
The ruling leaves open the possibility of further review by the New York Court of Appeals, the state’s highest court. For now, however, Trump is free of the massive financial judgment that critics had described as a potential death blow to his business empire.
The decision drew swift political reaction. Trump allies celebrated the outcome as vindication, arguing it underscored what they view as prosecutorial overreach by James. Critics, meanwhile, stressed that the fraud finding remains intact and said the ruling does not absolve Trump of wrongdoing.
