A New York state appeals court on Thursday overturned a roughly half-billion-dollar penalty imposed on Donald Trump after a trial judge determined that the former U.S. president had fraudulently inflated the value of his real estate holdings and other assets to enhance his family’s business operations.
The ruling by a five-judge panel of the Appellate Division in Manhattan marked a setback for New York Attorney General Letitia James, whose office initiated the civil fraud action against Trump in 2022.
During oral arguments in September of the previous year, the appellate judges had expressed doubts about the merits of the case.
Trump was challenging a verdict issued by Justice Arthur Engoron in a Manhattan state court, following a three-month bench trial.
Engoron concluded that Trump had exaggerated his net worth over multiple years prior to assuming the presidency in 2017, thereby misleading lenders and insurers to secure more favorable terms for the Trump Organization.
In February 2024, the judge mandated that Trump pay $454.2 million in penalties, plus accruing interest.
Trump bore personal responsibility for nearly 98% of the judgment, with his sons Donald Trump Jr. and Eric Trump, along with former Trump Organization CFO Allen Weisselberg, accountable for the balance.
In his decision, Engoron described the conduct of Trump and other Trump Organization executives as exhibiting a “complete lack of contrition and remorse [that] borders on pathological.”
Additionally, Engoron prohibited Trump and the Trump Organization from seeking loans from New York-registered banks for three years and effectively prevented Donald Trump Jr. and Eric Trump from managing the company for two years.
The appeals court stayed these prohibitions pending the appeal while allowing a court-appointed monitor to oversee the Trump Organization’s activities.
Trump has rejected any allegations of misconduct, with his legal team contending that the penalty was excessive and that James had exceeded her authority.
