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An appellate court has thrown out the $500 million civil fraud penalty against President Donald Trump in the high-profile case brought by New York Attorney General Letitia James.
The New York Appellate Division overturned the penalty, ruling the disgorgement was an excessive fine that violates the Eighth Amendment.
The five-member panel all upheld findings that Trump and his company were liable, affirming that James acted within her authority and that injunctive relief to curb Trump Organization practices was appropriate.
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The ruling leaves liability intact but eliminates the massive financial penalty of $364 million plus interest, which rises to around $500 million.
Trump took to Truth Social to declare a “total victory” and rail against James and the original trial judge, Arthur Engoron. James claimed a win too, noting the appeals court upheld the findings of fraud and restrictions on Trump’s business and she pledged to appeal the penalty decision.
“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!” Trump wrote.
“I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision that was hurting Business all throughout New York State. Others were afraid to do business there. The amount, including Interest and Penalties, was over $550 Million Dollars. It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before.”
He also blasted the case as election interference, saying it was tried during his 2024 presidential campaign, while praising Justice David Friedman, who issued a partial dissent.
Friedman wrote that James’ true aim was political and argued the entire case should be dismissed. He said her “ultimate goal was not market hygiene … but political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business.”
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Friedman blasted James’ use of Section 63(12) of New York’s Executive Law, which gives the state attorney general broad power to pursue civil fraud claims.
He wrote that it was unprecedented and political, giving James “essentially limitless power to prosecute her political enemies.”
Friedman wrote that Trump’s business deals involved sophisticated parties who profited without harming the public and concluded he would “reverse the judgment and dismiss the complaint.”
“Section 63(12) has never been used in the way it is being used in this case – namely, to attack successful, private, commercial transactions, negotiated at arm’s length between highly sophisticated parties fully capable of monitoring and defending their own interests,” Friedman wrote.
“All parties to these private transactions profited handsomely from the deals, from which there was no… discernible negative effect on the public interest.”
Because the judges were split on liability, the case is now likely headed to New York’s highest court, the Court of Appeals.
James confirmed her intention to appeal the ruling in a statement, saying she was doing so to protect the rights and interests of New Yorkers.
“The [appellate court] today affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud,” James wrote.
“The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York. It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit.”
James, a Democrat elected attorney general in 2018, has long had Trump in her crosshairs. During her campaign she called him an “illegitimate president” and pledged to “use every area of the law” to investigate him and his businesses.
Since Trump returned to office, the Justice Department has opened a grand jury investigation into James and issued subpoenas tied to the civil fraud case against Trump, Fox News Digital has learned.
James has alleged that Trump is using the federal government to go after her politically. The Justice Department is also investigating her for alleged mortgage fraud, including misrepresenting her primary residence on loans for homes in Virginia and New York. She denies the allegations and claims Trump is behind the move, calling it a “revenge tour” for the civil fraud lawsuit.
Fox News’ Tamara Gitt and Kevin Ward contributed to this report.
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