A New York appeals court has dismissed a $500 million civil fraud penalty against President Donald Trump and his companies, ruling that the award was excessive and potentially unconstitutional. This decision marks a significant legal victory for Trump in a case brought by New York Attorney General Letitia James, who alleged fraudulent overvaluation of assets.
Who was involved: The case involved President Donald Trump, his companies including the Trump Organization, and his sons Eric Trump and Donald Trump Jr., who are executive vice presidents. New York Attorney General Letitia James brought the lawsuit, and the ruling was made by a five-judge panel of the state Appellate Division’s First Department, with judges including Peter Moulton, Dianne Renwick, John Higgitt, and Llinét Rosado.
What happened: The appeals court voided the massive civil fraud penalty, which had been imposed by trial judge Arthur Engoron in early 2024 after finding Trump and his companies guilty of ‘repeated and persistent fraud’ by overvaluing properties in financial statements. The court’s 323-page ruling contained divided opinions, with some judges upholding the fraud finding but dismissing the financial penalties, while others favored a new trial or complete dismissal.
When it occurred: The ruling was issued on Thursday, August 21, 2025, and was publicly announced that day. Trump commented on it shortly after during remarks to law enforcement officers in Washington, D.C., and via social media posts.
Where it took place: The legal proceedings and ruling occurred in New York State, specifically in the Appellate Division of the New York Supreme Court, which is based in New York City.
Why it happened: The court found that the penalty was an ‘excessive fine’ and potentially violated the Eighth Amendment, with judges noting that while harm occurred, it was not severe enough to justify such a large award. Trump’s legal team argued that the businesses involved benefited from the transactions and that some allegations were outside the statute of limitations.
How it unfolded: The appeal had been pending for almost a year after oral arguments in September 2024. The judges were deeply divided, leading to a unusual compromise where some signed off on the opinion to allow for further appeal. The ruling spares Trump from paying the penalty, which had been growing due to interest, and he had previously posted a reduced bond of $175 million to secure the judgment during appeal.
Impact: This decision is a major win for Trump, avoiding a financial blow that he claimed would severely damage his business. It also fuels his narrative of being targeted by political witch hunts, as he and his family celebrated the ruling. Conversely, Attorney General James affirmed that the fraud finding was upheld and plans to appeal, emphasizing that Trump violated the law.
What’s next: James intends to appeal the decision to New York’s highest court, the Court of Appeals, which could lead to further legal battles. Additionally, Trump is facing other legal challenges, including appeals in cases involving E. Jean Carroll, indicating that his legal woes are far from over.