A New York appellate court on Thursday erased the half-billion-dollar penalty imposed on President Donald Trump in a civil fraud case, while leaving intact restrictions on his ability to run businesses, a split ruling that both relieves and restrains the real estate magnate-turned-politician.
The five-judge panel concluded that the $515 million disgorgement order — which stemmed from a lower-court finding that Trump had misrepresented his wealth to lenders and insurers — was unconstitutionally excessive. But the judges allowed sanctions blocking him and his two oldest sons from serving as officers or directors of New York corporations for several years.
The outcome represents a sharp reversal of Judge Arthur Engoron’s decision last year, which not only concluded that Trump had repeatedly overstated his financial position but also ordered him to pay $355 million in penalties, an amount that swelled with interest. By tossing out the financial hit but maintaining governance bans, the appeals court sought to draw a line between punitive fines and targeted remedies.
In a lengthy 323-page ruling marked by multiple concurring and dissenting opinions, the appellate division underscored its view that Engoron’s disgorgement order violated the Eighth Amendment. “While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, the court’s disgorgement order…is an excessive fine,” Judges Dianne T. Renwick and Peter H. Moulton wrote.
The ruling, which comes seven months after Trump returned to the White House, spares him from a payout that threatened to rattle the finances of his real estate empire. Trump had already posted a $175 million bond to stave off collection.
Still, the decision leaves open a potential appeal to New York’s highest court, a path that Attorney General Letitia James may pursue. James, who brought the civil case, has repeatedly described Trump’s conduct as “lying, cheating, and staggering fraud.” Her office had no immediate comment.
The appellate panel did not deliver a majority opinion, but instead issued a patchwork of findings. Two judges emphasized James proved her case but imposed penalties beyond what the law allowed. Another judge argued the attorney general exceeded her authority altogether, contending that lenders could have pursued remedies if they believed they had been misled.
One judge also faulted Engoron for ruling, before trial, that Trump had committed fraud — a procedural move that shaped the case from the start.
The unusual length of deliberations underscored the difficulty of the case. Nearly 11 months elapsed between oral arguments and Thursday’s decision, far longer than the typical turnaround time for civil appeals.
Trump has denied wrongdoing, labeling the litigation a politically-motivated effort by James and Engoron, both Democrats. At trial, he called himself “an innocent man” and said the proceedings were “a fraud on me.” His lawyers argued that disclaimers on his financial statements, along with the independent assessments made by banks and insurers, meant no fraud occurred.
The case is one of several legal battles Trump continues to confront. Earlier this year, he was sentenced in his New York criminal hush money case to an unconditional discharge, leaving his conviction intact but avoiding additional penalties. He is appealing that ruling. Separately, federal appeals judges recently upheld an $83.3 million judgment against him in writer E. Jean Carroll’s defamation case.
For Trump, the ruling removes the immediate risk of a massive financial outflow but cements limits on his corporate activities in New York. For the state, the case illustrates the difficulty of balancing deterrence against penalties deemed excessive by higher courts.
As Trump continues his second term as president, the legal constraints on his business operations may prove less threatening to his political fortunes than to the family enterprise that has long defined his public identity.
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