Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
A New York court has overturned a roughly $500mn penalty against Donald Trump in a landmark civil fraud case, ruling that one of the most severe civil penalties in US history was excessive.
Judges at New York’s second-highest appeals court said on Thursday they were vacating a “disgorgement award”, in a case that had centred on allegations that Trump and people connected to him fraudulently inflated the value of real estate assets in representations to banks.
“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 that violates the Eighth Amendment of the United States Constitution,” justice Peter Moulton wrote in an opinion in which other judges concurred in whole or part.
The appellate panel did not overturn the lower court’s verdict that in 2024 found Trump and other defendants — including his elder sons, companies and some of their executives — liable for civil fraud.
Still, the decision marks a political victory for Trump in what had been one of his remaining legal headaches after other cases against him were dropped or derailed upon his return to the White House.
“TOTAL VICTORY in the FAKE New York State Attorney General Letitia James Case!”, Trump wrote on his Truth Social platform shortly after the court’s decision. “A GREAT WIN FOR AMERICA!!!”
Letitia James, New York’s attorney-general, who brought the original case, said she would appeal against the ruling to the state’s highest court.
In a statement, she said the court “affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud”.
“It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit.”
Trump and his businesses were initially found liable for inflating the value of residential and office buildings, hotels and golf courses by hundreds of millions of dollars in loan applications.
The court found that the valuations helped Trump gain loans on more favourable terms from the likes of Deutsche Bank, in effect harming the lender even though the loans were repaid in full and no complaint was made by the banks.
Moulton noted that “while harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state”.
He added that while the attorney-general might “police market behaviour” and did so in this case, “the state is not entitled to compound its victory with a massive punitive fine”.
James brought the case after pledging during her campaign for the role to take on Trump, and in the process became one of his primary political foes.
She has been in his political crosshairs since he returned to the Oval Office in January and is one of three public officials Trump’s administration has accused of mortgage fraud, an allegation she denies.
“Plainly, [James’] 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,” judge David Friedman said in an opinion that formed a separate section of the ruling and went further than the others on the panel that considered the case.
Trump maintained throughout his campaign that the fraud case was a “political witch-hunt” that amounted to interference in the 2024 presidential election.
Other Articles
No Comment! Be the first one.