New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Appellate panel reverses massive disgorgement order as excessive but affirms underlying fraud findings in state civil case.
A New York state appeals court on August 21, 2025, overturned a civil fraud penalty of nearly half a billion dollars imposed on Donald J.
Trump and affiliated parties, while maintaining the verdict that they committed financial fraud through years of inflated asset valuations.
In a ruling by a split five-judge panel of the Appellate Division, First Department, the court determined that the disgorgement order—originally set at approximately $355 million, plus interest—amounted to an excessive fine in violation of the Eighth Amendment.
Nevertheless, the panel upheld the lower court’s finding that the defendants engaged in longstanding fraudulent practices by inflating property values to mislead lenders and insurers.
The original judgment, handed down by Justice Arthur Engoron in February 2024 after a non-jury trial, ordered Trump, the Trump Organization, two of his adult children, and two former executives to disgorge around $354 million in ill-gotten gains, in addition to imposing leadership restrictions on the Trump Organization in New York.
In March 2024, the appellate court reduced the bond required to stay enforcement from $464 million to $175 million, which Trump subsequently posted.
The appeals court’s majority opinion stated that although the injunctive measures were crafted to address business practices, the disgorgement order was excessive under constitutional standards.
The court left intact other parts of the lower-court order, including restrictions on business operations.
Among the panel’s dissenting voices, Judge David Friedman contended that the lawsuit was politically motivated, targeting the undermining of Trump’s business and political career.
Other opinions diverged on procedural grounds, with some judges suggesting parts of the case warranted retrial, while others opposed that view.
The ruling preserves the possibility of further review by New York’s highest court, the Court of Appeals.
It also lifts the immediate financial pressure from Trump and his associates, with the posted bond expected to be returned once appellate proceedings conclude.
Additionally, the U.S. Department of Justice is conducting an investigation into the New York Attorney General’s conduct in bringing the case.
Among the inquiries, federal prosecutors have issued subpoenas related to the suit, exploring whether prosecutorial authority was misused.
This development marks a significant legal reprieve for Trump amid multiple concurrent legal challenges, including separate criminal and civil proceedings.
Trump and affiliated parties, while maintaining the verdict that they committed financial fraud through years of inflated asset valuations.
In a ruling by a split five-judge panel of the Appellate Division, First Department, the court determined that the disgorgement order—originally set at approximately $355 million, plus interest—amounted to an excessive fine in violation of the Eighth Amendment.
Nevertheless, the panel upheld the lower court’s finding that the defendants engaged in longstanding fraudulent practices by inflating property values to mislead lenders and insurers.
The original judgment, handed down by Justice Arthur Engoron in February 2024 after a non-jury trial, ordered Trump, the Trump Organization, two of his adult children, and two former executives to disgorge around $354 million in ill-gotten gains, in addition to imposing leadership restrictions on the Trump Organization in New York.
In March 2024, the appellate court reduced the bond required to stay enforcement from $464 million to $175 million, which Trump subsequently posted.
The appeals court’s majority opinion stated that although the injunctive measures were crafted to address business practices, the disgorgement order was excessive under constitutional standards.
The court left intact other parts of the lower-court order, including restrictions on business operations.
Among the panel’s dissenting voices, Judge David Friedman contended that the lawsuit was politically motivated, targeting the undermining of Trump’s business and political career.
Other opinions diverged on procedural grounds, with some judges suggesting parts of the case warranted retrial, while others opposed that view.
The ruling preserves the possibility of further review by New York’s highest court, the Court of Appeals.
It also lifts the immediate financial pressure from Trump and his associates, with the posted bond expected to be returned once appellate proceedings conclude.
Additionally, the U.S. Department of Justice is conducting an investigation into the New York Attorney General’s conduct in bringing the case.
Among the inquiries, federal prosecutors have issued subpoenas related to the suit, exploring whether prosecutorial authority was misused.
This development marks a significant legal reprieve for Trump amid multiple concurrent legal challenges, including separate criminal and civil proceedings.
