2 weeks ago
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An appeals court in New York has thrown out a civil fraud penalty that would have cost United States President Donald Trump and his business associates nearly half a billion dollars, calling the fine “excessive”.
On Thursday, a five-judge panel in New York’s Appellate Division rendered its decision after weighing Trump’s appeal for nearly 11 months.
In its ruling, the panel cited the Eighth Amendment of the US Constitution, which prohibits the government from levying unduly harsh penalties on its citizens.
The case stems from a civil suit brought by New York Attorney General Letitia James, who argued that Trump had inflated his financial records in order to secure advantages with insurance companies, banks and other financial institutions.
In February 2024, a lower court had ordered Trump to pay $355m in penalties, an amount the appeals court called into question. That amount has since grown to about $515m due to accumulating interest.
“While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, the court’s disgorgement order, which directs that defendants pay nearly half a billion dollars to the State of New York, is an excessive fine that violates the Eighth Amendment of the United States Constitution,” two of the panel’s judges, Dianne T Renwick and Peter H Moulton, wrote in one opinion.
While the court did dismiss the penalty in its entirety, its judges were divided over the merits of the lower court’s ruling, finding that Trump and his co-defendants had misrepresented their wealth in “fraudulent ways”.
What did the lower court decide?
The judge who issued that initial decision, Arthur Engoron, a Democrat, explained in his initial decision that “the frauds found here leap off the page and shock the conscience”.
In his 92-page decision, Engoron expressed particular frustration over Trump’s refusal to answer questions before the court and his refusal to acknowledge the misrepresentations in his financial documents.
“Their complete lack of contrition and remorse borders on pathological. They are accused only of inflating asset values to make more money. The documents prove this over and over again. This is a venial sin, not a mortal sin,” Engoron wrote.
“Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways.”
Trump and his co-defendants — who include his sons Eric Trump and Donald Trump Jr, as well as other Trump Organization leaders — were dealt a combined financial penalty that currently totals to about $527m, including interest.
While Engoron’s ruling left the Trump Organization intact, it did bar Eric Trump and Donald Trump Jr from serving in executive roles for two years.
Trump, meanwhile, did not have an official role in the organization at the time. He was in the midst of his 2024 campaign for re-election, and he dismissed the fraud case as “election interference”.
A slate of ongoing appeals
He has repeatedly denied wrongdoing in the myriad legal cases he faced between his two terms as president.
In 2023, for instance, a jury found Trump liable for sexual abuse and defamation in a case involving writer E Jean Carroll, who alleged the Republican leader raped her in a New York City department story, Bergdorf Goodman.
The jury in that case awarded $5m to Carroll. A second defamation civil suit filed by Carroll resulted in an even bigger sum for damages: $83.3m. Trump continues to appeal both decisions.
During that period, Trump also faced four criminal indictments, two on the state level and two on the federal level.
The federal cases were dropped ahead of Trump’s second inauguration, but one of the state level cases, also in New York, resulted in Trump becoming the first president, past or present, to become a convicted felon. He was found guilty in May 2024 on 34 counts of falsifying business records.
He continues to appeal that case as well, and his legal team has pushed to move the case from the state court system to the federal level, where Trump would enjoy immunity as president.
Trump versus Letitia James
In recent weeks, the Trump administration has also ramped up pressure against James, the attorney general who brought the civil fraud case at the heart of Thursday’s decision.
On August 8, Trump’s Justice Department reportedly issued a subpoena against James, to force the Democrat to release records related to the civil fraud case and her investigation into the National Rifle Association (NRA).
That subpoena comes on the heels of James’s success in a civil suit against the NRA that alleged the advocacy group misspent millions of dollars in charitable funds. Last December, a jury imposed fines on two NRA’s leaders as a result and required the organisation to reform its operations.
Trump, however, has denounced James’s lawsuits as politically motivated and even called her racist.
“Remember when Racist New York State Attorney General, Letitia ‘Peekaboo’ James, went after former Governor of New York, Andrew Cuomo, only to announce that she was going to run for Governor?” Trump wrote in one post, citing James’s short-lived 2022 bid to be New York’s governor.
His post continued by alleging that James switched tracks and ran for the attorney general position instead, where she could “happily continue to ‘GET TRUMP’.”
“She even quickly convinced a Trump Hating Judge that my assets were valued too high and I was using totally ‘Disclaimered Financial Statements’ to take advantage of highly sophisticated & well represented Banks & Insurance Companies,” Trump wrote, citing the civil fraud case.
James began her tenure as New York’s attorney general in 2019, and she was re-elected to the post in 2022.
Her first term as attorney general coincided with Trump’s first term as president, and she quickly began to investigate the Trump Organization upon taking office.
Trump, meanwhile, has pointed to statements she made on the campaign trail — calling him an “embarrassment” and “illegitimate” — as evidence of her alleged bias against him.
James, however, has argued that she sought equal justice under the law.
“No matter how rich, powerful or politically connected you are, everyone must play by the same rules. We have a responsibility to protect the integrity of the marketplace, and for years, Donald Trump engaged in deceptive business practices and tremendous fraud,” she said in February 2024, after Judge Engoron’s decision.
