In huge win for Trump, court throws out civil fraud penalty
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US President Donald Trump had been ordered to pay about half a billion dollars after a judge found that he fraudulently overstated the value of his properties and other assets to bolster his family business.
PHOTO: AFP
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- Appeals court threw out half-billion-dollar penalty against Trump in fraud case, a defeat for NY Attorney-General Letitia James.
- Court was deeply divided; some agreed with liability, others wanted a new trial or dismissal. Restrictions on Trump's businesses remain.
- Trump called it a "TOTAL VICTORY." James will appeal to the state's highest court. Justice Department is investigating James.
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NEW YORK - In a triumph for Donald Trump, a New York state appeals court on Aug 21 threw out an approximately half-billion-dollar penalty against the US president, in a fraud case that had been one of his biggest legal setbacks before his return to the White House.
The decision by the Appellate Division in Manhattan is a defeat for New York Attorney-General Letitia James, who Mr Trump accused of bringing the civil fraud lawsuit to advance a political witch hunt and deny him a second term.
A trial judge had ordered the penalty in February 2024
Mr Trump denied wrongdoing, and his lawyers argued that any errors in reporting Mr Trump’s fortune to his lenders and business partners were irrelevant because none was harmed.
The Aug 21 decision by the five-judge appeals court was deeply splintered, with some agreeing Mr Trump should be held liable while others called for a new trial or even dismissal.
In a social media post, Mr Trump called the decision a “TOTAL VICTORY.”
“I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision,” Mr Trump wrote.
Ms James said she will ask the Court of Appeals, the state’s highest court, to review the case.
“It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit,” she added.
Mr Trump was separately convicted in May 2024 on criminal charges in a New York state court in Manhattan stemming from hush money paid to porn star
Lack of contrition
The appeals court in Ms James’ case issued approximately 320 pages of opinions.
Two judges found Mr Trump was properly held liable, and Ms James “vindicated a public interest” by suing, but said the penalty was unconstitutionally excessive. They upheld restrictions imposed against Mr Trump’s businesses.
Two other judges also found Ms James had authority to sue, but a new trial was necessary because of errors by the trial judge. The fifth judge said the case should be thrown out.
The Aug 21 decision came as the US Department of Justice investigates Ms James for possible mortgage fraud. The probe is part of a White House effort to use the power of government against people who have investigated Mr Trump or resisted his agenda.
Prosecutors convened a grand jury to investigate whether Ms James’ fraud case deprived Mr Trump of his civil rights, a person familiar with the matter said this month. A lawyer for Ms James called it part of Mr Trump’s “political retribution campaign.”
Mr Trump was appealing a judgment entered by Justice Arthur Engoron in Manhattan, following a three-month nonjury trial.
Justice Engoron found Mr Trump had inflated his wealth over several years before first becoming president in 2017, to dupe lenders and insurers into providing better terms to the Trump Organisation.
In February 2024, Justice Engoron ordered Mr Trump and other defendants to pay US$464.6 million (S$600 million) in penalties plus interest, which has continued to accrue.
Mr Trump was personally liable for nearly 98 per cent of the judgment, with his eldest sons, Donald Trump Jr and Eric Trump, and former Trump Organisation chief financial officer Allen Weisselberg responsible for the remainder.
Referring to Mr Trump and other Trump Organisation figures, Justice Engoron said their “complete lack of contrition and remorse borders on pathological.”
Justice Engoron also banned Mr Trump and the Trump Organisation from applying for loans from banks registered in the state for three years, and effectively barred Donald Trump Jr and Eric Trump from running the business for two years.
The appeals court put these restrictions on hold during the appeals process, while letting a court-appointed monitor for the Trump Organisation continue her work.
No ‘cataclysmic harm’
In the Aug 21 decision, the two judges who found Mr Trump was properly held liable, Ms Dianne Renwick and Mr Peter Moulton, said the evidence demonstrated that the defendants “engaged in a decade-long pattern of financial fraud and illegality.”
They also rejected suggestions that Ms James sued to further political goals, saying the “political” choice would have been to not pick a fight with a powerful adversary.
But they said Mr Trump’s wrongdoing did not cause “cataclysmic harm” to justify a half-billion-dollar award, though injunctive relief to prevent future wrongdoing was appropriate.
“The Attorney-General may act, as she did in this case, before a potential catastrophe occurs, to deter further fraudulent business behaviour by defendants specifically, and to police market behavior generally,” they wrote.
“Having achieved these goals the state is not entitled to compound its victory with a massive punitive fine,” they added.
In voting to dismiss the case, Justice David Friedman said Ms James’ case was politically motivated, and voters had rendered their own verdict on Trump’s political career.
He also said subjecting Mr Trump to another trial “would disrupt the political life of the United States and would undermine its national interest, particularly at a time of high global tension.” REUTERS
