A New York appellate court on Thursday, August 21, 2025, overturned the half-billion-dollar financial penalty imposed in the civil fraud case against former President Donald Trump, his sons, and Trump Organization executives, ruling that the fine was “excessive.” However, the panel of justices remained sharply divided on the overall merits of the case.
One justice from the Appellate Division, First Judicial Department, wrote that the disgorgement order against Mr. Trump, his two sons, and other company executives amounted to “an excessive fine barred by the Eighth Amendment.”
In February 2024, Judge Arthur Engoron had ordered Trump and his co-defendants to pay nearly $364 million in “ill-gotten gains,” plus millions in interest, bringing the total to about $527 million. Engoron’s ruling placed Mr. Trump personally responsible for nearly 98% of the penalty.
New York Attorney General Letitia James quickly announced her intention to appeal the appellate decision to the Court of Appeals, the state’s highest court. While critical of the reversal, she praised the ruling for upholding sanctions restricting Trump’s business activities in New York.
“The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York. It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit,” James said.
Mr. Trump, however, celebrated the development on his Truth Social account, declaring “TOTAL VICTORY.”
“I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision that was hurting Business all throughout New York State,” Trump wrote.
The case began in 2022 when James accused Trump of orchestrating a scheme to inflate his net worth and the value of his properties to secure favorable loan and insurance terms. Trump’s legal team has consistently argued that the lawsuit was politically motivated, but Engoron ruled earlier this year that Trump and his executives knowingly misrepresented valuations by hundreds of millions of dollars over a decade.
The five-justice appellate panel issued a lengthy 323-page set of opinions, revealing deep internal disagreement. Two justices favored a new trial, and one justice believed the case should be dismissed entirely. Ultimately, four justices agreed to vacate the monetary judgment, calling it “far from a reasonable approximation” of what was warranted.
Justice David Friedman, dissenting, criticized the fractured outcome:
“I find it remarkable that, although a three-justice majority of this five-justice panel believe that the judgment in favor of the Attorney General should not stand … the result of the appeal is the affirmance of the judgment, albeit as modified to eliminate the disgorgement award,” Friedman wrote. He likened the ruling to “a team being awarded a touchdown without crossing the goal line.”
Justices John Higgitt and Llinét Rosado reluctantly joined the majority, emphasizing the need to reach a final resolution:
“Under the truly extraordinary circumstances here, where none of the writings enjoys the support of a majority, we are moved to take this action … We must therefore agree with Justice Friedman in his observation that a remarkable situation has necessitated a remarkable solution.”
Despite overturning the penalty, the appellate panel concluded that Judge Engoron “was even-handed at trial, and allowed both sides to ‘make their case.’”
Trump testified during the November 2023 trial, insisting his company had “underestimated” property values rather than inflating them. “The numbers you are talking about here is, you know, they are very big numbers, very, very big. Far bigger — the values are far bigger than what is on the financial statement,” Trump said, adding there were “billions of dollars more.”
Engoron rejected that claim, finding Trump’s testimony and that of his sons and executives “not credible.” The appellate court largely deferred to those credibility assessments, instead siding with testimony provided by Trump’s former attorney Michael Cohen.
“We defer to the court’s findings that the testimony of President Trump, Donald Trump, Jr., Eric Trump, Jeffrey McConney and Allen Weisselberg were not credible, and that the testimony of Michael Cohen was credible,” the court said.
The ruling sets the stage for another high-stakes appeal as both Trump and the Attorney General’s office seek clarity from New York’s highest court on one of the most consequential civil cases involving a former U.S. president.
