Former President Donald Trump scored a major legal win in New York this week after a state appellate court struck down a nearly half-billion-dollar fraud penalty against him and the Trump Organization. Yet the ruling was not an outright victory: the panel of judges upheld findings that Trump and his company engaged in years of financial fraud, ensuring that the case will continue to shadow his business empire.
Penalties Tossed, Fraud Liability Upheld
The case, brought by New York Attorney General Letitia James, accused Trump, his two eldest sons, and Trump Organization executives of inflating property values to secure better loan terms from banks. In February 2024, Judge Arthur Engoron had imposed $454 million in penalties, which ballooned with interest to more than $527 million while Trump appealed.
On Thursday, a panel of five appellate judges ruled that Engoron’s financial penalty was “excessive,” overturning the fine. But the judges also agreed across three separate opinions totaling 323 pages that Trump and his associates were largely liable for fraud.
“The evidence demonstrates that defendants engaged in a decade-long pattern of financial fraud and illegality,” the majority opinion stated.
Trump Celebrates, James Silent
Trump, who has repeatedly cast the lawsuit as politically motivated, hailed the decision on Truth Social, calling it a “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 Attorney General’s office declined to comment immediately after the ruling.
Inside the Trump Fraud Case
James’s investigation revealed instances in which the Trump Organization misrepresented assets, such as tripling the size of Trump’s Manhattan penthouse on paper to inflate its value. Bank officials testified that the inflated figures helped the company secure favorable lending terms.
The case went to trial in October 2023, spanning three months without a jury. The proceedings often veered into spectacle:
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Trump himself attended several days, railing against the case during breaks.
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Donald Trump Jr. joked with the judge and even asked a courtroom artist for a “sexy” sketch of his testimony.
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Trump attorney Alina Habba now the U.S. Attorney for New Jersey clashed with Judge Engoron in closing arguments, before Trump delivered his own.
Despite the theatrics, Engoron concluded that the Trump family and its executives had engaged in systemic fraud, though he struggled to justify the scale of the penalties.
Why the Appeals Court Ruled This Way
The appellate panel was deeply divided. Three separate written opinions reflected disagreements over key legal issues, including:
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Whether the Attorney General had authority to bring the case.
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Whether the Trump Organization should be liable for every count.
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Whether Trump deserved a new trial.
Ultimately, two judges joined the majority “for the sole purpose of ensuring finality,” opening a path for further appeal to New York’s highest court.
While affirming fraud liability, the judges rejected Engoron’s penalty, writing: “While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State.”
More Appeals Likely
Legal experts say the fight is far from over. Both sides have incentives to appeal.
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Trump’s team may challenge the fraud liability that was upheld.
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James’s office may push to reinstate the financial penalty and sanctions against Trump’s lawyers.
“Each side has a bone to pick,” said Barbara Jaffe, a retired New York Supreme Court Justice. “The opinion was not a legal slam dunk for either side.”
The case could drag on for another year or more, with interest on Trump’s appeal bond accruing at roughly $1 million every nine days.
The $175 Million Bond
For now, no money will change hands. Trump posted a $175 million appeal bond in April 2024, underwritten by Knight Specialty Insurance and fully collateralized by his own cash. Court records show Trump cannot access those funds during the appeal process.
The Bigger Picture
The decision comes as Trump faces a tangle of other legal and political battles. For his real estate empire, the appellate ruling provides short-term financial relief but also cements a lasting legal stain: multiple New York judges now agree that Trump and his company committed fraud for years.
For Attorney General James, the setback on penalties leaves her landmark case weakened, but not undone. The question now shifts to New York’s highest court and potentially the U.S. Supreme Court as both sides weigh their next moves.
