New York appeals court voids the nearly $500 million civil fraud penalty against Trump
A New York appeals court has thrown out the roughly half-billion dollar judgment against President Donald Trump in the civil fraud case brought by the state’s attorney general.
Thursday’s decision, which was not unanimous, leaves Trump still liable for fraud. The judges aligned to uphold his liability and toss the penalty so the case could move forward for further appellate review.
In the prevailing opinion, the judges wrote, “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.”
CNN senior legal analyst Elie Honig said the “monumental” ruling was unusual due to it taking the court nearly a year to reach this decision.
“This is a huge win for Donald Trump, any way you cut it. And this is a stinging rebuke to the Attorney General Letitia James,” Honig said on CNN.
Former Trump lawyer Alina Habba, meanwhile, called the ruling “a resounding victory for President Trump and his company.”
“The court struck down the outrageous and unlawful $464 million penalty, confirming what we have said from the beginning: the Attorney General’s case was politically motivated, legally baseless, and grossly excessive,” Habba, who was on Trump’s legal team in the case and is now an acting US Attorney in New Jersey, . “President Trump won - and justice won with him.”
Four judges agreed that the lower state court correctly found Trump and the other defendants liable for fraud and agreed that James had the right to bring the civil action under New York’s Executive Law 63(12) – a long-debated interpretation of the statute.
“We agree with Supreme Court that the Attorney General acted well within her lawful power in bringing this action, and that she vindicated a public interest in doing so,” the opinion says.
The prevailing decision supported Judge Arthur Engoron’s finding that Trump and others engaged in years of fraud by issuing falsified financial statements that inflated the value of his properties and misled insurers and lenders.
James is likely to appeal this decision to New York’s highest appellate court. A representative for James did not have an immediate comment.
Split decision outlined in 322 pages
The majority decision by members of the appellate panel means that Trump sheds the immense financial pressure he faced to satisfy the $354 million judgment, which with interest totals roughly $500 million.
Last year, the appeals court agreed to lower the bond Trump was required to post to $175 million – down from the full amount – to stop the New York attorney general’s office from beginning to collect the judgment while he appealed. Now that money will come back to Trump once the appeals are exhausted.
The split panel wrote three decisions in response to Trump’s appeal argued last September.
Two judges thought the matter should be retried to address errors by Judge Engoron though the others disagreed.
Justice Peter Moulton said a retrial would be “unnecessary and likely terminal.”
“It is difficult to imagine that a trial could proceed while one of the principal defendants, and a central witness, is President of the United States,” Moulton wrote.
A fifth panelist, Justice David Friedman, argued in a standalone opinion that the entire complaint should be dismissed and accused James of being driven by political motivations.
“Plainly, her ultimate goal was not ‘market hygiene,’ as posited by Justice Moulton, but political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business. The voters have obviously rendered a verdict on his political career. This bench today unanimously derails the effort to destroy his business,” Friedman wrote.
Trump DOJ investigating James
The Trump Justice Department, meanwhile, is investigating James for bringing the case as it continues to take on the president’s perceived enemies.
The US attorney’s office for the Northern District of New York has issued subpoenas seeking information about James’ activities, and a Washington, D.C., based DOJ official, Ed Martin, is looking into claims of mortgage fraud.
Abbe Lowell, an attorney for James, said of the DOJ probes, “Investigating the fraud case Attorney General James won against President Trump and his businesses has to be the most blatant and desperate example of this administration’s carrying out the president’s political retribution campaign.”
CNN’s Shania Shelton contributed to this report.