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Court throws out $500m civil fraud penalty against Donald Trump Court throws out $500m civil fraud penalty against Donald Trump
(about 1 hour later)
Trump was sued by New York over inflated financial statements used for favorable terms from lenders and insurersTrump was sued by New York over inflated financial statements used for favorable terms from lenders and insurers
An appeals court has thrown out the massive civil fraud penalty against Donald Trump, ruling on Thursday in New York state’s lawsuit accusing him of exaggerating his wealth.An appeals court has thrown out the massive civil fraud penalty against Donald Trump, ruling on Thursday in New York state’s lawsuit accusing him of exaggerating his wealth.
The decision came seven months after the Republican returned to the White House. A panel of five judges in New York’s mid-level appellate division said the verdict, which stood to cost Trump more than $515m and rock his real estate empire, was “excessive”.The decision came seven months after the Republican returned to the White House. A panel of five judges in New York’s mid-level appellate division said the verdict, which stood to cost Trump more than $515m and rock his real estate empire, was “excessive”.
After finding that Trump engaged in fraud by flagrantly padding financial statements that went to lenders and insurers, Judge Arthur Engoron ordered him last year to pay $355m in penalties. With interest, the sum has topped $515m. After finding that Trump engaged in fraud by flagrantly padding financial statements that went to lenders and insurers, judge Arthur Engoron ordered him last year to pay $355m in penalties. With interest, the sum has topped $515m.
The total – combined with penalties levied on some other Trump Organization executives, including Trump’s sons Eric and Donald Jr – now exceeds $527m, with interest.The total – combined with penalties levied on some other Trump Organization executives, including Trump’s sons Eric and Donald Jr – now exceeds $527m, with 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,” Judges Dianne T Renwick and Peter H Moulton wrote in one of several opinions shaping the appeals court’s ruling. “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,” judges Dianne T Renwick and Peter H Moulton wrote in one of several opinions shaping the appeals court’s ruling.
Engoron also imposed other punishments, such as banning Trump and his two eldest sons from serving in corporate leadership for a few years. Those provisions have been on pause during Trump’s appeal, and he was able to hold off collection of the money by posting a $175m bond. Engoron had also barred Trump and his sons from corporate leadership roles for several years. Those restrictions were paused pending appeal, and Trump delayed payment by posting a $175m bond.
The court, which was split on the merits of the lawsuit and the lower court’s fraud finding, dismissed the penalty Engoron imposed in its entirety while also leaving a pathway for further appeals to the state’s highest court, the court of appeals. The appeals court dismissed the financial penalty imposed by Engoron but left room for further appeals to the state’s highest court. The panel took nearly 11 months to issue its decision, far longer than is typical.
The court took an unusually long time to rule, weighing Trump’s appeal for nearly 11 months after oral arguments last fall. Normally, appeals are decided in a matter of weeks or a few months. Trump has denied wrongdoing, calling himself “an innocent man” and claiming the case was a “fraud on me”. He continues to argue that the lawsuit is politically motivated.
New York’s attorney general, Letitia James, who brought the suit on the state’s behalf, has said the businessman turned politician engaged in “lying, cheating, and staggering fraud”. Her office had no immediate comment after Thursday’s decision. In the aftermath of the ruling making headlines, Trump posted on Truth Social that it was a “great win for America”. In another post, he claimed: “these were all Political Trials in an effort to destroy my viability as a Presidential Candidate before, during, and after the Election.” He continued to claim that the Biden-Harris administration attacked him and that “all of these Judges should be ashamed of themselves for allowing them to happen.”
Trump and his co-defendants denied wrongdoing. In a six-minute summation of sorts after a months-long trial, Trump proclaimed in January 2024 that he was “an innocent man” and the case was a “fraud on me”. He has repeatedly maintained that the case and verdict were political moves by James and Engoron, who are both Democrats. Trump continued with another lengthy screed, calling the penalty “a Political Witch Hunt, in a business sense” and “a Case of Election Interference by the City and State trying to show, illegally, that I did things that were wrong when, in fact, everything I did was absolutely CORRECT and, even, PERFECT.”
Trump’s justice department has subpoenaed James for records related to the lawsuit, among other documents, as part of an investigation into whether she violated the president’s civil rights. James’s personal attorney, Abbe D Lowell, has said that investigating the fraud case is “the most blatant and desperate example of this administration carrying out the president’s political retribution campaign”. That same post also took aim at New York attorney general Letitia James and judges Juan Merchan and Lewis Kaplan.
Trump and his lawyers said his financial statements weren’t deceptive, since they came with disclaimers noting they weren’t audited. The defense also noted that bankers and insurers independently evaluated the numbers, and the loans were repaid. James, who brought the suit on the state’s behalf, has said the businessman turned politician engaged in “lying, cheating, and staggering fraud”. Her office had no immediate comment after Thursday’s decision.
Despite such discrepancies as tripling the size of his Trump Tower penthouse, he said the financial statements were, if anything, lowball estimates of his fortune.
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During an appellate court hearing in September, Trump’s lawyers argued that many of the case’s allegations were too old, an assertion they made unsuccessfully before trial. The defense also contends that James misused a consumer-protection law to sue Trump and improperly policed private business transactions that were satisfactory to those involved. Trump’s justice department has subpoenaed James for records related to the lawsuit, among other documents, as part of an investigation into whether she violated the president’s civil rights. James’s personal attorney, Abbe D Lowell, has said that investigating the fraud case is “the most blatant and desperate example of this administration carrying out the president’s political retribution campaign”.
State attorneys said the law in question applies to fraudulent or illegal business conduct, whether it targets everyday consumers or big corporations. Though Trump insisted that no one was harmed by the financial statements, the state contended that the numbers led lenders to make riskier loans than they knew, and that honest borrowers lose out when others game their net-worth numbers. Trump’s defense maintains his financial statements were not misleading, pointing to disclaimers and the fact that lenders were repaid. During an appellate court hearing in September, Trump’s lawyers argued that many of the case’s allegations were too old, an assertion they made unsuccessfully before trial.
The state has argued that the verdict rests on ample evidence and that the scale of the penalty comports with Trump’s gains, including his profits on properties financed with the loans and the interest he saved by getting favorable terms offered to wealthy borrowers. He also argued his reported assets were underestimated, despite discrepancies such as tripling the size of his Trump Tower penthouse.
The civil fraud case was just one of several legal obstacles for Trump as he campaigned, won and segued to a second term as president. State lawyers countered that the inflated figures misled lenders into riskier deals and gave Trump unfair advantages over honest borrowers. They argue the penalty was justified by the profits he gained through favorable loan terms offered to wealthy borrowers. The case is one of several legal challenges Trump has faced. In January, he received an unconditional discharge in his criminal hush-money case, leaving his conviction intact but avoiding jail or fines. He is appealing against the conviction.
On 10 January, he was sentenced in his criminal hush-money case to what’s known as an unconditional discharge, leaving his conviction on the books but sparing him jail, probation, a fine or other punishment. He is appealing against the conviction. Separately, a federal appeals court upheld a jury’s finding that Trump sexually abused and defamed writer E Jean Carroll, affirming a $5m judgment. He lost a subsequent attempt to get the court to reconsider the rejected appeal in June.
And in December, a federal appeals court upheld a jury’s finding that Trump sexually abused writer E Jean Carroll in the mid-1990s and later defamed her, affirming a $5m judgment against him. The appeals court declined in June to reconsider; he still can try to get the supreme court to hear his appeal. The president is also appealing another verdict that requires him to pay Carroll $83.3m for additional defamation claims.
The president is also appealing a subsequent verdict that requires him to pay Carroll $83.3m for additional defamation claims.