An appeals court has thrown out a $500m (£372m) penalty that President Donald Trump was ordered to pay in a New York civil fraud trial last year.
Judge Arthur Engoron had ordered Trump to pay the fee for massively inflating the value of the Trump Organization’s properties in order to secure favourable loans.
In the ruling released on Thursday, judges on the New York Supreme Court’s Appellate Division stated that while Trump was liable for the fraud, the fine of nearly half a billion dollars was excessive and likely violated protections in the US Constitution against severe punishment.
In the case Judge Engoron had ordered Trump to pay $355m, but with interest, that grew to more than $500m.
In the case against Trump, his two adult sons, and the Trump Organization, Judge Engoron also banned Trump from serving as a company director or taking out loans from banks in the state for three years.
The decision kept in place this and other non-monetary penalties that Judge Engoron imposed. Either side can appeal the decision to the state’s highest court, the New York Court of Appeals.
The appellate panel of five judges was divided over the merits of the original lawsuit brought by New York Attorney General Letitia James, who had accused Trump and his sons of “persistent and repeated fraud”.
While several judges said she was “within her lawful power in bringing this action”, one believed the case should have been dismissed and two said that there should be a new trial of a more limited scope.
Those two, though, joined the decision to throw out the fine “for the sole purpose of ensuring finality”, wrote Judge Peter Moulton.
In the 323-page decision, Judge Moulton said that American voters had “obviously rendered a verdict” on Trump’s political career.
“This bench today unanimously derails the effort to destroy his business,” the judge wrote.
Trump’s son, Eric Trump, who was involved in the case, celebrated the decision in a post on social media.
“Total victory in the sham NY Attorney General case!!! After 5 years of hell, justice prevailed!” he wrote.
The BBC has contacted the New York Attorney General’s Office for comment.
In September 2023, Judge Engoron ruled Trump was liable for business fraud, finding he had misrepresented his wealth by hundreds of millions of dollars. Another trial was held in 2024 to determine the penalty.
In one instance, the judge found Mr Trump’s financial statements had wrongly claimed that his Trump Tower penthouse was almost three times its actual size.
Trump had said that the case brought by James, a Democrat, was politically motivated.
