An appeals court has overturned the $500 million penalty that former President Donald Trump was ordered to pay in a civil fraud trial in New York last year. The penalty had been imposed by Judge Arthur Engoron after finding that Trump had inflated the value of properties under the Trump Organization to secure favorable loans.

While the New York Supreme Court’s Appellate Division upheld Trump’s liability for fraud, the court ruled that the $500 million fine was excessive, likely violating constitutional protections against disproportionate punishment. The original fine, which had been set at $355 million, grew to over $500 million with interest.

Judge Peter Moulton, in his opinion, stated that while harm had occurred, it was not severe enough to justify such a large penalty. “It was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state,” Moulton wrote.

Trump celebrated the ruling on his social media platform, Truth Social, calling it a “total victory.” He criticized the decision as a “political witch hunt” and claimed the penalty was hurting businesses across New York State.

Despite the reduction in the fine, the New York Attorney General’s Office, which brought the case against Trump, still considered the ruling a victory, as the fraud liability against Trump remained in place. The office plans to appeal the decision on the fine to New York’s highest court, the Court of Appeals.

The Attorney General’s Office issued a statement reaffirming the court’s finding that Trump, his company, and his two adult sons were liable for fraud. “It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit,” the statement read.

In addition to the penalty, Judge Engoron had banned Trump from acting as a company director or taking out loans in New York for three years, a ruling that was upheld in Thursday’s decision.

The lengthy 323-page ruling, which included multiple opinions, revealed disagreement among the five judges on the panel. Some supported the Attorney General’s right to bring the lawsuit, while others felt the case should have been dismissed or retried on a more limited scope. However, the judges agreed to overturn the fine “for the sole purpose of ensuring finality,” as stated by Judge Moulton.

The decision comes nearly a year after oral arguments in the case, during which several judges seemed skeptical of the civil fraud accusations. Trump’s son, Eric Trump, celebrated the decision as a triumph, posting on social media, “After 5 years of hell, justice prevailed!”

Legal experts, however, cautioned that the ultimate outcome of the case may still be some time away. Will Thomas, a business law professor, described the court’s decision as a “judicial version of kicking the can down the road” and noted that the real legal decision would likely be made by the New York Court of Appeals.

In 2023, Judge Engoron ruled that Trump was liable for business fraud, finding that he had misrepresented his wealth by hundreds of millions of dollars. Further trials are underway to determine the full penalty.

Trump has claimed that the case, brought by Democrat Letitia James, is politically motivated. The decision to reduce the fine comes amid ongoing debate over how to handle a high-profile fraud case involving a former sitting president.

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