A New York appeals court on Thursday reportedly threw out the unprecedented $464 million judgment against Donald J. Trump, a ruling that spares the president from what would have been a devastating financial penalty as he campaigns to return to the White House.
The Appellate Division, First Department, struck down Manhattan Supreme Court Justice Arthur Engoron’s February 2024 decision, which had found Mr. Trump liable for inflating his net worth by billions of dollars to secure favorable loans and insurance terms.
Had the lower court’s ruling stood, Mr. Trump, 79, would have been forced to pay more than $500 million, including over $100 million in interest.
The reversal represents a major victory for the president, who has long argued that the case was a “political witch hunt” brought by Democrats intent on damaging him. The decision follows a lengthy, 11-week trial that critics of Mr. Trump had hoped would brand him a fraudster and undermine his reputation as a real estate magnate.
During the trial, evidence showed that Mr. Trump’s company overstated the size of his Trump Tower penthouse — claiming 30,000 square feet rather than its actual 11,000 — and inflated its value to $327 million in 2015, up from $80 million just four years earlier.
Similarly, Mr. Trump listed his Mar-a-Lago estate as worth $517 million, even as his tax representative declared its market value at just $27 million in 2020, citing its designation as a social club that afforded tax breaks.
Justice Engoron, in siding with New York Attorney General Letitia James, a Democrat, accused Mr. Trump of fraud on a scale that “leap off the page and shock the conscience.”
But the appellate panel appeared less convinced. In September, Judge Peter Moulton openly questioned whether the sweeping state law Ms. James relied on had “morphed into something it was not meant to do.” He called the massive penalty “troubling,” noting that the statute did not require evidence of actual financial harm to any victim.
That point became central to Mr. Trump’s defense. His attorneys argued that no lenders or insurers lost money, pointing out that major institutions such as Deutsche Bank conducted their own due diligence and were repaid in full. “Sophisticated” financial firms, they contended, were not duped.
Ms. James, however, argued that false financial statements damage the marketplace as a whole. “The next group of lenders to receive bogus statements might not be so lucky,” Justice Engoron wrote in his ruling.
Still, the appeals court’s decision casts serious doubt on the attorney general’s aggressive pursuit of Mr. Trump. Both Ms. James and Justice Engoron are elected Democrats; Ms. James campaigned on investigating Mr. Trump, calling him a “con man” and “carnival barker.”
For Mr. Trump, who briefly stepped off the campaign trail last fall to attend the trial, the ruling marks vindication. His legal team said he had done “nothing wrong” and predicted the case would collapse on appeal.
Now, with the staggering fine overturned, Mr. Trump emerges not only financially unscathed but politically strengthened — his claims of partisan overreach bolstered by a higher court’s rebuke.
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