(MENAFN- Gulf Times) In a triumph for Donald Trump, a New York state appeals court threw out an approximately half-billion-dollar penalty against the US president, in a fraud case that had been one of his biggest legal setbacks before his return to the White House.
The decision by the Appellate Division in Manhattan is a defeat for New York Attorney-General Letitia James, who Trump accused of bringing the civil fraud lawsuit to advance a political witch hunt and deny him a second term.
A trial judge had ordered the penalty in February 2024 after finding that Trump fraudulently overstated his wealth and the value of his properties to bolster his family business.
Trump denied wrongdoing, and his lawyers argued that any errors in reporting Trump's fortune to his lenders and business partners were irrelevant because none was harmed.
Thursday's decision by the five-judge appeals court was deeply splintered, with some agreeing Trump should be held liable while others called for a new trial or even dismissal.
In a social media post, Trump called the decision a "TOTAL VICTORY”.
"I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision," Trump wrote.
Trump Jr termed the appellate court ruling a "massive win!!!"
"New York Appeals Court has just THROWN OUT President Trump's $500+ Million civil fraud penalty! It was always a witch hunt, election interference, and a total miscarriage of justice... and even a left leaning NY appeals court agrees! NO MORE LAWFARE!" he wrote on X.
Trump's economic adviser Peter Navarro said at the White House Thursday that "James is another one that belongs in jail".
"The Democrats really overplayed their hand on this because they thought they could take Donald Trump out," he said.
James said she will ask the Court of Appeals, the state's highest court, to review the case.
"It should not be lost to history: yet another court has ruled that the president violated the law, and that our case has merit," she added.
Trump was separately convicted in May 2024 on criminal charges in a New York state court in Manhattan stemming from hush money paid to an adult entertainer, but received no punishment.
The appeals court in James' case issued approximately 320 pages of opinions.
Two judges found Trump was properly held liable, and James "vindicated a public interest" by suing, but said the penalty was unconstitutionally excessive.
They upheld restrictions imposed against Trump's businesses.
Two other judges also found James had authority to sue, but a new trial was necessary because of errors by the trial judge.
The fifth judge said the case should be thrown out.
The decision came as the US Department of Justice investigates James for possible mortgage fraud.
The probe is part of a White House effort to use the power of government against people who have investigated Trump or resisted his agenda.
Prosecutors convened a grand jury to investigate whether James' fraud case deprived Trump of his civil rights, a person familiar with the matter said this month.
A lawyer for James called it part of Trump's "political retribution campaign”.
Trump was appealing a judgment entered by Justice Arthur Engoron in Manhattan, following a three-month nonjury trial.
Engoron found Trump had inflated his wealth over several years before first becoming president in 2017, to dupe lenders and insurers into providing better terms to the Trump Organisation.
In February 2024, Engoron ordered Trump and other defendants to pay $464.6mn in penalties plus interest, which has continued to accrue.
Trump was personally liable for nearly 98% of the judgment, with his eldest sons, Donald Trump Jr. and Eric Trump, and former Trump Organisation chief financial officer Allen Weisselberg responsible for the remainder.
Referring to Trump and other Trump Organisation figures, Engoron said their "complete lack of contrition and remorse borders on pathological”.
Engoron also banned Trump and the Trump Organisation from applying for loans from banks registered in the state for three years, and effectively barred Donald Trump Jr and Eric Trump from running the business for two years.
The appeals court put these restrictions on hold during the appeals process, while letting a court-appointed monitor for the Trump Organisation continue her work.
In Thursday's decision, the two judges who found Trump was properly held liable, Dianne Renwick and Peter Moulton, said the evidence demonstrated that the defendants "engaged in a decade-long pattern of financial fraud and illegality”.
They also rejected suggestions that James sued to further political goals, saying that the "political" choice would have been to not pick a fight with a powerful adversary.
However, they said Trump's wrongdoing did not cause "cataclysmic harm" to justify a half-billion-dollar award, though injunctive relief to prevent future wrongdoing was appropriate.
"The Attorney-General may act, as she did in this case, before a potential catastrophe occurs, to deter further fraudulent business behaviour by defendants specifically, and to police market behaviour generally," they wrote. "Having achieved these goals the state is not entitled to compound its victory with a massive punitive fine."
In voting to dismiss the case, Justice David Friedman said James' case was politically motivated, and voters had rendered their own verdict on Trump's political career.
He also said subjecting Trump to another trial "would disrupt the political life of the United States and would undermine its national interest, particularly at a time of high global tension.

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