Compromise decision in Trump civil case tosses nearly $500M disgorgement order to pave way for appeal
A splintered New York appeals court gave President Donald Trump a partial victory Thursday, when it vacated an order for him to disgorge nearly $500 million for inflating the value of assets in statements to lenders and insurers.
Appellate Division’s First Judicial Department of the New York Supreme Court was split 2-2-1 on the approach to the case. The decision to affirm liability while tossing the disgorgement order was a compromise.
Two judges would have affirmed liability and overturned the disgorgement order as an excessive fine under the Eighth Amendment; two would have granted a new trial because of “fundamental errors;” and another would have ruled that New York Attorney General Letitia James had no power to bring the case, and it should be tossed.
But the new-trial judges agreed to “join the decretal” of a decision by excessive-fine judges “for the sole purpose of ensuring finality, thereby affording the parties a path for appeal” to the state’s highest court, according to a concurrence by the excessive-fine judges, written by Judge Peter H. Moulton.
The judges also agreed to reverse sanctions of $7,500 each imposed on five defense attorneys for allegedly recycling arguments that were already rejected. In his concurrence, Moulton said all five judges agreed that the sanctions were “improvidently levied.”
“The parties in this litigation had to contend with novel legal issues,” Moulton wrote. “In grappling with these issues, defendants offered colorable arguments in their defense. Consequently, their arguments were not ‘completely without merit’” under court rules.
Dissenting Judge David Friedman outlined the consensus agreement while expressing disagreement with the decision by the majority to affirm liability to allow for an appeal.
“I am troubled that my colleagues are affirming [Judge Arthur Engoron’s] liability finding, notwithstanding that three out of the five members of this panel clearly believe that the judgment should be vacated, as the attorney general has not yet proven her case,” Friedman wrote.
“Nonetheless, what emerges from this court’s vacating the $500 million disgorgement award, with which I concur, is the frustration of what appears to me to have been the attorney general’s true aim in bringing this action. Plainly, her ultimate goal was not ‘market hygiene,’ as posited by Justice Moulton, but political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business. The voters have obviously rendered a verdict on his political career. This bench today unanimously derails the effort to destroy his business.”
Engoron had ordered Trump and other defendants in February 2024 to disgorge nearly $364 million, plus prejudgment interest, for a total amount of more than $464 million. Friedman’s dissent said the award was $500 million.
In a post celebrating the decision on Truth Social, his social media platform, Trump put the amount at more than $550 million.
“Total victory in the Fake New York State Attorney General Letitia James Case!” Trump wrote in a portion of his post. “I greatly respect the fact that the Court had the Courage to throw out this unlawful and disgraceful Decision that was hurting Business all throughout New York State. Others were afraid to do business there. The amount, including Interest and Penalties, was over $550 Million Dollars. It was a Political Witch Hunt, in a business sense, the likes of which no one has ever seen before. This was 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.”
James pointed to the liability finding in her Aug. 21 statement on the decision.
“The First Department today affirmed the well-supported finding of the trial court: Donald Trump, his company and two of his children are liable for fraud,” she wrote, referring to Donald Trump Jr. and Eric Trump. “The court upheld the injunctive relief we won, limiting Donald Trump and the Trump Organization officers’ ability to do business in New York. It should not be lost to history: Yet another court has ruled that the president violated the law, and that our case has merit. We will seek appeal to the Court of Appeals and continue to protect the rights and interests of New Yorkers.”
See also:
Justice Department subpoenas Letitia James about Trump fraud probe
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