How did the New York appeals court justify voiding the disgorgement order while upholding liability in the Trump business fraud case?
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Executive summary
A New York Appellate Division panel affirmed that Donald Trump and his companies were liable for civil business fraud but vacated Judge Arthur Engoron’s nearly half‑billion‑dollar disgorgement as an unconstitutional, excessive fine under the Eighth Amendment, finding the remedy disproportionate and its calculation legally and factually unsupported [1] [2]. The court simultaneously upheld tailored injunctive relief designed to curb the defendants’ business practices and left the door open for further review by New York’s highest court, while New York Attorney General Letitia James has signaled she will appeal [3] [2] [4].
1. How the court treated liability versus remedy: a split conclusion
The appeals panel separated the trial court’s factual finding of fraud from the monetary remedy, agreeing that the Attorney General proved a pattern of issuing inflated financial statements yet concluding that the form and size of Engoron’s disgorgement could not stand; four judges agreed liability was properly found under Executive Law §63 while the disgorgement award was vacated as excessive [2] [5]. Multiple outlets report the panel reached a divided decision: the liability determination remained intact even as the monetary judgment—originally hundreds of millions and later swelled by interest—was thrown out [3] [6].
2. The constitutional hook: the Eighth Amendment and “excessive” disgorgement
The prevailing opinion framed the disgorgement as a fine subject to the Excessive Fines Clause, holding that depriving defendants of purported “ill‑gotten gains” in the magnitude ordered amounted to punishment that crossed constitutional bounds [7] [1]. Judges Dianne T. Renwick and Peter H. Moulton emphasized that while injunctive relief was “well crafted” to address the defendants’ business culture, the near‑half‑billion dollar disgorgement was “an excessive fine” barred by the Eighth Amendment [3] [1].
3. Why the panel found the calculation legally defective
A key practical reason for voiding the award was evidentiary: the court said the Attorney General failed to carry the initial burden of proving the rough total of profits “causally connected” to the violations, and that Engoron’s disgorgement was not a reasonable approximation of ill‑gotten gains [8]. Judge Moulton’s concurrence argued that although harm occurred, it was not of the cataclysmic magnitude needed to justify the award, and that the disgorgement’s computation was far from a permissible approximation [8].
4. What the court left in place and why it matters
While vacating the monetary award, the panel upheld non‑monetary, prospective injunctive measures—such as corporate leadership bans and business‑practice restrictions—finding those remedies appropriately tailored to prevent future harm and to curb the defendants’ business culture [6] [2]. The ruling therefore preserves the core vindication of the Attorney General’s theory that fraudulent overstatements were proven even as it rejects the trial court’s choice of penalty.
5. Procedural posture and next steps: appeals, bonds and enforcement stays
The decision pauses enforcement of the disgorgement but does not end the litigation: the panel indicated the remedy could be revisited by New York’s Court of Appeals, and Attorney General James has said she will seek further review to restore the fine [4] [1]. Earlier appellate activity had already reduced and conditioned the bond that stayed collection—Trump had posted a $175 million bond to forestall enforcement while appeals progressed [2] [5].
6. Competing narratives and implicit agendas in coverage
Coverage split between emphasizing the vindication of the fraud finding and celebrating the monetary win for Trump; some outlets framed the vacatur as a technical Eighth Amendment check on judicial overreach, while others highlighted the sustained finding of misconduct [3] [9]. Implicitly, defense‑friendly narratives stress constitutional limits on punitive disgorgement, whereas the Attorney General’s camp stresses accountability and deterrence—both perspectives draw on the same appellate ruling but foreground different legal and political stakes [7] [4].