An appellate court has dismissed the $500 million civil fraud penalty imposed on former President Donald Trump in the notable case initiated by New York Attorney General Letitia James.

The New York Appellate Division overturned the penalty, ruling the disgorgement was an excessive fine that violates the Eighth Amendment.

The panel of five judges concurred that Trump and his company were indeed accountable, supporting James’s actions as legitimate and agreeing that restrictions to modify Trump Organization practices were justified.

New York Attorney General Letitia James and President Donald Trump (Getty Images)

The ruling leaves liability intact but eliminates the massive financial penalty of $364 million plus interest, which rises to around $500 million.

However, Justice David Friedman offered a partially dissenting opinion, suggesting that James’ motives were politically driven and advocating for the complete dismissal of the case.

Friedman asserted that James’ “real aim was not to ensure fair market practices… but to achieve political results, particularly to hinder President Trump’s political future and dismantle his real estate empire.”

He blasted her use of Section 63(12) of New York’s Executive Law, which gives the state attorney general broad power to pursue civil fraud claims.

Friedman wrote that it was unprecedented and political, giving James “essentially limitless power to prosecute her political enemies.” 

He argued that Trump’s transactions involved knowledgeable parties who benefited without causing public harm, and he believed the judgment should be overturned and the complaint dismissed.

This is a breaking news story and will be updated.