In a triumph for U.S. President Donald Trump, a New York state appeals court on Thursday threw out a half-billion-dollar penalty while preserving a fraud case against him, enabling him to rebound from one of his biggest legal defeats.

The deeply divided decision by the Appellate Division in Manhattan is also a defeat for New York Attorney General Letitia James, one of Trump's biggest foes, who he accused of bringing the civil fraud lawsuit to advance a political witch hunt and deny him a second White House 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.