Studdard, 26, of Birmingham, won the television talent show in 2003 and filed suit last year against ex-manager Ronald W. Edwards and Edwards' promotions company, Sez Inc.
Jefferson County Circuit Judge Scott Vowell on Thursday awarded Studdard $500,000 for his actual losses and another $1.5 million in punitive damages, The Birmingham News reported Thursday on its Web site.
Vowell dismissed Edwards' promotions company from the suit because it was bankrupt and had no assets. Edwards filed a petition for Chapter 7 bankruptcy on June 17, 2005.
The suit claimed Edwards misused more than $246,000 of the singer's money.
According to the judge's ruling, Edwards took money from Studdard's checking and other bank accounts, improperly used his credit cards and even used Studdard's money to repay a $10,000 bank loan.
Studdard has sold more than 2.2 million records, but the damage to his credit because of the fraud made it hard to obtain financing to buy a home, Vowell's order said.