Trump spurned as he seeks bond in $454M judgment
Donald Trump’s lawyers disclosed Monday that he had failed to secure a roughly half-billion-dollar bond in his civil fraud case in New York, raising the prospect that the state could seek to freeze some of his bank accounts and seize some of his marquee properties.
The court filing, coming one week before the bond is due, suggested that the former president might soon face a financial crisis unless an appeals court comes to his rescue. Trump has asked the appeals court to pause the $454 million judgment that a New York judge imposed on Trump in the fraud case last month, or accept a bond of only $100 million. Otherwise, the New York attorney general’s office, which brought the case, might soon move to collect from Trump.
Still, even if the higher court rejects his appeal, Trump is not entirely out of options. He might appeal to the state’s highest court, quickly sell an asset or seek help from a wealthy supporter.
Trump’s team has also left the door open to exploring a bankruptcy for corporate entities implicated in the case, according to people with knowledge of the discussions. That option, however, is politically fraught during a presidential race in which he is the presumptive Republican nominee, and for now it appears unlikely.
The former president has been unable to secure the full bond, his lawyers said in the court filing Monday, calling it a “practical impossibility” despite “diligent efforts.” Those efforts included approaching about 30 companies that provide appeal bonds, and yet, the lawyers said, he has encountered “insurmountable difficulties.”
The company providing the bond would essentially promise to cover Trump’s judgment if he lost an appeal and failed to pay. In exchange, he would pledge cash as collateral, and he would pay the company a fee as high as $20 million.
But Trump does not have enough liquidity to obtain the bond. The company would require Trump to pledge more than $550 million in cash and securities as collateral — a sum he simply does not have.
Although the former pres
dent boasts of his billions, his net worth is derived largely from the value of his real estate, which bond companies rarely accept as collateral. Trump has more than $350 million in cash, a recent New York Times analysis found, far short of what he needs.
The judge in the civil fraud case, Arthur Engoron, levied the $454 million penalty and other punishments after concluding that Trump had fraudulently inflated his net worth to obtain favorable loans and other benefits. The case, brought by New York Attorney General Letitia James, has posed a grave financial threat to Trump.
He might have to post an appeal bond worth more — possibly above $500 million, to reflect the interest he will owe — to prevent James from seizing his assets on March 25.
Under the law, James could have moved to collect from Trump as soon as Engoron ruled, but she offered a 30-day grace period, until March 25. It is unclear whether she will provide Trump extra time or if she will move swiftly to collect. Nor is it clear whether the appellate court will rule on his plea for help before the deadline.
Trump could also seek to appeal to New York’s highest court, and it is unclear whether James will hold off on the seizure while he pursues that route.
A spokesperson for James did not immediately respond to a request for comment.
Trump has denied all wrongdoing and claimed that James and Engoron, both Democrats, are out to get him.
“This is a motion to stay the unjust, unconstitutional, un-american judgment from New York Judge Arthur Engoron in a political witch hunt brought by a corrupt attorney general,” Steven Cheung, a spokesperson for Trump’s campaign, said in a statement. “A bond of this size would be an abuse of the law, contradict bedrock principles of our republic, and fundamentally undermine the rule of law in New York.”
The looming deadline could not come at a worse time for Trump. He also faces four criminal indictments, including one in Manhattan that is tentatively set for trial in mid-april.
And just last week he finalized a $91.6 million bond in a defamation case he recently lost to writer E. Jean Carroll, a costly deal that drained him of precious cash.
Trump, who obtained that bond from insurance giant Chubb, pledged an investment account at Charles Schwab as collateral, records show. He most likely pledged more than $100 million in cash and stocks and bonds that he could sell in a hurry — investments that are now no longer available for him to use in the civil fraud case.
A nearly $500 million bond, Trump’s lawyers wrote Monday, “is unprecedented for a private company.”
Yet Trump’s legal team “devoted a substantial amount of time, money, and effort” to finding one, according to a court filing by Alan Garten, the top lawyer at Trump’s family business.
Using four separate brokers, the lawyers approached more than two dozen companies that provide appellate bonds, including Chubb and Berkshire Hathaway, the conglomerate run for decades by Warren Buffett, Garten said. He added that most of the companies were either unable or unwilling to handle a bond of this size, and that none were willing to accept property as collateral.
Their best bet appeared to be Chubb, but within the past week, Chubb notified Trump’s lawyers that it, too, could not accept property as collateral.
“This presents a major obstacle,” Garten wrote.
Trump’s company has not ruled out the possibility of having the corporate entities declare bankruptcy, the people with knowledge of the discussions said. That move would automatically halt the judgment against those entities and prevent James from seizing some of the former president’s properties.
But Trump, scarred from an experience in the 1990s when some of his companies filed for bankruptcy, is likely to balk at a filing.
And even if he supported it, bankruptcy — which Trump used to describe derisively as “the b-word” — might not be a cureall, legal experts said. Seeking court protection could trigger defaults in loans he holds, and it would most likely set off litigation over whether Trump is still responsible to pay his company’s debts.
Trump’s lawyers on Monday also submitted a filing from one of his insurance brokers, Gary Giulietti, who said his team had for several weeks been “scouring the market” for a bond.
“Simply put, a bond of this size is rarely, if ever, seen,” he wrote.
Giulietti, who testified as an expert witness at the trial, also occasionally golfs and dines with Trump.
In his decision, Engoron criticized Giulietti’s testimony, saying that in more than 20 years on the bench, he had never encountered an expert witness who “not only was a close personal friend of a party, but also had a personal financial interest in the outcome of the case.”