Ex-president gets a break in posting fraud bond
Court says he only has to put up $175 million to pause collection while he appeals.
NEW YORK — A New York appeals court on Monday agreed to hold off collection of former President Trump’s more than $454million civil fraud judgment if he puts up $175 million within 10 days.
If he does, it will stop the clock on collection and prevent the state from seizing the presumptive Republican presidential nominee’s assets while he appeals. The appeals court also halted other aspects of a trial judge’s ruling that had barred Trump and his sons Eric Trump and Donald Trump Jr., the family company’s executive vice presidents, from serving in corporate leadership for several years.
In all, the order was a significant victory for the Republican ex-president as he defends the real estate empire that vaulted him into public life. The development came just before New York Atty. Gen. Letitia James, a Democrat, was expected to initiate efforts to collect the judgment.
Trump, who was attending a separate hearing in his criminal hush money case in New York, hailed the ruling and said he would post a bond, securities or cash to cover the $175 million sum in the civil case. Speaking in a courthouse hallway, Trump revisited his oft-stated complaints about civil trial Judge Arthur Engoron and the penalty he imposed.
“What he’s done is such a disservice and should never be allowed to happen again,” said Trump, who argues that the fraud case is discouraging business in New York.
Judgment stands
James’ office, meanwhile, noted that the judgment still stands, while collection is paused.
“Donald Trump is still facing accountability for his staggering fraud,” the office said in a statement.
Trump’s lawyers had pleaded for a state appeals court to halt collection, claiming it was “a practical impossibility” to get an underwriter to sign off on a bond for such a large sum, which grows daily because of interest. The Trump attorneys had earlier proposed a $100-million bond, but an appellate judge said no late last month.
Monday’s ruling came from a five-judge panel in the state’s intermediate appeals court, called the Appellate Division, where Trump is fighting to overturn Engoron’s Feb. 16 decision. Trump attorneys Alina Habba and Christopher Kise characterized Monday’s ruling as a key first step.
Siding with the attorney general after a months-long civil trial, Engoron found that Trump, his company and top executives lied about his wealth on financial statements, conning bankers and insurers who did business with him. The statements valued Trump’s penthouse for years as though it were nearly three times its actual size, for example.
Trump and his co-defendants denied any wrongdoing, saying the statements actually underestimated his fortune, came with disclaimers and weren’t taken at face value by the institutions that lent to or insured him. The penthouse discrepancy, he said, was simply a mistake made by subordinates.
Engoron ordered Trump to pay $355 million, plus interest. Some co-defendants, including Donald Trump Jr. and Eric Trump, were ordered to pay far smaller amounts. Monday’s ruling also puts those on hold if the $175-million bond is posted.
A legal timeout
After James won the judgment, she didn’t seek to enforce it during a legal timeout for Trump to ask the appeals court for a reprieve from paying up.
That period ended Monday, though James could have decided to allow Trump more time.
James told ABC News last month that if Trump doesn’t have the money to pay, she would seek to seize his assets. She didn’t detail the process or specify what holdings she meant.
Trump maintained on
social media on Friday that he has almost $500 million in cash, but he said at a news conference on Monday that he’d like to use some of it on his presidential run. He asserted that James and Engoron, who’s also a Democrat, “don’t want me taking cash out to use it for the campaign.”
If the penalty is ultimately upheld, the attorney general could go after Trump’s bank and investment accounts. There’s also the possibility of seizing properties such as his Trump Tower penthouse, aircraft, Wall Street office building or golf courses, and selling them.
But that could be complicated in Trump’s case.
“Finding buyers for assets of this magnitude is something that doesn’t happen overnight,” noted Stewart Sterk, a real estate law professor at New York’s Cardozo School of Law.
Under state law, filing an appeal generally doesn’t hold off enforcement of a judgment. But there’s an automatic pause if the person or entity posts a bond covering what’s owed.
Many defendants are able to get such a bond, but “judgments of this size are rare,” said Joshua Naftalis, a former federal prosecutor now in private practice.
“What makes this one unusual is someone who is subject to an enormous amount of money and has to come up with it himself,” Naftalis said.
Tying up cash
The ex-president’s lawyers have said underwriters approached to provide a bond wanted 120% of the judgment as collateral and wouldn’t accept real estate. That would mean tying up over $557 million in cash, stocks and other liquid assets, and Trump’s company needs some left over to run the business, his attorneys have said.
They asked an appeals court to freeze collection without Trump posting a bond. The attorney general’s office objected, saying he hadn’t explored every option for covering the amount.
The appeals court “chose a middle ground” by still requiring Trump to put up money but lowering the amount, Naftalis said.