Donald Trump has failed to secure a bond to satisfy the nearly half a billion dollar civil fraud judgment against him, his lawyers told an appeals court on Monday.
The former president’s attorneys argued that finding a company to back a bond in excess of $454m plus millions of dollars in interest is a “practical impossibility,” and one that raises the possibility that New York Attorney General Letitia James can begin seizing his assets unless the court intervenes.
Mr Trump faces “insurmountable difficulties” securing a bond, according to his attorneys. The former president has approached “about 30 surety companies through four separate brokers” to no avail – one week before Ms James can begin collecting.
“Critical among these challenges is not just the inability and reluctance of the vast majority of sureties to underwrite a bond for this unprecedented sum, but, even more significantly, the unwillingness of every surety bond provider approached by defendants to accept real estate as collateral,” they wrote.
Those companies “will only accept cash or cash equivalents,” such as marketable securities, and typically would “require collateral of approximately 120 per cent of the amount of the judgment,” which in this case comes to nearly $560m.
Sureties would then likely charge bond premiums of approximately 2 per cent per year “with two years in advance – an upfront cost over $18m,” according to Mr Trump’s attorneys.
That money would not be recoverable, even in the event that Mr Trump wins his appeal.
Mr Trump, his adult sons, two former Trump Organization executives and the entities associated with the brand-building properties in the Trump real estate empire were ordered to pay more than $464m at the conclusion of a three-year investigation and months-long trial targeting fraud in the family’s business.
Defendants were found to have engaged in a decade-long scheme to fraudulently inflate the value of his net worth and assets in annual statements of financial condition that were given to banks and lenders to secure more favourable financing terms for some of his star properties.
The total “disgorgement” owed that is now owed back to the state – money that is effectively forfeited as “ill-gotten gains” – amounts to roughly $364m, with an additional $100m in interest.
Post-judgment interest is accruing daily at the rate of 9 per cent per annum, or more than $114,000 for all defendants, including nearly $112,000 for Mr Trump alone.
His attorneys are now asking the court to pause the appeal bond in that amount, “diven these exceptional circumstances.”
The deadline for Mr Trump to appeal the judgment is 25 March, after a 30-day stay of the judgment from New York Justice Arthur Engoron expires.
He can block collection of that judgment by posting the full amount either through an escrow account, effectively acting as a deposit, or by securing a third-party bond that can guarantee the full amount, plus a premium for doing so.
Ms James has mentioned that her office is prepared to begin collecting, should Mr Trump fail to do that.
But his attorneys have argued that the value of his real estate holdings – including star properties like his 40 Wall Street in New York and Mar-a-Lago in Florida – far exceed the judgment.
“Such assets are impossible to secrete or dispose of surreptitiously, leaving the plaintiff effectively secured during the pendency of an appeal,” they wrote.
But selling off those properties in a “fire sale” to finance an appeal would “inevitably result in massive, irrecoverable losses – textbook irreparable injury,” they added.
Mr Trump’s strained finances follow a nearly $92m bond in his appeal of a defamation verdict stemming from E Jean Carroll’s lawsuit against the former president.
He was required to put up 110 per cent of the $83.3m judgment to pause collections while the appeal plays out.
Mr Trump lined up a loan through the Federal Insurance Company, a subsidiary of the Chubb Corporation, whose CEO was appointed to a trade advisory committee during the Trump administration.
But that company does not appear to be prepared to support his bond in his fraud verdict.
Chubb told Mr Trump that the company would be unwilling to accept real estate as collateral, Mr Trump’s attorneys wrote to the appeals court on Monday.
“Unfortunately, we have been advised that there are only a handful of sureties in the market that have both the financial capability and willingness to underwrite a bond of this magnitude,” they wrote.
According to his brokers, “the vast majority simply do not have the financial strength to handle a bond of this size,” they said. “Of those that do, the vast majority are unwilling to accept the risk associated with such a large bond.”
A looming financial crisis for the Republican Party’s nominee to face President Joe Biden for the presidency adds to a lengthy list of legal complications, including dozens of criminal charges, with at least one trial expected to begin before the general election in November.
It also presents significant questions surrounding how and where he raises the millions of dollars he needs to continue his legal battles, with the White House serving as an ostensible shield against his growing legal issues.
Mr Trump has relied on his fundraising arms to collect tens of millions of dollars from supporters largely to pay off his legal fees and attorneys who are working on his cases while courting billionaire donors and transforming the GOP’s financial apparatus into one that can bankroll his campaign.
