Donald Trump is unable to secure the bond needed to postpone the enforcement of a $464mn fraud judgment against him and his business empire in a New York civil court, his lawyers said on Monday.
The former US president’s team has spent “countless hours negotiating with one of the largest insurance companies in the world”, the lawyers wrote in a filing, citing a broker they hired, but have concluded that “very few bonding companies will consider a bond of anything approaching that magnitude”.
The Trump Organization had approached 30 surety companies — including Allianz, Axa, Berkshire Hathaway, Chubb, Munich Re, Swiss Re and Zurich — via four separate brokers, to no avail, they added.
Trump and his businesses were found liable in January for committing “blatant” fraud by vastly inflating the value of core real estate assets such as Mar-a-Lago and 40 Wall Street in loan applications. The judgment, which exceeds $464mn with interest , can be collected by the New York attorney-general, who brought the case, unless Trump posts a bond for the full amount while he appeals.
One of the largest penalties imposed on a New York corporation, the judgment has deepened the former president’s ballooning legal costs, which he is struggling to cover while mounting a campaign for the presidency in November’s election.
As Trump has pleaded for an extension, Letitia James, the New York attorney-general who brought the fraud suit, has hinted at seizing his assets, specifically mentioning 40 Wall Street , a tower that Trump has called a crown jewel of his real estate empire.
A surety bond is similar to a bank line of credit and ensures that a party will be able to pay a legal judgment in full in the event that an appeal fails. The insurers that underwrite them typically charge a premium of as much as 3 per cent and require cash or other forms of liquid collateral.
Trump said in a legal deposition last year that he had about $400mn in cash. Yet, since his company is private, his finances are unclear. Some of the documents published on Monday by Trump’s legal team show that Deutsche Bank, one of his top lenders, had made drastic downward adjustments to his stated net worth and liquid assets in its own credit reports.
In a statement, Trump claimed “Crooked Joe Biden and his Maniac Persecutors” were trying to take away his “Magnificent Business, which helped rebuild New York City and State”, calling the bond amount “unConstitutional, un-American, unprecedented, and practically impossible” for a company to post.
Trump is asking a panel of judges at a New York appeals court to delay the enforcement without the full sum being posted. One appeals judge had already refused a similar request on a temporary basis last month.
The renewed request comes days after Trump posted a $91.6mn bond to stay the enforcement of a separate civil judgment, in which he was found liable for defaming writer E Jean Carroll. He had previously posted a separate bond to cover another $5mn verdict won by Carroll last year.
The $91.6mn bond was underwritten by a subsidiary of the Chubb corporation. Its chief executive later explained the company had done so through “the ordinary course of its surety business and is acting as a neutral party”.
Chubb was negotiating with the Trump Organization over posting a bond in the fraud case, but the talks broke down when the corporation concluded it could not accept real estate as collateral, according to Monday’s filing.
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Gary Giulietti, the head of brokerage firm Lockton Companies, said in an affidavit to the court that he had been hired by Trump to secure the bond for the fraud case, but “despite scouring the market, we have been unsuccessful in our effort . . . for the simple reason that obtaining an appeal bond for $464mn is a practical impossibility under the circumstances presented”.
Giulietti said very few companies would even entertain providing a bond of that size, and the remaining handful will not “accept hard assets such as real estate as collateral”, but “will only accept cash or cash equivalents (such as marketable securities)”.
Most bond companies would also “require collateral of approximately 120 per cent of the amount of the judgment”, Giulietti wrote, which “would require defendants to hand over collateral in the form of cash or cash equivalents of approximately” $557mn. The 2 per cent premium for such a bond would force the Trump entities to pay $18.5mn upfront to an underwriter, the filing added.