Trump gets bond deal to ward off $454 million judgment, for now
NEW YORK — Former President Donald Trump averted a financial disaster Monday, reaching a deal that will spare him from paying a $454 million judgment in his civil fraud case while he appeals the penalty.
The lifeline came in the form of a bond that will prevent New York’s attorney general, who brought the lawsuit that led to the judgment, from collecting the $454 million until Trump’s appeal is resolved. The attorney general, Letitia James, accused Trump of fraudulently inflating his net worth by as much as $2 billion, and a judge ruled in her favor.
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Trump secured the bond after an appeals court last week granted his request to lower the bond amount, setting it at $175 million and staving off a financial crisis for Trump. He otherwise would have had to post a bond for the full $454 million, which his lawyers declared a “practical impossibility.” Had he failed to do so, James could have frozen his bank accounts.
The clock had been ticking. When the appeals court ruled last week, it gave him 10 days to line up the bond, making Thursday the deadline.
The $175 million bond came from Knight Specialty Insurance Co., a California company that handles such deals. In providing the bond, which is a legal document, not an actual transfer of money, the firm essentially promised New York’s court system that it would cover the judgment against Trump if he loses his appeal and fails to pay.
Many details of the deal are private, but the former president most likely had to pay the company a fee and pledge cash and other liquid investments as collateral.
It was the collateral that prevented Trump from securing a bond for the full $454 million. Although Trump measures his net worth in the billions, much of that is drawn from the value of real estate, which bond companies typically don’t accept as collateral. While Trump had more than $350 million in cash and other liquid investments as of early this year, a New York Times analysis found, that was short of what he needed to secure the bigger bond.
His lawyers, after being spurned by more than 30 bond companies, recently cited “insurmountable difficulties” in obtaining the full bond.
Even to secure the $175 million bond, Trump probably had to dig deep into his reserves.
The terms may be costly, but Trump had little choice. Absent a bond, James could have moved to collect at any moment, freezing bank accounts and potentially starting the long, complicated process of seizing some of his marquee New York properties. She has suggested she would pursue Trump’s office tower in lower Manhattan, at 40 Wall St., a short walk from her office.
A spokesperson for James, a Democrat, declined to comment.
