Trump Spurned by 30 Companies as He Seeks Bond in $454 Million Judgment

 

Trump Spurned by 30 Companies as He Seeks Bond in $454 Million Judgment

 

Donald J. Trump’s lawyers said in a court filing that he faces “insurmountable difficulties” as he tries to raise cash for the civil fraud penalty he faces in New York.

 

By Ben Protess, Maggie Haberman and Kate Christobek

March 18, 2024

https://www.nytimes.com/2024/03/18/nyregion/trump-bond-civil-fraud-case.html

 

Donald J. Trump’s lawyers disclosed on 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.

 

Mr. Trump has asked the appeals court to pause the $454 million judgment that a New York judge imposed on Mr. 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 Mr. Trump.

 

Still, even if the higher court rejects his appeal, Mr. 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.

 

Mr. 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 judge in the civil fraud case, Arthur F. Engoron, levied the $454 million penalty and other punishments after concluding that Mr. Trump had fraudulently inflated his net worth to obtain favorable loans and other benefits. The case, brought by the New York attorney general, Letitia James, has posed a grave financial threat to Mr. Trump.

 

The former president has been unable to secure the full bond, his lawyers said in the court filing on 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 Mr. Trump’s judgment if he lost an appeal and failed to pay. In exchange, he would pledge cash and other liquid assets as collateral, and he would pay the company a fee as high as $20 million.

 

But Mr. Trump does not have enough liquidity to obtain the bond. The company would require Mr. Trump to pledge more than $550 million in cash and securities as collateral — a sum he simply does not have.

 

Although the former president boasts of his billions, his net worth is derived largely from the value of his real estate, which bond companies rarely accept as collateral. Mr. Trump has more than $350 million in cash, a recent New York Times analysis found, far short of what he needs.

 

He might have to post an appeal bond worth more than $454 million — possibly above $500 million, to reflect the interest he will owe — in order to prevent Ms. James from seizing his assets on March 25.

 

Under the law, Ms. James could have moved to collect from Mr. Trump as soon as Justice Engoron ruled, but she offered a 30-day grace period, until March 25. It is unclear whether she will provide Mr. 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.

 

Mr. Trump could also seek to appeal to New York’s highest court, and it is unclear whether Ms. James will hold off on the seizure while he pursues that route.

 

A spokeswoman for Ms. James did not immediately respond to a request for comment.

 

Mr. Trump has denied all wrongdoing and claimed that Ms. James and Justice 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 spokesman for Mr. 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 Mr. 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 the writer E. Jean Carroll, a costly deal that drained him of precious cash.

 

Mr. Trump, who obtained that bond from the 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, Mr. Trump’s lawyers wrote on Monday, “is unprecedented for a private company.”

 

Yet Mr. 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 Mr. 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 E. Buffett, Mr. 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 Mr. Trump’s lawyers that it, too, could not accept property as collateral.

 

“This presents a major obstacle,” Mr. Garten wrote.

 

Mr. 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 Ms. James from seizing some of the former president’s properties.

 

But Mr. 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 Mr. Trump used to describe derisively as “the b-word” — might not be a cure-all, legal experts said. Seeking court protection could trigger defaults in loans he holds, and would most likely set off litigation over whether Mr. Trump is still responsible to pay his company’s debts.

 

Mr. 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.

 

Mr. Giulietti, who testified as an expert witness at the trial, also occasionally golfs and dines with Mr. Trump.

 

In his decision, Justice Engoron criticized his 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.”

 

Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess

 

Maggie Haberman is a senior political correspondent reporting on the 2024 presidential campaign, down ballot races across the country and the investigations into former President Donald J. Trump. More about Maggie Haberman