Trump Can Post Smaller Bond in Civil Fraud Case, Court Rules

 

Trump Can Post Smaller Bond in Civil Fraud Case, Court Rules

 

The former president must post a bond of $175 million within 10 days as he appeals the $454 million judgment against him.

 

By Ben Protess and William K. Rashbaum

March 25, 2024

Updated 11:52 a.m. ET

https://www.nytimes.com/2024/03/25/nyregion/trump-bond-reduced.html

 

With Donald J. Trump on the clock to secure a nearly half-billion-dollar bond in his civil fraud case, a New York appeals court appears to have handed the former president a lifeline on Monday, saying it would accept a far smaller bond of $175 million.

 

The ruling by a five-judge panel of appellate court judges was a crucial and unexpected victory for the former president, potentially staving off a looming financial disaster. Had the court denied his request — and had he failed to obtain the full bond — Mr. Trump risked of losing control over his bank accounts and, eventually, even some of his marquee properties.

 

For now, those dire outcomes might be on hold. If Mr. Trump obtains the smaller bond, it would prevent the New York attorney general’s office, which brought the case accusing him of fraudulently inflating his net worth, from collecting while Mr. Trump appeals the $454 million judgment imposed by a trial judge. The appeal could take months or longer to resolve.

 

Mr. Trump has 10 days to secure the bond, and two people with knowledge of his finances said he should be able to do so by then.

 

In a statement, a spokeswoman for the attorney general, Letitia James, noted that Mr. Trump was “still facing accountability for his staggering fraud” and that the judgment “still stands.”

 

An appeal bond is a promise from an outside company that it will cover his judgment if he ultimately cannot pay. In order to obtain one, Mr. Trump must pay the bond company a fee and pledge a sizable sum of cash as collateral. Mr. Trump need not turn over the collateral for now, but the bond company would be entitled to collect it if he failed to pay.

 

Mr. Trump’s lawyers had asked the appeals court to either accept a smaller bond or pause the bond requirement altogether. They argued that the court would be likely to overturn the trial judge’s $454 million penalty once it heard the substance of his appeal, contending that it was “grossly disproportionate and unconstitutional.”

 

The trial judge, Arthur F. Engoron, found Mr. Trump liable for conspiring to inflate his net worth to reap favorable loans from banks and other financial benefits. The $454 million reflected the interest payments Mr. Trump saved by misleading his lenders, as well as profits from the recent sale of two properties.

 

Justice Engoron did not stop there. He also imposed several restrictions on Mr. Trump and his family business. For three years, Mr. Trump cannot run any New York company, including portions of his own, nor can he obtain a loan from a New York bank. The same restrictions apply to his adult sons for two years. And he extended the appointment of an independent monitor, a watchful outsider to keep an eye on the family business.

 

In a surprise move, the appeals court on Monday also paused most of those new restrictions, save for the monitor.

 

Mr. Trump is fighting all the punishments, but the financial penalty alarmed him most.

 

Until the court accepted the smaller bond on Monday, Mr. Trump was on the hook to obtain a bond for the full amount.

 

He would have needed to pledge a significant amount of collateral to the bond company — about $557 million, his lawyers said — including as much cash as possible, as well as any stocks and bonds he could sell quickly. He would have also owed the bond company a fee that could have amounted to nearly $20 million.

 

In a recent court filing, Mr. Trump’s lawyers revealed that he had been unable to secure a bond for the full amount despite “diligent efforts” that included approaching more than 30 bond companies. They called it a “practical impossibility.”

 

The problem was simple: Much of Mr. Trump’s wealth is tied up in the value of his real estate, which bond companies rarely accept as collateral. A recent New York Times analysis found that Mr. Trump had more than $350 million in cash as well as stocks and bonds, far short of the $557 million he would have needed to post in collateral.

 

He did, however, have enough collateral to recently post a $91.6 million bond in the defamation case he lost to E. Jean Carroll, and now appears to have enough to secure a $175 million bond in the case brought by Ms. James.

 

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

 

William K. Rashbaum is a senior writer on the Metro desk, where he covers political and municipal corruption, courts, terrorism and law enforcement. He was a part of the team awarded the 2009 Pulitzer Prize for Breaking News. More about William K. Rashbaum