Trump’s attorneys to argue for acceptance of his $175M bond in civil fraud case

Written by ABC Audio. All rights reserved. on April 22, 2024

(NEW YORK) — Attorneys for Donald Trump are expected back in court on Monday to defend the $175 million bond in the former president’s civil fraud case, days after New York Attorney General Letitia James urged the court to reject the bond and give Trump seven days to find a new one.

Judge Arthur Engoron ordered the hearing earlier this month after James took exception to the bond and asked the company behind the bond — Knight Specialty Insurance Company — to prove they are sufficiently collateralized to pay the bond if Trump’s appeal of the $464 million judgment fails.

The bond hearing presents a legal double-header for the former president, who is required to attend the opening statements in his criminal hush money trial on Monday morning. Down the street from the criminal courthouse, Judge Engoron will hear arguments that could place the former president in financial dire straits if the bond is rejected.

Trump’s bond saga began in February when Engoron ordered the former president and his co-defendants to pay $464 million in disgorgement and prejudgment interest for engaging in what he found to be a decade of business fraud. Trump attempted to delay the fine, telling an appellate court that finding a surety willing to handle a half-billion-dollar bond was a “practical impossibility.”

James vowed to begin seizing Trump’s assets, including his namesake buildings, if he did not pay the judgment in time.

“If he does not have funds to pay off the judgment, then we will seek judgment enforcement mechanisms in court, and we will ask the judge to seize his assets,” James said in an interview with ABC News.

At the deadline for Trump to pay the judgment, New York’s Appellate Division First Department granted the former president’s 11th-hour request to reduce the size of his bond, permitting the him to post a bond of $175 million.

Days later, Trump and his co-defendants posted a $175 million bond collateralized using $175,304,075 held in a Charles Schwab brokerage account controlled by the Donald J. Trump Revocable Trust.

Because the company behind the bond was not admitted in New York, James filed a notice that requires Knight Speciality Insurance to demonstrate they are capable of paying the bond if needed.

“KSIC is a respected, well-capitalized, Delaware-domiciled insurer that has long underwritten surety bonds and other types of insurance placed around the country,” attorneys for Knight Speciality Insurance and Trump wrote in a filing last week.

The filing specified that the bond was secured by more than $175 billion held in a brokerage account controlled by Knight, which independently maintained more than $539 million in their own assets. The filing also stated that the company has access to more than $2 billion in assets through their parent company.

“By any standard, KSIC has therefore provided assurance to the Plaintiff judgment creditor that she can collect the designated amount if the award is affirmed on appeal,” the filing said.

In a filing on Friday, the New York Attorney General argued that the bond itself should be rejected because the defendants failed to prove that Knight could handle “this extraordinarily large undertaking” and that the bond was sufficiently collateralized.

According to James’ filing, Knight does not have the exclusive right to control the money in Trump’s brokerage account, which could become problematic if the value of Trump’s assets in the account dips below $175 million. James also raised issues with Knight’s business practices, which she argued should make the company ineligible to do business in New York.

“KSIC is not qualified to act as the surety under this standard because its management has been found by federal authorities to have operated affiliated companies within KSIC’s holding company structure in violation of federal law on multiple occasions within the past several years,” the filing said.

Don Hankey — the chairman of Knight Specialty’s parent company — declined to comment on the attorney general’s recent filing on Friday.

In an interview with ABC News on April 4, he said he had “no concerns at all” about the bond.

“Seldom do our applications or our bonds get turned down. I imagine it is being scrutinized very carefully, and they’re checking to make sure all the i’s are dotted and the T’s are crossed,” Hankey said. “It’s a large amount for anybody.”