New York Attorney General Letitia James is urging New York State Supreme Court Justice Arthur Engoron to void the $175 million bond that the ex-president posted to appeal his New York civil lawsuit.
Trump was found liable for committing business fraud by illegally manipulating the value of assets for financial benefit and ordered to pay over $450 million earlier this year. The former president continues to deny any wrongdoing and says that he is the victim of a politically motivated “witch hunt.”
While appealing the verdict earlier this month, Trump posted the bond—which had been substantially reduced in a separate appeal—with the backing of California-based Knight Specialty Insurance Company (KSIC). James quickly objected, noting that KSIC was not licensed in New York and raising questions about the “sufficiency” of the bond.
Trump and KSIC filed a motion backed by several documents that they said showed the bond was financially sound and guaranteed by the former president’s cash earlier this week while arguing that James had wrongly objected to the bond and urging Engoron to make her pay associated legal fees.
SARAH YENESEL/POOL/AFP; Lev Radin/Pacific Press/LightRocket
James filed her response on Friday, writing that KSIC was “not regulated by the state’s insurance department” and “had never before written a surety bond in New York or in the prior two years in any other jurisdiction.”
The attorney general argued that KSIC only had “a total policyholder surplus of just $138 million,” considerably less than the $175 million supposed to be guaranteed. New York State law requires companies that issue bonds to take on no liabilities that amount to more than 10 percent of their surplus.
“Based on KSIC’s policyholder surplus in its most recent annual… the limitation of loss on any one risk that KSIC is permitted to write is $13.8 million,” James’ filing states. “The face amount of the bond exceeds this limitation by $161.2 million. Accordingly, the Bond is ‘ultra vires’ [invalid] and the surety is not justified.”
The filing goes on to argue that a pledge by Trump to “true-up” his collateral if required by adding funds from a Schwab brokerage account is “nothing more than a promise” and “without any legal effect” because the ex-president cannot legally “be his own surety.”
Newsweek reached out for comment to Trump’s office via email on Friday evening.
James also accused KSIC of using “shadow insurance” from affiliates in the Cayman Islands “to artificially bolster its financial capacity,” while asserting that the company’s managers are “neither competent nor trustworthy.”
Engoron was asked to deny the previous motion by Trump’s legal team and invalidate the bond, which would require the former president to post a valid replacement bond in the same amount within seven days or face the possibility of James seizing his assets.
Lawyers representing Trump and James’ office are expected to meet in court on Monday for a hearing on the bond. Trump himself will likely be in a different New York City courtroom on Monday, when the ex-president’s hush-money criminal trial is set to resume after completing jury selection this week.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.