Former President Donald Trump’s lawyers argued on Monday that he is facing “insurmountable difficulties” in obtaining a bond to cover the $464 million civil fraud judgment, stressing the need to use real estate as collateral.
In a fresh appellate court filing, Trump’s legal team outlined the formidable challenge ahead.
“Defendants have faced what have proven to be insurmountable difficulties in obtaining an appeal bond for the full $464 million,” affirmed Trump Organization general counsel Alan Garten.
This predicament stems from Judge Arthur Engoron’s ruling in February, demanding Trump to disburse $464 million in disgorgement and interest. Engoron found Trump culpable of engaging in a decade-long business venture with falsified financial statements, artificially inflating his real estate assets, and exaggerating his wealth.
As a result, Trump was banned from leading any New York enterprise for three years, while his sons, Donald Trump Jr. and Eric Trump, were fined $4 million each and received a two-year ban.
Garten highlighted that while Trump remains “financially stable” and possesses “substantial assets,” the enormity of the judgment necessitates leveraging his real estate holdings for the bond.
However, despite Trump’s endeavors, no surety bond provider, including Chubb, the insurer behind Trump’s $91.6 million bond covering the $83 million judgment in the E. Jean Carroll defamation case, has shown a willingness to accept real estate as collateral.
“For Defendants, this presents a major obstacle,” Garten underscored.
Trump’s legal team, denouncing the judgment as “unconstitutionally excessive,” reiterated their plea to an appellate court on Monday, seeking permission for Trump to secure a bond of a lesser amount.
Defense attorneys Alina Habba and Clifford Robert emphasized the impracticality of obtaining such a vast sum solely through the liquidation of real estate assets, foreseeing substantial and unrecoverable losses. In their filing, they asserted, “Obtaining such cash through a ‘fire sale’ of real estate holdings would inevitably result in massive, irrecoverable losses — textbook irreparable injury.”
The filing disclosed that Gary Guilietti, the president of insurance surety Lockton Companies, who testified in favor of Trump during the trial, has been helping the Trump Organization connect with bond companies.
Guilietti, in an affidavit, disclosed that surety companies have declined to accept the Trump Organization’s properties as collateral, leaving the company with the sole alternative of providing 120% of the bond amount in cash and cash equivalents, totaling a staggering $557,491,716.
“While it is my understanding that the Trump Organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” Guilietti clarified.
The New York Attorney General’s Office has opposed the proposition of a reduced bond, contending that Trump and his co-defendants may endeavor to elude enforcement of the judgment or complicate enforcement procedures.
The former president maintains his innocence and has vowed to challenge the ruling through the appellate process.
In Engoron’s judgment, Trump was instructed to pay pre-judgment interest on each unlawfully obtained gain, with interest calculated from the date of each transaction, alongside a 9% post-judgment interest rate upon the court’s entry of the judgment.
Business law professor, Will Thomas from the University of Michigan pointed out to ABC News that the accumulating interest not only adds to Trump’s increasing legal costs but also influences his approach to the appeal process.
During Trump’s protracted appeal of Engoron’s decision, the fine will continue to accumulate interest unless he places the entire sum into an escrow account, per Thomas’s explanation.
Although Trump’s appeal triggers an automatic stay on the enforcement of Engoron’s ruling, he must initially place funds into an escrow account or furnish a bond to proceed with the appeal.
Should Trump opt for posting a bond to cover the fine throughout the appeal, the interest will persist, potentially resulting in tens of millions of dollars in additional costs.
