New York Attorney General Letitia James has taken a stand against the surety company responsible for holding the $175 million bond for former President Donald Trump. This comes as Trump appeals the $460 million decision made against him in the civil fraud trial that took place earlier this year.
The attorney general’s office has expressed concern regarding the financial status of Knight Specialty Insurance company, as well as the collateral associated with the bond.
According to the attorney general’s office, the $175 million in cash that Trump states as collateral in a bank account is actually held in the DJT Revocable Trust, which is not under Knight’s control as it should be. This means that Trump still has access to the funds and can withdraw them or replace them with other assets that may be affected by market fluctuations. If the value of these assets falls below $175 million, the bond is no longer considered secure.
The state is worried that if Trump retains control of the account, he might profit from the bond deal by earning interest that surpasses the fees he owes to Knight for posting the bond.
If Trump loses on appeal and refuses to pay, Knight would be responsible for paying the $175 million bond. The attorney general’s memorandum states that Knight does not meet several criteria as a surety bondholder.
According to CBS News, Knight does not seem to violate the restriction imposed by New York insurance law, which prohibits companies from putting more than 10% of their capital at risk. The attorney general’s office pointed out that Knight has a surplus of only $138 million, which under New York law, limits the liability it can assume to $13.8 million. Additionally, the attorney general claims that Knight relies on risk transfer practices that artificially boost its surplus. James further alleges that Knight’s management has violated federal law on multiple occasions in recent years, raising concerns about their trustworthiness.
Trump’s representatives did not respond to requests for comment right away.
The court has been asked by the state to require Trump to come up with a replacement within seven days of its ruling on the matter. A hearing on this issue is scheduled for Monday.
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