The New York attorney general’s office is seeking to nullify the $175 million bond that former President Trump obtained to delay payment of the substantial financial penalty in his civil fraud case.
According to court documents filed on Friday, state lawyers have argued that the former president and his co-defendants, including the Trump Organization and its top executives (his two eldest sons), have not provided sufficient evidence to demonstrate that the surety which Trump used to secure the bond actually possesses the necessary funds to back it up.
The defendants failed to demonstrate that the bond is backed by sufficiently secure and ascertainable collateral, according to their argument.
In a 26-page filing, attorneys from the office of New York Attorney General Letitia James (D) have respectfully requested the Court to deny Movants’ motion to justify the surety. They further seek to declare the Bond as ineffective and order the posting of a replacement bond within seven days. The lawyers also express their willingness to comply with any additional relief that the Court deems necessary and appropriate.
Knight Specialty Insurance Company, based in California, was the company that secured Trump’s bond.
According to state lawyers, Knight is a relatively small insurer that does not have the authorization to conduct business in New York. Additionally, they claim that prior to the involvement of Trump, Knight had never issued a surety bond in New York.
According to the filing, the company’s policyholder surplus is only $138 million. New York state law prohibits companies like Knight from incurring liabilities or potential losses that exceed 10 percent of their surplus.
According to the lawyers, the current annual financial statement of KSIC shows a policyholder surplus of $138,441,671. Based on this, KSIC is only allowed to write a maximum of $13.8 million for any single risk. However, the bond in question exceeds this limit by $161.2 million.
The state also claimed that Trump and his codefendants have not proven that the Bond is adequately collateralized by identifiable assets, as they still have access to the $175 million in cash that was placed in an account as collateral.
In a ruling earlier this year, Judge Arthur Engoron found that Trump, along with the Trump Organization and top executives, had conspired to manipulate Trump’s net worth in order to gain tax and insurance advantages. As a result, they were ordered to pay a total of $464 million, along with interest.
Trump’s bond guarantees that James’s office cannot enforce the multimillion-dollar judgment against the defendants during their appeal, and it also puts other penalties on hold. Initially, the bond amount was set to match the full judgment, but Trump’s attorneys successfully argued that it would be “impossible” for the former president to provide the full bond, leading to a reduction in the amount.
A hearing is scheduled for Monday to address the concerns brought forth by the attorney general’s office. This hearing will occur simultaneously with the commencement of opening statements in Trump’s criminal trial in New York.
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