Court cuts bond in Trump civil fraud case to US$175 million, gives 10-day deadline
- If Trump puts up US$175 million, it will stop clock on collection of US$454 million judgment and prevent state from seizing assets while he appeals
- ‘Trump is still facing accountability for his staggering fraud,’ said New York Attorney General Letitia James’ office, even if collection is paused
A New York appeal court on Monday agreed to hold off collection of former US president Donald Trump’s more than US$454 million civil fraud judgment if he puts up US$175 million within 10 days.
If Trump does, it will stop the clock on collection and prevent the state from seizing the presumptive Republican presidential nominee’s assets while he appeals. The appeal court also halted other aspects of a trial judge’s ruling that had barred Trump and his sons Eric Trump and Donald Trump Jnr, the family company’s executive vice presidents, from serving in corporate leadership for several years.
In all, the order was a significant victory for the Republican ex-president as he defends the property empire that vaulted him into public life. The development came just before New York Attorney General Letitia James, a Democrat, was expected to initiate efforts to collect the judgment.
Trump, who was attending a separate hearing in his criminal hush money case in New York, hailed the ruling and said he would post a bond, securities or cash to cover the US$175 million sum in the civil case. Speaking in a courthouse hallway, Trump revisited his oft-stated complaints about civil trial Judge Arthur Engoron and the penalty he imposed.
“What he’s done is such a disservice and should never be allowed to happen again,” said Trump, who argues that the fraud case is discouraging business in New York.
James’ office, meanwhile, noted that the judgment still stands, even if collection is paused.
“Donald Trump is still facing accountability for his staggering fraud,” the office said in a statement.
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Trump’s lawyers had pleaded for a state appeal court to halt collection, claiming it was “a practical impossibility” to get an underwriter to sign off on a bond for such a large sum, which grows daily because of interest. The Trump lawyers had earlier proposed a US$100 million bond, but an appellate judge had said no late last month.
Monday’s ruling came from a five-judge panel in the state’s intermediate appeal court, called the Appellate Division, where Trump is fighting to overturn Engoron’s February 16 decision. Trump lawyers Alina Habba and Christopher Kise characterised Monday’s ruling as a key first step.
Siding with the attorney general after a months-long civil trial, Engoron found that Trump, his company and top executives lied about his wealth on financial statements, conning bankers and insurers who did business with him. The statements valued Trump’s penthouse for years as though it were nearly three times its actual size, for example.
Trump and his co-defendants denied any wrongdoing, saying the statements actually lowballed his fortune, came with disclaimers and were not taken at face value by the institutions that lent to or insured him. The penthouse discrepancy, he said, was simply a mistake made by subordinates.
Engoron ordered Trump to pay US$355 million, plus interest. Some co-defendants, including Donald Trump Jnr and Eric Trump, were ordered to pay far smaller amounts. Monday’s ruling also puts those on hold if the US$175 million bond is posted.
After James won the judgment, she did not seek to enforce it during a legal timeout for Trump to ask the appeal court for a reprieve from paying up.
That period ended on Monday, though James could have decided to allow Trump more time.
James told ABC News last month that if Trump does not have the money to pay, she would seek to seize his assets. She did not detail the process or specify what holdings she meant and her office has declined more recently to discuss its plans. Meanwhile, the office has filed notice of the judgment, a technical step toward potentially moving to collect.
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Trump maintained on social media on Friday that he has almost US$500 million in cash, but he said at a news conference on Monday that he would like to be able to use some on his presidential run. He asserted that James and Engoron, who is also a Democrat, “don’t want me taking cash out to use it for the campaign”.
If the penalty is ultimately upheld, the attorney general could go after Trump’s bank and investment accounts. There is also the possibility of going through a legal process to seize properties such as his Trump Tower penthouse, aircraft, Wall Street office building or golf courses, and then seeking to sell them.
But that could be complicated in Trump’s case.
“Finding buyers for assets of this magnitude is something that doesn’t happen overnight,” noted Stewart Sterk, a property law professor at Cardozo School of Law.
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What if Trump wins?
Under New York law, filing an appeal generally does not hold off enforcement of a judgment. But there is an automatic pause if the person or entity posts a bond covering what is owed.
Many defendants are able to get such a bond, but “judgments of this size are rare”, said Joshua Naftalis, a former federal prosecutor now in private practice.
“What makes this one unusual is someone who is subject to an enormous amount of money and has to come up with it himself,” Naftalis said.
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The ex-president’s lawyers have said underwriters wanted 120 per cent of the judgment and would not accept property as collateral. That would mean tying up more than US$557 million in cash, stocks and other liquid assets, and Trump’s company needs some left over to run the business, his lawyers have said.
They asked an appeal court to freeze collection without his posting a bond. The attorney general’s office objected, saying he had not explored every option for covering the amount.
The appeal court “chose a middle ground” by still requiring Trump to put up money but lowering the amount, Naftalis said.
