What happens if Trump can’t post 4 million bond in civil fraud case?  Here’s what you need to know
What happens if Trump can’t post 4 million bond in civil fraud case?  Here’s what you need to know

The Republican nominee to challenge President Joe Biden may face a financial crisis on top of a mountain of legal liabilities, including 88 criminal charges, with at least one criminal trial and sentencing expected before Election Day.

In a revealing court filing on March 18, Donald Trump’s lawyers said he tried to get help from at least 30 companies that could provide guarantees worth more than $454 million after he lost a civil fraud lawsuit in New York earlier this year.

But none of them could, and he now faces the “practical impossibility” of coming up with the money before the state’s looming deadline to enforce the sentence against him, according to his lawyers.

The extraordinary circumstances also raise the likelihood that the GOP presidential nominee will be a convicted felon strapped for tens of millions of dollars that won’t be there when voters go to the polls in November.

Mr. Trump also cannot get rid of fraudulently acquired debts by filing for bankruptcy.

Trump claims to block the execution while he appeals

Mr. Trump got some relief last month after a judge agreed to stay part of the ruling that would have effectively barred him from borrowing money. His attorneys sought that relief so he could secure bail while he appeals, they wrote in court documents.

Now his legal team is asking a state appeals court to stay the financial portion of the judgment, even if he can’t afford the bond that would stop collections while he appeals the entire decision.

His lawyers have requested oral arguments to make their case.

Trump can keep trying to borrow money

A surety bond acts as a type of paid security for delays in performance during an appeal.

However, according to his legal team, the companies he approached were “unwilling” to use his star properties as collateral after a judge found him liable for fraudulently inflating the value of his real estate portfolio.

These companies “do not have the financial strength to handle a bond of this size” or are “unwilling to accept the risk associated with such a large bond.”

These companies “will only accept cash or cash equivalents,” such as marketable securities, and typically “require collateral of approximately 120 percent of the judgment amount,” which in this case was nearly $560 million.

The guarantees would then likely charge bond premiums of roughly 2 percent a year “two years ahead — an upfront cost of more than $18 million,” according to Mr. Trump’s lawyers.

That money will not be refundable even if Mr Trump wins his appeal.

Leticia James may try to target his assets

Last month, New York Attorney General Letitia James said her office was ready to target his assets to begin collecting what a judge determined the former president owed the state in so-called “ill-gotten gains” from the fallout from his manipulated financial statements used to obtain favorable terms from banks and insurers.

“We stand ready to ensure that the judgment is paid to New Yorkers,” she said in February.

Ms. James would likely need a court order to do so.

Mr. Trump, his grown sons, two former Trump Organization executives and entities associated with brand-building properties in the Trump real estate empire were ordered to pay more than $464 million at the end of a three-year investigation and ongoing months of trial targeting family business fraud.

The defendants were found to have engaged in a decade-long scheme to fraudulently inflate the value of his net worth and assets in annual financial statements that were provided to banks and lenders in order to secure more favorable financing terms for some of its star properties.

The total “payback” owed now owed back to the state — money that was effectively forfeited as “ill-gotten gains” — is roughly $364 million, with an additional $100 million in interest.

Post-judgment interest accrues daily at a rate of 9 percent per year, or more than $114,000 for all defendants, including nearly $112,000 for Mr. Trump alone.

Mr Trump could theoretically start selling off his properties to cover the sum, but his lawyers say his real estate holdings – such as Mar-a-Lago and 40 Wall Street in New York – are worth much more of the bet amount.

Ms. James said that if Mr. Trump does not have the funds, “then we will seek mechanisms to enforce the judgment in court and ask the judge to seize his assets.” The court filing shows that her office is beginning a foreclosure process on Mr. Trump’s properties.

Because the civil fraud trial took place in Manhattan, where Trump Tower and 40 Wall Street are located, a verdict had already been entered there. However, the huge outstanding loans on these properties mean they are unlikely to be among the most at risk of foreclosure.

Instead, March 7 documents revealed that state attorneys entered the judgment in the civil fraud case in Manhattan with the district clerk’s office in New York’s Westchester County — home to the former president’s Seven Springs estate and his Trump National Golf Club Westchester.

Trump will continue to raise money as he campaigns

During taped testimony in the case last year, Mr. Trump claimed to have more than $400 million in cash.

His 2021 statement of financial position — the documents at the center of the fraud case and the most recent available from the trial — indicated he had approximately $294 million in cash, a figure Ms. James claimed was inflated.

Mr. Trump’s legal battles raise significant questions about the state of his finances and how and where he intends to raise millions of dollars for his litigation, with the presidency and victory to retake the White House serving as a potential shield against liability.

He has already secured nearly $92 million in bail in his appeal of a defamation conviction stemming from E Jean Carroll’s lawsuit against the former president.

He was required to pay 110 percent of the $83.3 million judgment to stop collections pending the appeal.

Mr. Trump obtained the loan through the Federal Insurance Company, a subsidiary of the Chubb Corporation, whose CEO was appointed to a trade advisory committee during the Trump administration.

But that company doesn’t seem ready to support his bond in his fraud conviction.

Chubb told Mr. Trump that the company would not be willing to accept real estate as collateral, according to Mr. Trump’s lawyers.

Mr. Trump’s campaign fundraising arms have raised millions of dollars from supporters to pay his legal fees and the lawyers who work on his cases. Meanwhile, he courted billionaire donors and transformed the Republican Party’s financial apparatus into one that could finance his campaign.

He also expects a big windfall from the long-awaited merger between his parent company, Truth Social, and publicly traded shell company Digital World Acquisition Corporation. That ticker symbol “DJT,” which will now return to Wall Street this month, was used for only one other publicly traded company: Trump Hotels and Casino Resorts, which filed for bankruptcy in 2004.

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