Former President Donald J. Trump warned of financial disaster on Monday, reaching a settlement that will save him from paying a $454 million judgment in his civil fraud case while he appeals the fine.
The lifeline came in the form of a bond that will prevent the New York attorney general, who filed the lawsuit that led to the ruling, from collecting the $454 million until Trump’s appeal is resolved. Attorney General Letitia James accused Trump of fraudulently inflating his net worth by as much as $2 billion, and a judge ruled in his favor.
Mr Trump secured bail after an appeals court hearing last week granted his request to lower the bond amount, setting it at $175 million and sparing Trump a financial crisis. Otherwise he would have had to post bail in the full $454 million, which his lawyers said was “virtually impossible.” If she had not done so, Ms James could have frozen her bank accounts.
Time was running out. When the appeals court ruled last week, it gave him 10 days to post bail, setting the deadline for Thursday.
The $175 million bond came from Knight Specialty Insurance Company, a California company that handles such deals. By providing the bond, which is a legal document and not an actual money transfer, the company essentially promised the New York court system that it would cover a portion of the $454 million judgment against Trump if he lost the appeal and had not paid. .
Many details of the deal are private, but the former president most likely had to pay a commission to the company and pledge cash and other liquid investments as collateral.
It was the collateral that prevented Trump from securing a bond for the full $454 million. While Trump measures his net worth in the billions, much of it comes from the value of real estate, which bond companies typically don’t accept as collateral. Although Trump had more than $350 million in cash and other liquid investments as of early this year, a New York Times analysis found that he fell short of what he needed to secure the bond bigger.
His lawyers, after being prodded by more than 30 bond companies, recently cited “insurmountable difficulties” in obtaining full bail.
Even to secure the $175 million bond, Trump likely had to dig deep into his reserves.
The terms might be expensive, but Trump didn’t have much choice. In the absence of a bond, Ms. James could have proceeded to collect at any time, freezing her bank accounts and potentially starting the long and complicated process of seizing some of her New York properties. She suggested pursuing Trump’s office tower in Lower Manhattan, at 40 Wall Street, just steps from his office.
A representative for Ms. James, a Democrat, declined to comment.
Alina Habba, Trump’s lawyer, said in a statement that the former president “looks forward to asserting his rights on appeal and overturning this unjust verdict.”
Mr. Trump had recently posted a separate $91.6 million bond in a defamation lawsuit brought by writer E. Jean Carroll. The collateral he promised the bond company in that case was prohibited for civil fraud bail. Few people, even as rich as Trump, needed to issue such large bonds, let alone two at once, and it was unclear whether he would be able to secure both before time ran out.
Ms. James filed a lawsuit against Trump and his family business in 2022, accusing the former president of manipulating the value of his properties to obtain favorable loans from banks.
The judge overseeing the case — there was no jury — ruled in favor of Ms. James and lashed out at Trump. The judge, Arthur F. Engoron, imposed a fine of $355 million, which increased to $454 million with interest added.
The bond, for now, clears a major liability from Trump’s legal docket, but many other problems remain. Trump, once again the presumptive Republican nominee for president, faces four criminal indictments in four different cities, the first of which goes to trial in two weeks in Manhattan.
If so, Trump is accused of covering up a sex scandal during and after the 2016 presidential campaign.
Kate Christobek contributed to the reporting.
