New York Attorney General Letitia James is pushing New York State Supreme Court Justice Arthur Engoron to cancel the $175 million bond that the former president posted for his New York civil lawsuit appeal.
Trump was found guilty of business fraud for illegally inflating asset values for financial gain and was ordered to pay over $450 million earlier this year. Despite this, the ex-president denies any wrongdoing, claiming he's a victim of a politically motivated "witch hunt."
In a move to appeal the verdict, Trump recently posted the bond, which had been significantly reduced in a separate appeal, with the support of California-based Knight Specialty Insurance Company (KSIC). James objected promptly, citing KSIC's lack of licensing in New York and raising concerns about the bond's "adequacy."
Trump and KSIC countered with a motion supported by various documents, asserting the bond's financial stability and the former president's cash backing. They argued that James had unfairly objected and urged Engoron to make her pay the associated legal fees.
James responded on Friday, pointing out that KSIC was "not regulated by the state's insurance department" and had never issued a surety bond in New York or any other jurisdiction in the past two years. She argued that KSIC's total policyholder surplus was only $138 million, falling short of the $175 million guaranteed by the bond. According to New York State law, companies issuing bonds must not take on liabilities exceeding 10 percent of their surplus.
"Based on KSIC's policyholder surplus in its most recent annual... the limitation of loss on any one risk that KSIC is permitted to write is $13.8 million," James' filing states. "The face amount of the bond exceeds this limitation by $161.2 million. Accordingly, the Bond is 'ultra vires' [invalid] and the surety is not justified."
James further argued that Trump's pledge to "true-up" his collateral, if necessary, by adding funds from a Schwab brokerage account was merely a promise and had no legal effect since the ex-president cannot legally "be his own surety."
Engoron was requested to reject Trump's legal team's previous motion and invalidate the bond. If granted, this would require the former president to post a valid replacement bond of the same amount within seven days or risk James seizing his assets.
James also accused KSIC of using "shadow insurance" from Cayman Islands affiliates to artificially enhance its financial capacity, while asserting that the company's managers are "neither competent nor trustworthy."
Trump's office was contacted for comment by Newsweek via email on Friday evening.
Lawyers for Trump and James' office are set to appear in court on Monday for a hearing on the bond. Trump himself is expected in a different New York City courtroom on Monday as well, as his hush-money criminal trial is scheduled to resume after completing jury selection this week.
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