New York attorney general Letitia James on Friday asked the judge presiding over former president Donald Trump’s civil-fraud case to void his $175 million bond, arguing that the insurance company that underwrote the bond cannot prove it can make the payment.
Trump posted the bond at the start of April to put off the more than $454 million judgment, which Judge Arthur Engoron served against the former president, his business, and his co-defendants. Trump’s bond, underwritten by the California-based Knight Specialty Insurance Company (KSIC), ensures James can’t collect the much larger judgment while he appeals.
However, the Democratic attorney general asked Engoron in a new court filing to throw out the $175 million bond, forcing Trump to post a replacement bond with a new insurance company.
“Based on the foregoing, the People respectfully request that the Court deny Movants’ motion to justify the surety, declare the Bond to be without effect and order that any replacement bond be posted within seven days, along with such other and further relief the Court deems necessary and appropriate,” James’s office wrote in a 26-page filing.
James argued that the current insurance company hasn’t demonstrated its “financial capacity” to pay the bond if Trump can’t. Notably, the company reports it’s worth only $138 million — over $35 million less than the size of the bond. The filing alleges that Knight Specialty Insurance uses a “shadow” company in the Cayman Islands to make itself “appear more financially stable than it actually is.”
Another concern of hers is that KSIC “is not authorized to write business in New York and thus not regulated by the state’s insurance department.” The insurer “had never before written a surety bond in New York or in the prior two years in any other jurisdiction,” she added.
Trump’s lawyers and Knight Specialty Insurance defended the bond and the company’s finances in a Monday court filing, arguing its “solvency and substantial financial credibility . . . enable it to satisfy all obligations under the bond.”
James also took issue with Trump’s collateral, saying he and his co-defendants have failed to demonstrate that “there is sufficiently secure and ascertainable collateral backing the bond.” Trump still has full access to $175 million in cash collateral, which the attorney general argued should be in the insurer’s full control.
Earlier this year, Judge Engoron ruled that Trump and his co-defendants engaged in fraud to financially benefit the Trump Organization. The initial judgment was more than $355 million before interest was taken into account.
In March, an appeals court agreed to reduce the bond’s price from $454 million to $175 million after Trump’s lawyers said it was impossible for their client to secure the full judgment amount.
Engoron will hold a hearing on Monday concerning the KSIC-backed bond’s fate.