The New York Attorney General, Letitia James, has filed a memorandum of opposition in response to the surety company holding a $175 million bond for former President Donald Trump as he appeals a $460 million decision against him in a civil fraud trial. James’s office is concerned about the financials of the bondholder, Knight Specialty Insurance company, and the collateral for the bond. The attorney general argues that the $175 million in cash that Trump provided as collateral is in a trust controlled by Trump and not by Knight, raising concerns about the security of the bond.
The state is worried that Trump still has access to the funds and could potentially make withdrawals or replace the funds with other assets that may fluctuate in value. If the value drops below $175 million, the bond would no longer be secure. There are also concerns that Trump, if he continues to control the account, could potentially earn interest on the bond deal that exceeds the fees he owes to Knight for posting the bond. If Trump loses on appeal and does not pay, Knight would be obligated to pay the $175 million bond, but the attorney general argues that Knight falls short on several requirements for a surety bondholder.
CBS News reported that Knight does not seem to meet a restriction under New York insurance law that prohibits companies from putting more than 10% of its capital at risk. The attorney general’s office pointed out that Knight only has a surplus of $138 million, meaning it may not take on liability of more than $13.8 million under New York law. Additionally, there are concerns about Knight’s risk transfer practices that artificially bolster its surplus and the trustworthiness of its management. The state has requested the court to require Trump to come up with a replacement for the bond within seven days of its ruling on the matter, with a hearing scheduled for Monday.
Representatives for Trump have not yet provided comment on the situation. The legal battle involving the surety bond is just one of several setbacks Trump is facing in various legal battles. The $460 million decision against him in the civil fraud trial earlier this year is a significant blow, and the concerns raised by the New York Attorney General regarding the security of the bond add further complications to Trump’s legal situation. It remains to be seen how these legal challenges will unfold and whether Trump will be able to address the issues raised by the state.
