New York Attorney General Letitia James is urging the judge in former President Donald Trump’s civil fraud case to void the $175 million bond that Trump posted to appeal his New York civil lawsuit. James questions whether the insurance company, Knight Specialty Insurance Company (KSIC), has the funds to back up the bond, as it is a small insurer not authorized to write business in New York. James argues that smaller businesses like KSIC are not permitted to expose themselves to liabilities greater than 10% of their policyholder surplus, which is $138 million for KSIC. She also raises concerns about KSIC’s management having violated federal law in recent years.
In her filing, James states that KSIC’s financial summary attached to the bond should not be relied upon as evidence of the insurer’s capacity. She points out that KSIC sends all of its retained insurance risk to affiliates in the Cayman Islands, using this risk transfer to artificially bolster its surplus in a practice known as “shadow insurance”. Due to these issues, James requests that the Court deny the Motion and require Defendants to post a replacement undertaking within seven days of the ruling. A hearing is expected to discuss these matters along with the opening statements in Trump’s New York criminal trial.
In September, Judge Arthur Engoron ruled that Trump and the Trump Organization committed fraud by deceiving banks, insurers, and others about the value of assets and net worth. The judge also barred Donald Trump Jr. and Eric Trump from serving as officers or directors of any New York corporation or legal entity for two years. Trump has repeatedly denied any wrongdoing and called the case a “witch hunt”. The lawsuit, brought by James, accuses Trump and the Trump Organization of fraudulent business practices, with allegations of fraud and misrepresentation on financial statements made by Donald Jr., Ivanka, Eric, and their associates and businesses.
The bond posted by Trump for his civil lawsuit has come under scrutiny as James questions the ability of the insurance company, KSIC, to back it up. She argues that KSIC, as a small insurer not authorized to conduct business in New York, does not have the necessary financial capacity to support a bond of that size. Additionally, she raises concerns about the management of KSIC having violated federal law in recent years, further questioning the insurer’s ability to act as the surety under the standard required by law.
The judge is expected to address the issues raised by James regarding the bond and the insurance company’s ability to support it. This hearing will also coincide with the opening statements in Trump’s New York criminal trial, where he faces charges related to the same fraudulent business practices. Trump has maintained his innocence and pushed back against the allegations, describing the case as a politically motivated attack. Despite his protests, the legal battles continue as the Attorney General’s office seeks to hold him accountable for what they allege are fraudulent activities carried out by him and the Trump Organization.
