Trump NY Bond Just As Kosher As His Financial Statements

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(Photo by MANDEL NGAN/AFP via Getty Images)

On Monday Donald Trump announced that he’d found someone to front the $175 million bond to stave off collections during appeal of the massive civil fraud judgment won by the New York Attorney General. Apparently some rando billionaire from California who made his fortune in subprime car loans was willing to vouch for Trump through his company, Knight Speciality Insurance.

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“I’ve just posted a 175 Million Dollar Bond with the sadly failing and very troubled State of New York,” Trump whined on Truth Social, adding that the civil fraud case against him and his business was nothing but “a fabricated ELECTION INTERFERENCE con job, so bad for New York, where businesses are fleeing & violent crime is flourishing.”

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He complained that he’d “Also posted a 91 Million Dollar Bond on another New York Fake Case, money I can’t use on my campaign. Just what Crooked Joe wanted. WITCH HUNT!”

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We might be tempted to make fun of Trump for not understanding how bonds work. Isn’t the point of paying Chubb to underwrite the note that you don’t have to hand all your cash over to the State of New York? But engaging with Trump’s digital logorrhea as a representation of facts is like trying to assemble a jigsaw puzzle in an open sewer — you wind up with a lot of missing pieces and probably worms.

And anyway, who the hell understands what’s actually going on with the bond he’s supposed to have posted to stop Attorney General Letitia James from auctioning off Trump Tower to pay the judgment? Not us! And apparently, not Knight Specialty Insurance, either.

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On Wednesday, the court rejected the bond because it had not one but three defects, including no attached financial statement from Knight.

BREAKING NEWS:
Court rejected #TrumpBond filing in #TrumpFraudVerdict for several reasons, 1 of which was #Trump failed to upload his "current financial statement" to the Court [looking forward to read].
175 million reasons why 1 mistake should not have been made, much less 3 ! pic.twitter.com/qk7nLskx5F

— Jeffrey K. Levine 🇺🇸 (@NYadvocateJKL) April 3, 2024

The company duly amended its disclosure, but it’s not clear that the fix will help. As lawyers on Bluesky noted immediately, the language of the note appeared to guarantee that the defendants themselves would pay in the event of an unsuccessful appeal, not the guarantor, as provided by law.

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There was also the pesky matter that Knight’s balance sheet shows just $26.8 million in cash on hand, and a net worth of just $138 million, both of which are substantially less than the $175 million the company claimed to be guaranteeing on Trump’s behalf.

And not to get too technical, but providing a surety bond requires a certificate of qualification from New York State Department of Financial Services under Insurance Law § 1111, and the NYAG is just wondering if Knight has got one.

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In comments to CBS News, Knight’s CEO Amit Shah seemed to suggest that the company was exempt from the surety capitalization requirements as an out-of-state entity.

“Knight Specialty Insurance Company is not a New York domestic insurer, and New York surplus lines insurance laws do not regulate the solvency of non-New York excess lines insurers,” he told the network. “So we don’t believe we need the 10% surplus.”

HUH.

Well, that seems on the up and up! Surely Justice Arthur Engoron will be completely understanding about these unique financial arrangements at the April 22 hearing.

Liz Dye lives in Baltimore where she produces the Law and Chaos substack and podcast.

Topics

Donald Trump, Government, Letitia James