The New York attorney general’s office is questioning Donald Trump’s $175 million bond in the civil fraud case and has requested additional information to verify it is financially sound.
Trump posted the bond Monday night after receiving a reprieve from a New York appeals court, which reduced the amount he had to pay to $175 million. The lifeline allowed Trump extra time to get a bond after he informed the court that 30 underwriters refused to support a bond worth nearly half a billion dollars.
The attorney general’s office, led by Democrat Letitia James, took a step to challenge the deal’s soundness on Thursday, filing a “notice of exception to the sufficiency of the surety” to seek additional information from Trump or the underwriter about the bond because the insurer is not regulated by New York.
Judge Arthur Engoron scheduled a hearing for April 22.
On Monday, California-based Knight Specialty Insurance Company agreed to underwrite the bond. Don Hankey, Knight Specialty Insurance’s chairman and principal shareholder, told CNN on Tuesday that Trump gave $175 million in cash as collateral for the bond.
Lawyers acquainted with bonds say it’s reasonable for the attorney general’s office to want to know about the collateral used to secure the bond. Trump can request that the judge sign off on Knight or couple Knight with another corporation that is authorized in New York.
“If they seek court approval for Knight Specialty, I believe the attorney general will want proof that the company is actually holding the $175 million in cash collateral so the bond can be paid immediately if the judgment is affirmed without having to wait to try to liquidate pledged assets,” said Bruce Lederman, an attorney with DL Partners who has experience obtaining bonds.
Knight Specialty and its parent firm are not permitted to issue surety bonds in New York state, and hence cannot get a certificate from the New York Department of Financial Services, which is typically included in a bond package. The attorney general’s office requested additional information within 10 days or declared the bail ineffective.
By posting the bond, Trump prevented the Attorney General’s Office from taking assets to enforce the verdict. Trump is appealing the judgment and the judge’s determination that he is liable for fraud.
Earlier Thursday, Trump disclosed additional details about the bond, including financial statements from the underwriter. According to the new filings, Knight Specialty Insurance Company had $539 million in total assets at the end of 2023, with a surplus of $138 million to policyholders. The parent company’s total assets are $2.2 billion, with a $1 million surplus, according to the filing.
Lederman stated that in New York, a business cannot underwrite a bond for more than 10% of its spare cash.
Trump’s lawyer accused the attorney general’s office of intentionally causing difficulty for the former president.
“After hiding out in silence following an embarrassing loss in the First Department which does not bode well for the future of her baseless and vindictive political crusade, the Attorney General now seeks to stir up some equally baseless public quarrel in a desperate effort to regain relevance,” stated Chris Kise, Trump’s attorney.
The challenge is the latest twist in the long-running feud between Trump and the attorney general’s office, which also sought a more direct channel into bond discussions on Thursday.
Lawyers for the attorney general’s office requested that Engoron specifically enable the independent monitor supervising the Trump Organization to share material with any party in the case. Last month, the judge ordered the Trump Organization to provide specific information to the monitor regarding its efforts to acquire bonds to satisfy judgments.
The attorney general’s office also requested that the monitor investigate Allen Weisselberg, the former chief financial officer of the Trump Organization, who acknowledged to lying to the state during its probe into Trump’s finances.