The New York attorney general’s office is seeking to invalidate the $175 million bond that former President Trump used to delay payment of the substantial monetary damages awarded in his civil fraud case.
In court documents filed on Friday, state lawyers argued that the former president and his co-defendants, including the Trump Organization and its top executives (including his two eldest sons), have not provided sufficient evidence to demonstrate that the surety used by Trump to secure the bond actually possesses the necessary funds to support it.
The defendants were unable to demonstrate that the bond has adequate and verifiable collateral backing, according to their critics.
The lawyers representing New York Attorney General Letitia James’s office have submitted a 26-page filing, urging the Court to reject the motion put forth by the Movants to validate the surety. They further request the Court to declare the Bond ineffective and order the prompt posting of a replacement bond within seven days. The People seek any additional relief that the Court deems necessary and appropriate in this matter.
Trump’s bond was backed by Knight Specialty Insurance Company, based in California.
According to state lawyers, Knight is classified as a “small insurer” that does not have the authorization to conduct business in New York. They further stated that, prior to the involvement of Trump, Knight had never written a surety bond in New York.
According to the filing, the company’s policyholder surplus stands at a mere $138 million. In compliance with New York state law, Knight and similar companies are prohibited from assuming liabilities, such as bonds, or incurring losses exceeding 10 percent of their surplus.
According to the lawyers, KSIC’s policyholder surplus in its latest annual financial statement is $138,441,671. As per KSIC’s policy, they are only allowed to write a maximum loss of $13.8 million on any single risk. However, the face value of the bond surpasses this limit by $161.2 million.
The state also contended that Trump and his codefendants have not met their burden of proof in demonstrating that the Bond is adequately collateralized by identifiable assets. They pointed out that Trump still has access to the $175 million in cash he placed in an account as collateral.
Earlier this year, Judge Arthur Engoron made a ruling stating that Trump, the Trump Organization, and their top executives had conspired to manipulate Trump’s net worth in order to obtain tax and insurance benefits. As a result, he ordered them to collectively pay a sum of $464 million, along with any accrued interest.
