Donald Trump, the previous president of the United States, has until Monday to settle a staggering $464 million (£357 million) fraud verdict against him by depositing a bond, lest he face asset seizures by Letitia James, the New York Attorney General. This event marks the close of a month-long delay permitted by James following the ruling made by a court in New York. Trump has petitioned a state appellate court for intervention, although it has yet to announce a judgement thus far.
Despite appearing simple on the surface, this legal situation is predictably impacted by the political manoeuvring that characterises interactions between these adversaries.
What transpires next?
Should Trump fail to meet this obligation, James may furnish an “execution” notice to Manhattan’s sheriff or any other authorised New York marshals to collect on the courts’ behalf. If she seeks to seize the money in Trump’s bank accounts, the sheriffs or marshals could initiate the collection process immediately.
Asset seizure is a more complex issue. The majority of Trump’s properties are under limited liability companies’ ownership. Despite his control over them, Trump could potentially stall proceedings by asserting that he does not have sole authority to transfer these assets, necessitating a court order compelling him to do so. Furthermore, New York legislation mandates that property sales must be publicised in local newspapers and public venues for a minimum of 56 days leading up to the auction. These properties are traditionally auctioned at the county courthouse doors.
Although the protocol slightly varies in Florida, nothing stands in the way of James attempting to impound Trump properties in different states.
James could more feasibly begin to impound items within Trump’s properties like art. Even with potential resistance from the former president, one seasoned New York lawyer, Adam Pollock – who has previous experience in the Attorney General’s office – anticipates the judge would promptly issue a turnover order. Certain exceptions would apply, such as Trump being allowed to retain a motor vehicle valued up to $4,000 and any bibles in his possession.
What other strategies does the attorney general possess?
Certain experts caution that a hasty approach could have adverse effects on Democrat James. Law expert at Northeastern University, Nikos Passas, emphasises the delicate act of balancing. In his view, the attorney general must execute the law impartially, but also ensure they are not viewed as biased or pursuing a political grudge. To immobilise Trump’s assets, James holds the power to issue a “restraining notice”, which bars a debtor from any disposition or intrusion with their property. Should Trump violate this, he’d face being held in contempt of court.
Another alternative at James’ disposal is to mandate Trump’s financial data through a subpoena, obliging him to reveal all financial obligations and restrictions on his assets. His properties are largely laden with mortgages and this could prove uncomfortable for him. Trump, who has branded himself as a billionaire, might be exposed as having less fortune than he purports.
James could also show leniency by affording Trump an extension. However, added clemency seems probable only if Trump’s legal team can demonstrate he is close to obtaining a bond and requires a bit more time, as per specialist advice.
As for the cost of a bond to Trump, a surety bond functions akin to a bank’s letter of credit, ensuring a defendant’s ability to settle a legal ruling if appeals fall through. For self-protection, insurers typically require collateral equalling entirely or exceeding the judgment, in cash or highly liquid assets, as opposed to property.
In the case of Trump, his legal representatives anticipate he’d need to arrange for $570 million in collateral, or 120 per cent of the judicial ruling. The underwriter also charges an initiation fee between 1 and 3 per cent, predicted by Trump’s legal team to be around $18.5 million. This sum would not be recoverable, even if Trump were successful in his appeal. The question of Trump’s available cash remains unanswered.
In his latest social media post, Trump announced he possesses nearly $500 million in liquid assets, following the procurement of a $91.6 million surety bond earlier in the month, related to a different defamation case filed by author E Jean Carroll. The precise state of Trump’s finances remains uncertain due to the private nature of his business. His record of magnifying his wealth, as exemplified by the New York fraud case, is widely known.
In other news, he stands to potentially gain upward of $3 billion following the decision by shareholders to introduce his social media corporation to the public market via his Spac, also known as a blank cheque firm. However, he is restricted from trading his shares for a half year due to a lock-up agreement. Equally uncertain is the future value of the business. Many of the individuals who invested in the special purpose acquisition corporation did so due to their admiration for Trump, rather than the financial strength of the business.
According to Passas of Northeastern University, the value of the corporation exists only in projection, so any party accepting it as collateral would need to calculate the risk. Passas speculated that Trump might offer a mix of liquid assets, shares, and other properties as collateral. Simultaneously, the attorney general has proposed that a collection of insurers could disassociate the bond into multiple $100 million pieces to lower their risk.
There’s a possibility that one of Trump’s affluent followers could provide the cash, but it would bring about considerable public examination. If the funds were considered a contribution to aid Trump’s re-election, it might violate campaign funding laws.
Turning to overseas funding would magnify scrutiny and increase campaign finance sensitivity. Regarding his other campaign funds, Trump could utilise Save America, his leadership Pac, which held just $4.1 million as of February’s end.
As for the prospect of declaring bankruptcy, it may offer temporary relief, but his team is reportedly reluctant to pursue this route due to the political repercussions towards a candidate who has heralded himself as a proficient entrepreneur.