No One Will Give Trump a $464 Million Bond, Lawyers Say

Alyssa Pointer/Reuters
Alyssa Pointer/Reuters

Donald Trump simultaneously claims he’s much wealthier than a court says but too broke to halt the judgment that threatens to take away those very riches.

In a court filing written with glaring irony, Donald Trump’s lawyers on Monday revealed that the real estate tycoon has failed to secure the gigantic, half-billion dollar bond required to temporarily halt the New York Attorney General from seizing his properties after he lost a bank fraud trial.

The deadline clock is now ticking, with only a week left until AG Letitia James can ask a judge for permission to start grabbing Trump’s Monopoly board portfolio. The former president has until Sunday, March 24, to obtain what amounts to a massive loan—with a surety company guaranteeing to the court that Trump will pay his financial penalty if he ultimately loses the case on appeal.

In a court filing, defense lawyers claimed that they’d been turned away by “about 30 surety companies through 4 separate brokers.” Meanwhile, an executive at a company that claims to be “the largest privately held insurance brokerage firm in the world” informed the court that obtaining the bond is “not possible under the circumstances presented.”

Trump is facing a severe cash crunch, according to the situation described in the 4,919-page filing.

When Trump lost his three-month bank fraud trial, New York Supreme Court Justice Arthur F. Engoron issued a $464 million judgment that seeks to siphon away every last dollar that Trump thought he’d saved by lying to banks about the value of his properties and obtaining loans under false pretenses. But to halt the AG from enforcing that judgment, Trump needed to come up with roughly 120 percent of that amount to post a bond in appellate court.

Only a select group of insurance companies are financially strong enough to guarantee that much money. A little known entity with the U.S. Treasury Department, called the Bureau of the Fiscal Service, keeps what’s referred to as a “t-list” of the few surety firms that can handle that kind of risk. The government agency also sets a strict cap on how large a single bond can be.

In Monday’s filing, Trump’s legal team tried to explain the difficulty of the challenge by recruiting testimony from Gary Giulietti, a company executive who oversees the northeast U.S. operations at a surety firm known as the Lockton Companies.

Giulietti revealed that Trump has spent more than a month desperately trying to find a single insurer willing to work with him—since even before the gargantuan judgment was issued on Feb. 16.

“These efforts, which began before the judgment was issued… have included reaching out to virtually every major surety in the market and spending countless hours negotiating with one of the largest insurance companies in the world,” Giulietti wrote.

“Despite scouring the market, we have been unsuccessful in our effort to obtain a bond for the judgment amount… for the simple reason that obtaining an appeal bond for $464 million is a practical impossibility under the circumstances presented,” he continued.

Giulietti went on to explain that surety companies generally won’t accept “hard” assets as collateral for fronting this kind of money, passing on physical things like buildings, planes, and cars. They instead prefer cold, hard cash.

And that’s where Trump runs into trouble. In a sworn deposition last year where he answered questions from the AG’s investigators, Trump boasted that he kept some $400 million in cash—a hefty amount that, if true, might very well have been enough to cover some of what’s at stake now.

But then in January, he lost a second rape defamation trial in federal court for falsely denying that he sexually assaulted the journalist E. Jean Carroll. The $83 million jury verdict came in like a surprise jab, turning the $464 million bank fraud judgment into a powerful hook that combined into a one-two punch of historic proportions.

Trump managed to secure a bond for that rape defamation judgment, posting a $91.6 million bond from a subsidiary of Chubb, an insurance giant led by Evan G. Greenberg, a man who Trump had previously appointed to the U.S. trade representative’s Advisory Committee for Trade Policy and Negotiations. But even the way they put that deal together hinted at his personal financial challenges, with Trump trying to sneak in a clause that would allow him to delay any eventual payment by two months.

But in the aftermath, sources in the surety industry wondered whether Trump would be able to pull off the same feat again, this time with an even bigger sum—particularly after he was already on the hook for the first one.

Monday’s court filing proved that the answer was a definite “no.” But it also put concrete numbers on what exactly Trump would have to pay to even secure this second bond.

In the filing, Giulietti explained that New York’s statutory 120 percent bond upcharge meant that Trump was actually on the market for someone to front an even more eye-popping sum of $557 million. And while Trump’s dizzying array of umbrella companies own large stakes in many buildings and real estate ventures that feature his brand name, Trump doesn’t have the billion dollars in cash lying around to make surety companies feel comfortable enough to put up the bond.

“While it is my understanding that the Trump Organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” Giulietti wrote.

And if Trump manages to find a company willing to work out a deal in the next seven days, he’ll be forced to cough up $18.6 million as the “upfront premium” for the bond, Giulietti said in court papers. That would be enough to cover the first two years of what amounts to a loan by another name.

But it’s looking increasingly unlikely that Trump will be able to find a company willing to do business with him, especially now. In court documents, Trump Organization corporate lawyer Alan Garten stressed what he called “the unwillingness of every surety bond provider approached by defendants to accept real estate as collateral.”

As industry experts previously told The Daily Beast, lenders would be particularly wary of Trump now, given that he’s fighting off a case that proved he committed bank fraud for a decade by lying about his wealth—fueling distrust about the very same documents they’d have to review before extending him a financial lifeline.

That means Trump needs a ton of cash, and fast. But the real estate tycoon still appears unwilling to do the obvious: selling off some of his portfolio to raise the money.

In court documents, Garten pointed to the Trump National Doral golf course in suburban Miami, the Trump International Hotel and Tower in Chicago, the 40 Wall Street skyscraper in New York City, and the South Florida oceanside estate and social club of Mar-a-Lago that has become the former president’s winter residence.

“There is simply no way for defendants to tap into the substantial equity in these properties needed to collateralize a bond for $464 million without causing irreparable harm,” he wrote, opting instead to reiterate his request that the courts simply halt the case instead of making them front the money.

The sudden shift appears to have been precipitated by Chubb’s unwillingness to come to Trump’s rescue a second time. In his telling, Garten claimed that Chubb last week was “actively negotiating” a bond that would be backed by a mix of “liquid assets” and real estate but ended up deciding that it wouldn’t accept Trump’s buildings as collateral.

“This presents a major obstacle,” Garten wrote.

It’s now up to the First Judicial Department, the appellate court that oversees state trials in Manhattan, to decide whether to hit pause on the case entirely. If appellate judges don’t, then the AG on Sunday can start making administrative moves that would pave the way for what Trump would consider the unthinkable: government padlocks on his properties.

Sunday will mark 30 days since the New York court clerk signed off on Justice Engoron’s judgment. At that point, the AG can file notices of liens on Trump’s assets, giving the law enforcement office a legal claim to certain properties until his debt is fully paid. She can also request that the judge greenlight seizures and auctions, although that may come later.

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