- Experts say Mr. Trump must keep $500 million in cash in the bank to cover his appeal bond in the New York fraud case.
- If he does not comply by March 25, New York state will begin seizing his assets, the state's attorney general warned.
- A $250,000 to $1 million premium would make the bond even more expensive.
One fiscal stimulus is all it takes for President Donald Trump.
On Friday, President Trump posted bail in E. Jean Carroll's defamation lawsuit. His bail is backed by $93 million, which experts say he likely drew from his own wallet in the form of reserves or borrowed cash.
This small fortune will now sit in a bank, untouched, until President Trump exhausts his appeals and the ultimate winner takes it all.
The next appeal bond will be even higher.
The presumptive Republican presidential nominee still owes $455 million in fraud fines to New York State Attorney General Letitia James. The deadline for the loan is March 25, the same day as jury selection in his Manhattan hush money trial.
He called the amount “grossly excessive” in a thick 1,794-page appeal filing last week.
But despite Trump's protests, a Manhattan appeals court declined to reduce or delay the amount he owes, at least for now. Therefore, President Trump's deadline is ticking.
Insurance experts and experts say Mr. Trump must come up with $500 million in cash as an appeal bond in the fraud case by a March 25 deadline, or he could face state liens and even more. They claim the property could be at risk of foreclosure or a sheriff's sale of the property.
“All you have to do is give the judgment to the sheriff and say, 'Sheriff, Donald Trump owns this. We want you to sell it.'” Bankruptcy Lawyer said Eric Snyder, a sentencing enforcement expert.
“It's that simple. And the sheriff will say, 'Sure, you're entitled to 5 percent under New York law, so we'll be happy to sell it to you,'” Snyder added.
“It happens pretty quickly.”
Can't Trump just declare bankruptcy?
Experts say this is currently the least likely option for President Trump.
Like the losers of the lawsuits who face hefty fines, President Trump may also file for Chapter 11 bankruptcy. As the NRA revealed in 2021, this move tends not to work out well for litigants with deep pockets.
Endeavors destined for bankruptcy may buy you some time. However, Trump is the front-runner for the 2024 Republican presidential nomination. Bankruptcy is not a good political idea for Mr. Trump, who likes to be seen as extraordinarily wealthy. “I have a lot of money,” he told Fox on Tuesday, despite his lawyers insisting otherwise.
Option 2: Show me the money
To meet the March 25 deadline, Mr. Trump asked the state and the judge in the Manhattan fraud case, New York Supreme Court Justice Arthur Engoron, to pay $455 million in cash currently owed in a civil fraud judgment last month. You must show that you are accumulating funds.
How will Trump prove he has secured the funds? By posting another appeal bond. Similar to the better-known prison bond, an appellate bond is a promise of payment backed by collateral, which can mean cash or property.
Mr. Snyder, the bankruptcy chairman of Wilk Auslander LLP, predicted he would “bet a pastrami sandwich” that President Trump would issue bail for both sentences.
“He doesn't have a choice,” Snyder said.
The process of obtaining an appeal bond begins with hiring a surety and shopping around for the best deal, said Julie Alleyne, general counsel for the Insurance Fidelity Association of America.
The agent's job is to negotiate with potential surety insurance companies and find the best deal.
Mr. Trump already has a relationship with Federal Insurance Company, a subsidiary of the Chubb Group, which assumed his $93 million Carroll appeal bond.
The relationship dates back to at least 2018, when President Trump appointed Chubb CEO Evan G. Greenberg to a key trade advisory board.
Donald Trump appointed Chubb Group's Evan G. Greenberg to his trade advisory board in 2018.
business insider
“Mr. Chubb is very well-respected, but he's conservative,” said Neil Pedersen, owner of surety bond agency Pedersen & Sons.
“Mr. Chubb could easily issue $500 million in bonds,” he said. “They can issue $1 billion in bonds.”
The surety company would have looked closely at Trump's financial suitability before finalizing the offer.
“Offers will vary depending on the surety company's appetite for that type of bond,” Alleyne said.
The agency would ask for a minimum premium, which is the (usually) non-refundable price that President Trump would have to pay the carrier to put together the bond.
The premium on the $500 million appellate bond could range from $250,000 to more than $1 million just to buy the bond, experts cited as guests said.
Alleyne said multiple carriers could be involved in underwriting a single giant bond.
And carriers are likely to consider reputational risk when setting terms, Pedersen said.
“Everyone has an opinion about Trump, whether you like him or not,” Pedersen said.
One thing is certain, bond experts told Business Insider: All banks and surety companies want liquid assets like cash and securities as collateral, not real estate.
barrel head cash
That means President Trump will need one or more banks to participate.
President Trump doesn't appear to have much cash on hand, judging by what little is revealed in his financial and court filings.
Estimates of his liquidity range from $350 million (an amount Trump claimed in his 2021 financial statements) to “substantially more than $400 million” (an amount Trump claimed in his April deposition). (the amount pledged) and even as much as $600 million (according to the paper). (Estimated by Forbes and Bloomberg).
He may need a loan, as his lawyer suggested when he successfully asked an appellate judge in a fraud case to grant him a loan to meet his obligations.
“Nobody, including Jeff Bezos, Elon Musk, and Donald Trump, has half a billion hidden away,” lead attorney Christopher Kise told the judge at a recent hearing. .
No matter where President Trump gets the $500 million, he will need to keep it in one or more interest-bearing bank accounts during the appeal period, experts said.
Once the funds are deposited, President Trump's bank will issue so-called “irrevocable letters of credit” to the bond underwriters (Chubb and other carriers).
This is an assurance from the bank that President Trump holds the judgment money and cannot touch it until the appeal is decided. The person who wins the appeal receives the cash.
When underwriting a bond of this size, “you want cash, you want an irrevocable letter of credit, you want anything but real estate,” Pedersen said.
That's because if Trump loses his appeal in the fraud case, he would have just 10 days to hand over the judgment in cash to the state.
“How can you turn real estate into cash in just 10 days?” Pedersen said.
Warning from Letitia James
“If we don't have the funds to pay off the judgment, we're going to ask the court for a mechanism to enforce the judgment and we're going to ask the judge to seize the assets,” James told ABC News last month.
And she knows where to find them. James' office, which has spent five years poring over the Trump Organization's books, knows Trump's values better than anyone other than the former president himself.
Forbes magazine estimates that Trump's net worth includes about $690 million in real estate assets in New York City alone.
That includes a $287 million 30% stake in 1290 Avenue of the Americas, a skyscraper in midtown Manhattan.
This includes Trump's $80 million net land lease on 40 Wall Street, a skyscraper in the Financial District.
New York Attorney General Letitia James said of Donald Trump and his Manhattan skyscraper, also known as The Trump: “We are prepared to make sure New Yorkers get justice.'' “Yes, I look at 40 Wall Street locations every day.” building.
Roy Rochlin via Getty Images.Justin Sullivan via Getty Images
The judge in Trump's fraud trial said that Trump 40 Fraudulently doubled the value of Wall Street stocks Included in the 2012 and 2015 financial statements.
The skyscraper's facade bears the name “Trump Building,” and it happens to be right next to the taller building that houses the AG's Financial District office.
From James' conference room window, he can see 40 Wall Street, also known as the Trump Building.
During a pretrial deposition he was forced to attend in April, President Trump encouraged the AG and his lawyers to admire the skyscrapers, urging them to “open the curtains.”
“Open the curtains, please,” he urged.
“Here it is,” he told them. “I was just looking out the window.”
At the time, state officials denied Trump's request to tour the building, records show. But James clearly has his eye on it now.
“We stand ready to make sure New Yorkers pay their judgments,” James told ABC, warning of the consequences if Trump defaults.
“And yes,” she added, “I look at the 40 Wall Street district every day.”
