Donald Trump is in a race against the clock. He has just a few days left to secure a massive bond after losing the civil fraud case brought by New York Attorney General Letitia James. And if he fails, James can begin snapping up the former president’s most prized assets, including properties outside New York.
In an attempt to avoid paying the $454 million judgment, Trump’s attorneys are appealing New York Supreme Court Justice Arthur Engoron’s decision. (Engoron also banned Trump from running any New York–based corporation for the next three years.) However, under New York state law, defendants who are seeking an appeal—and want to stop authorities from collecting the fine they owe while the appeals process plays out—must post a bond worth the full value of the judgment.
The problem for Trump is that in this kind of situation, bond companies typically want somewhere between 1.2 and 1.5 times the amount of the judgment to account for costs and interest accrued during the appeals process—which means that he needs a bond worth about half a billion dollars.
In recent court filings, Trump’s lawyers assert that securing a bond of that scale has been “a practical impossibility,” even for a multibillionaire. They told a New York appeals court that they’ve tried negotiating with dozens of insurance companies but have so far come up empty-handed.
So, how will Trump pull together the money by Monday? Let’s take a look at his options:
Try, Try, and Try Again to Secure a Bond
A bond company would basically hold Trump’s money for him while the appeals process plays out. If Trump wins his appeal, the bond company would return his $500 million, but if he loses, the bond company would pay out the money to New York state. And if during the appeals process Trump’s balance grows beyond $500 million—New York state law prescribes a 9 percent annual interest rate, adding up to about $87,000 a day—he would need to up his collateral with the bond company or risk the court’s revoking it.
Because the appeal outcome is far from guaranteed, bond companies have strict rules for providing collateral. Adam Pollock, a former assistant attorney general of New York and a partner at the law firm Pollock Cohen, explained in an interview with Slate that bond companies typically require liquid assets, like cash or market securities, to be handed over—and will charge a 1 or 2 percent annual premium on top of that. Real estate isn’t allowed as collateral, since it’s an asset that can’t be liquidated quickly.
Trump’s attorneys claim that they’ve tried 30 bond companies but none have agreed to work with the former president. However, that argument doesn’t satisfy Pollock because it doesn’t include any details about their negotiations. “All 30 of them would absolutely write [Trump] a bond if he offered $500 million of cash collateral, and zero of the 30 will offer a bond if he offers anything much less than that,” he said.
Almost a year ago, Trump told prosecutors that he had over $400 million in cash on hand and that that balance was “going up very substantially every month.” Yet, a recent analysis of Trump’s finances by the New York Times found that he has about $350 million in cash on hand.
A Nontraditional Option
Pollock wondered just how much collateral Trump might have offered bond companies, noting that he’s also “kind of notorious for not making good on his bills.”
But if it’s really not possible to secure a bond, there is room to get creative, he said—after all, this is a history-making case. “You could have an intermediary in place. Like, maybe a private equity fund would give $500 million in cash collateral to an insurance bond writer if Trump would give that private equity fund pretty significant real estate collateral,” Pollock said.
Pollock acknowledged that this is an unconventional method and would likely need approval from the bonding agency and a judge. It would also cost Trump a lot more because bonding agencies typically charge an annual fee of 1 or 2 percent the value of the bond, while a private equity fund would likely charge much more for taking on this level of risk.
Offer a Settlement
“I would think that if [Trump] gave a reasonable settlement offer, let’s say $300 million, I think that the office of the attorney general would have to seriously consider it,” Pollock said. If Trump has the volume of cash he says he does, then he could simply accept Engoron’s decision and try to negotiate directly with James to limit the financial damage.
Though this would be antithetical to the persona Trump has spent his entire adult life building—wealth! prestige! power!—it might be better than losing his properties. On top of Engoron’s $454 million fine, Trump also just set aside $91.6 million in a bond for his defamation loss to writer E. Jean Carroll, which is in addition to the $5.5 million he was forced to pay Carroll after a jury found him liable for sexual abuse and defamation.
Trump’s Super PACs Can’t Foot the Bill
The former president may have leaned heavily on his political fundraising to pay for his legal bills in the four criminal indictments he faces, but campaign finance laws prevent him from doing the same in civil cases.
And Trump is already in hot water over campaign finance violations—one of his criminal trials stems from alleged hush money payments made to two women in the lead-up to the 2016 election. Even though those payments were not executed through Trump’s campaign, Manhattan District Attorney Alvin Bragg argues that they were intended to protect it, which would make them a felony offense.
As Bloomberg points out, the same argument could be made of any donations, even from nonpolitical sources, used to help Trump secure an appeal bond.
Asking to Lower the Bond Probably Won’t Work
Last month, New York Appeals Court Justice Anil C. Singh initially rejected Trump’s request to post a $100 million bond instead of the full $454 million, as dictated by New York state law. That decision is temporary, though—a full panel of appeals court judges is still expected to weigh in.
However, Pollock doesn’t believe that Trump should hold his breath for a lower bond, since that would set an extraordinary precedent. If the courts were to make an exception for Trump, “every defendant forever will come along and say, ‘Look, this judgment against me is an extraordinary amount for me,’ ” said Pollock. He argues that a rule change would “completely undermine the legislative decision made in Albany to require the full amount.”
Attorneys for James have also pushed back against Trump’s request for a lower bond. They argue that, technically, he can secure multiple bonds in order to meet the $454 million judgment, something New York law specifically allows for. It’s common practice among defendants who owe large fines, and it helps lower each bond agency’s risk.
Filing for Bankruptcy
It’s clear that Trump is strapped for cash and could file for bankruptcy, but this wouldn’t make Engoron’s $454 million fine disappear. Pollock explained that filing for bankruptcy essentially hands control of all assets to a bankruptcy court and trustee who sort out what debts are due and prioritize whom should get paid. (Taxes, for instance, always take first priority.)
A bankruptcy filing would help delay Trump’s debts, since it could take years to settle, but interest would still be able to accrue on outstanding balances. Pollock thinks that it’s unlikely Trump will take this route. “Bankruptcy has a reputational harm that he probably doesn’t want during his campaign for president.”
Worst-Case Scenario: The Attorney General Starts Seizing Assets
Come Monday, if Trump does not post a bond with the court, James can begin seizing the former president’s assets, and she will have a few different options to choose from. And as of Thursday, it appears the AG is eyeing the former president’s Seven Springs estate, in upstate New York, with James filing judgments in Westchester County.
Given the nature of James’ case, she already has a road map to Trump’s finances that essentially tells her exactly where his assets are held. She can direct a New York City sheriff or marshal to go to Trump’s bank and issue them an execution order that demands that Trump’s accounts be drained, minus $3,000, since that’s protected by law. Pollock says that this is the most straightforward and efficient route in getting that $454 million. James can also seize Trump’s LLC membership interests, shares of stock, and other financial investments.
The other option James can take is to begin seizing Trump’s properties, like 40 Wall Street and his flagship Trump Tower, on Fifth Avenue. Pollock also noted that the AG is not limited to New York, thanks to the Uniform Enforcement of Foreign Judgments Act, which requires states to give “full faith and credit” to official acts and judgments from other states. Almost the entire country abides by this, so James could technically go after Mar-a-Lago, Trump’s prized social club.
There is one caveat when it comes to Mar-a-Lago, however, which is Florida’s homestead law. A property where a debtor lives cannot be seized by a creditor. But Mar-a-Lago isn’t only where Trump lives. It’s also a business that runs a golf course, restaurant, and spa. Pollock believes that Florida’s homestead law probably does not apply to all of Mar-a-Lago and that James might still be able to seize portions of it.
