New York Attorney General Letitia James has issued a response after former President Donald Trump's $175 million bond was rejected.
In a new legal filing, James "takes exception to the sufficiency of the surety to the undertaking given by Defendants" and the bond issued by Knight Specialty Insurance Company (KSIC) "without a certificate of qualification pursuant to Insurance Law."
James wants to know if Knight can pay the $175 million bond.
Newsweek reached out to James' office and Trump's legal team via email for comment.
The Context
James, in 2022, initiated a civil fraud trial against Trump, his adult sons, and The Trump Organization, accusing them of inflating the former president's net worth and the value of his properties to obtain better loan and insurance terms.
Judge Arthur Engoron ruled last month that Trump must pay $454 million, which includes $355 million in penalties plus nearly $100 million in interest.
Trump, the presumptive Republican 2024 presidential nominee, is fighting the ruling through appeals, branding the overall case and trial against him as a politically motivated witch hunt.
"I've just posted a 175 Million Dollar Bond with the sadly failing and very troubled State of New York, based on a Corrupt Judge and Attorney General who used a Statute that was never used for this before, where no Jury was allowed, my financial statements were conservative and had a 100% perfect caution/non-reliance clause, there were no victims (except me!), there was no crime or damage, there was only success and HAPPY BANKS," Trump wrote in a post on Tuesday on Truth Social.
What We Know
On Monday, KSIC posted bond so none of Trump's assets or bank accounts could be seized. KSIC is owned by the privately held Hankey Group. Don Hankey, chair of the company, heads both organizations.
Documents as part of the $175 million bond were rejected by the court for not including a current financial statement.
On Wednesday, a message on the New York State Supreme Court's electronic filing system showed Trump's "Bond/Undertaking" had been "returned for correction."
Engoron has appointed retired Judge Barbara Jones to monitor Trump's parent company, The Trump Organization, to ensure that it does not engage in fraud.
The bond has also led to questions about what potential collateral Trump offered the insurance company in exchange for posting the $175 million.
Views
A source within James' office told Newsweek on Thursday that the court filing was due to Trump choosing to use an insurance company that is not admitted in New York and, therefore, ineligible to obtain a certificate of qualification from the Department of Financial Services (DFS).
James' office has filed a notice of exception to the surety that requires either Trump and/or his legal team or the surety to demonstrate by motion that the surety is financially capable of performing under the bond.
"If you seek a bond from a company not admitted in New York, as Trump did with Knight, you cannot get a certificate of qualification from DFS," they said. "So, by law, you have to demonstrate to the court why the surety you obtained is capable of paying under the bond if the judgment creditor files a notice of exception to the surety, as we did here.
"At a minimum, that requires a showing that the surety is financially sound and that the face amount of the bond is sufficiently collateralized by identifiable assets."
New York City-based attorney Nicole Brenecki told Newsweek that KSIC does not meet the "surplus" mandate for posting the bond in New York State.
"The entity is relatively unknown and allegations have been circulated that it has ties to Trump himself," she said. "As such, and given that the bond has already been significantly reduced, it seems reasonable for the AG to verify whether this particular company has the ability to pay the bond."
What's Next
A New York appellate court had given him 10 days to pay the money after judges agreed last month to reduce the amount needed to stop enforcement on the judgment.
Update 04/04/24, 2:40 p.m. ET: This article was updated with additional information.
Update 04/04/24, 3:06 p.m. ET: This article was updated with comment from James' Office and Nicole Brenecki.
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Nick Mordowanec is a Newsweek reporter based in Michigan. His focus is reporting on Ukraine and Russia, along with social ... Read more
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