The $175 million bond agreement posted by Donald Trump in his civil fraud case may include a warning sign for New York Attorney Letitia James, according to a new report.
Trump last week posted bond in James' business fraud case against him, preventing her from collecting his assets while he appeals Judge Arthur Engoron's judgment against him. In February, Trump was ordered to pay $355 million after Engoron sided with James in the civil suit in which she accused Trump and top executives at The Trump Organization of conspiring to increase his net worth by billions of dollars on financial statements provided to banks and insurers to make deals and secure loans.
After the ruling, his debt grew to $464 million because of interest. Engoron previously ruled that Trump would have to pay the sum to halt James's collection of his assets, but a court in March reduced the bond to the $175 million figure.
The bond posted by the Knight Specialty Insurance Company—a California-based company owned by the Hankey Group—has since come under scrutiny, with James raising questions about its sufficiency.
One line buried in the agreement may be cause for concern for James, according to a new report from The Daily Beast, which described the contact as "bizarre" and "shadier than it looks."
The contract includes a line that if the judgment is "affirmed" or the "appeal is dismissed," the defendants in the case "shall pay to Plaintiff...the sum directed to be paid by the Judgment plus interests and costs or any part of it as to which said Judgment is affirmed," without a guarantee the insurance company would pay.
This essentially means that Trump will be required to pay the judgment if he loses the appeal but leaves questions about whether the insurance would pay if he is unable, essentially leaving James in the same position as before Trump secured the bond, according to the report.
In remarks to The Daily Beast, N. Alex Hanley, CEO of Jurisco Surety Bonds, said the language is "not common" and may have been included "to limit the liability to the surety."
Newsweek reached out to James' office and Knight Specialty Insurance Company for comment via email.
The language of the contract is not the only concern that has been raised about the bond in recent days. James questioned whether Knight could pay the $175 million bond.
In a legal filing this month, James' office wrote that she "takes exception to the sufficiency of the surety to the undertaking given by Defendants" and the bond issued by Knight Specialty Insurance Company "without a certificate of qualification pursuant to Insurance Law."
Meanwhile, documents for the bond agreement were rejected by a court, and returned for a correction, because a current financial statement was not included.
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Andrew Stanton is a Newsweek weekend reporter based in Maine. His role is reporting on U.S. politics and social issues. ... Read more
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