The New York attorney general's office has asked a judge to void the $175 million bond former President Trump secured to put off paying the larger monetary damage award in his civil fraud case.
State lawyers said in new court filings Friday that the former president and his co-defendants — the Trump Organization and its top executives, including his adult sons — failed to prove that the surety Trump used to obtain the bond actually has the money to back it.
They also say the defendants did not show that "sufficiently secure and ascertainable" collateral backs the bond.
"Based on the foregoing, the People respectfully request that the Court deny Movants’ motion to justify the surety, declare the Bond to be without effect and order that any replacement bond be posted within seven days, along with such other and further relief the Court deems necessary and appropriate," lawyers with New York Attorney General Letitia James's (D) office wrote in a 26-page filing.
Trump's bond was secured by the California-based Knight Specialty Insurance Company.
State lawyers argued that Knight is a "small insurer that is not authorized to write business in New York" and, until Trump, had "never before written a surety bond in New York."
The company has a total policyholder surplus of just $138 million, the filing says. Under New York state law, companies like Knight can't expose themselves to liabilities — like a bond — or any potential loss greater than 10 percent of its surplus.
"Based on KSIC’s policyholder surplus in its most recent annual financial statement of $138,441,671, the limitation of loss on any one risk that KSIC is permitted to write is $13.8 million," the lawyers wrote. "The face amount of the bond exceeds this limitation by $161.2 million."
The state also argued that because Trump still has access to the $175 million in cash he placed in an account as collateral, the court should find that he and his codefendants "failed to meet their burden to demonstrate that the Bond is 'sufficiently collateralized by identifiable assets.'"
Judge Arthur Engoron ruled earlier this year that Trump, the Trump Organization and top executives conspired to alter Trump's net worth for tax and insurance benefits. He ordered them to pay a combined $464 million, plus interest.
Trump's bond ensures that James's office can't collect the multimillion-dollar judgment against the defendants while they appeal and pauses other penalties. The bond amount was originally set at the full judgment amount, but an appeals panel agreed to lower the price when Trump's lawyers said it would be "impossible" for the former president to secure a full bond.
The judge is expected to hold a hearing Monday to discuss the issues raised by the attorney general's office. The hearing is set to run in parallel to opening statements in Trump's New York criminal trial.
