The insurance company backing Donald Trump's $91.6-million bond in the E. Jean Carroll defamation case is taking a big risk because of Trump's history of exaggerating his wealth, a bond expert has said.
Trump had to post the entire $83.3 million a jury awarded Carroll in her defamation lawsuit as a condition of an appeal. The figure comes with 9 percent annual interest. The entire sum will be returned to Trump if he wins his appeal.
As is normal practice, Trump used an insurance company to pay the money. In this case, he went with the Federal Insurance Company, a subsidiary of Chubb Insurance.
If Trump loses his appeal and doesn't pay the money, Chubb must pay the full amount to Carroll.
Trump was ordered to pay over $450 million in penalties after a New York judge ruled in February that Trump has exaggerated his wealth to obtain favorable bank loans.
Judge Arthur Engoron said that Trump had exaggerated the worth of a proposed housing development in Scotland and his own penthouse in New York, among other findings.
New York Attorney General, Letitita James, who was the plaintiff in the case, wrote in court documents that Trump fraudulently inflated his worth by more than $2.2 billion in 2014.
Separately, Forbes magazine stated in October 2023 that Trump had "obsessed" over its Top 400 richest Americans list for decades. It said Trump had been "relentlessly lying to reporters to try to vault himself higher on the list."
The former president claims that all of his legal difficulties, including multiple lawsuits and more than 90 felony criminal charges, are part of a politically motivated "witch hunt" and "election interference."
In January, a New York jury awarded Carroll the $83.3 after finding that Trump had defamed her character while denying that he had sexually assaulted her in a department store dressing room in the 1990s. It was Carroll's second time suing Trump. In May 2023, a different jury awarded her $5 million over sexual assault and defamation.
JD Weisbrot, president and chief underwriting officer at JW Surety Bonds told Newsweek that Chubb will want Trump to put up collateral worth the full $91.6 million before they would back the bond.
"An appeal bond which is filed on behalf of a defendant that has lost a verdict is considered to be very hazardous in nature to a surety company," Weisbrot said.
"Donald Trump is always talking about how rich he is; however, he has been caught multiple times exaggerating the size of his buildings and his entire net worth. The insurance company would not be willing to take a $90,000,000 risk simply because he is an ex-president," he said.
"They most likely received 100% collateral in the form of cash or an irrevocable letter of credit."
As Trump was sued as an individual person, rather than a corporation, he would likely have to give personal guarantees to the insurance company.
"If an individual person and not a corporation has been sued and lost an appeal, they would need to post collateral and they would need to provide personal indemnification holding the surety company who issued the bond harmless from all losses and expenses whatsoever. We can presume that Donald Trump also needed to provide a similar personal guarantee as well as the collateral to secure this bond security," Weisbrot said.
He added that it will be very difficult for the public to uncover what collateral Trump offered Chubb before the company put up the $91.6 million bond.
"Unfortunately, those are private, specific deal terms that are not publicly available. That is not something the insurance company could or would disclose," Weisbrot said.
Newsweek reached out to Trump and Carroll's attorneys via email for comment on Sunday.
The former president could open himself up to a further defamation lawsuit for his comments at a campaign rally in Rome, Georgia on March 9.
"Sometimes it's not good to be rich," he told the crowd. "I could say things about what it would cost normally. Ninety-one million, based on false accusations made about me by a woman that I knew nothing about, didn't know, never heard of, I knew nothing about her."
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Sean O'Driscoll is a Newsweek Senior Crime and Courts Reporter based in Ireland. His focus is reporting on U.S. law. ... Read more
