An insurance company will not be permitted to post a $175 million bond for Donald Trump while he appeals a fraud judgment, a former federal prosecutor has said.
Eric Lisann was reacting to a separate comment by another lawyer, Dave Kingman, who wrote that Knight Specialty Insurance will not be able to post the bond for Trump.
Kingman wrote that, as a result, New York Attorney General Letitia James will be able to begin enforcement proceedings on Donald Trump's properties.
A New York court has rejected Knight Specialty's paperwork and said it wanted to see more information on its financial backing. The company filed new paperwork on April 4.
Newsweek sought email comment from Knight Specialty Insurance and Trump's attorney on Monday.
Trump must post the $175 million bond to prevent James from beginning enforcement proceedings after a judge fined the former president $454 million in February for fraudulently inflating the value of his assets.
Writing on X, formerly Twitter, one-time federal prosecutor Lisann wrote that Knight Speciality might not be able to post the bond for Trump and will be liable for the full amount because it had given a guarantee to the court.
"Looks like there is a real possibility that this Don Hankey-owned Knight Specialty Insurance does not itself have liquidity, and did not get from Trump collateral, sufficient to provide legally cognizable assurance that it can pay $175 million on demand in the event of a judgment-affirming appeal," he said.
"Thus NY AG James looks to be soon greenlit to execute on her $450 million judgment against Trump as if Trump posted no bond.
"But the Trumpian part is that even though, or perhaps because, it may be part of a Trump scam, Knight now too may be on the hook for $175 million as it won't automatically get out from underneath its own proffered surety."
Hankey, a billionaire, has already said that his company will be able to post the money for Trump.
He was reacting to a comment on X by lawyer Dave Kingman, who wrote that Knight will not be able to post the $175 million.
"Understand that Knight Specialty has a problem. This bond cannot be approved. Under the CPLR [Civil Practice Laws and Rules] the surety will remain obligated under the bond until a replacement bond is filed. Trump is unlikely to get a replacement bond. Knight Spec will be liable AND Trump won't have a stay [on enforcement]," he wrote.
The question rests on whether Delaware-based Knight Specialty will be able to post the bond in New York.
In April, 20220, the AM Best rating agency upgraded Knight's financial strength rating to A-(Excellent) from B++ (Good).
"These ratings reflect Knight's balance sheet strength, which AM Best assesses as very strong," AM Best wrote at the time.
Trump posted a $175 million bond on April 1 in order to prevent the seizure of his assets by New York while he attempts to appeal the civil fraud ruling against him. New York Judge Arthur Engoron previously found Trump, his adult sons Donald Jr. and Eric, and The Trump Organization liable for a scheme in which the value of Trump's net worth and assets were unlawfully inflated in order to obtain more favorable business deals. Trump, the presumptive 2024 GOP presidential nominee, has maintained his innocence in the matter.
Trump was hit with a penalty that came to around $454 million after interest, and would have had to pay a bond slightly higher than that amount to stave off the state from seizing assets, such as his many real estate holdings, to cover the penalty. An appeals court last week, however, ruled that he could instead pay a lower bond of $175 million.
The bond was then rejected by the court's filing system shortly after it was posted due to missing paperwork, including a "current financial statement." James, whose office led the fraud case against Trump, later raised questions about the "sufficiency" of the bond and noted that the surety backing it, Knight Specialty Insurance Company (KSIC), is not admitted in New York, meaning it's ineligible to obtain a certificate of qualification from the Department of Financial Services. KSIC has refiled its paperwork as a result in an effort to get the process moving again.
Update, 4/8/24, 1:30 p.m. ET: The headline on this article was updated.
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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
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