The New York Attorney General's Office and lawyers for Donald Trump reached a deal on Monday, allowing the former president's $175 million bond to stand on certain conditions. It was a win for Trump, but James' office said it was happy with the result in the end.
On Friday, Attorney General Letitia James had requested New York Judge Arthur Engoron to invalidate the bond provided by California-based Knight Specialty Insurance Company (KSIC) due to being "not regulated by the state's insurance department" and the fact that it "had never before written a surety bond in New York or in the prior two years in any other jurisdiction."
"Despite another flawed and desperate protest by the attorney general, President Trump is pleased the court determined the $175 million he posted in cash is worth $175 million, and the bond form in use in the New York court system for a century is in fact acceptable," Trump attorney Christopher Kise told Newsweek via email.
The Context
Engoron ruled in March that Trump must pay $454 million, which includes $355 million in penalties plus nearly $100 million in interest.
The former president and presumptive Republican presidential nominee's liability stems from a civil fraud lawsuit James initiated in 2022 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.
Prior to heading into Monday's trial proceedings in Manhattan as part of his criminal hush money case involving financial payments allegedly made to adult film actress Stormy Daniels prior to the 2016 election, which Trump denies, he spoke to the press and blasted James.
"I put $175 million in cash but she said the bonding company's not good....Nobody is going to be listening or coming into New York," Trump said. "Business are going to be fleeing because people are treated so badly. It's got to be the most unfriendly place to do business."
He called her "the worst attorney general in the country."
What We Know
On Friday, James urged Engoron to void the $175 million bond that the ex-president posted to appeal his New York civil lawsuit.
In the legal filing, the attorney general argued that a pledge by Trump to "true-up" his collateral if required by adding funds from a Schwab brokerage account is "nothing more than a promise" and "without any legal effect" because the ex-president cannot legally "be his own surety."
Trump and KSIC previously filed a motion backed by several documents that they said showed the bond was financially sound and guaranteed by the former president's cash earlier this week while arguing that James had wrongly objected to the bond and urging Engoron to make her pay associated legal fees.
On Monday, Engoron asked Trump lawyer Christopher Kise if Schwab breaks the agreement.
"Your hypothetical is calling into question the veracity of one of the largest financial institutions in the world," Kise responded, according to Law 360 reporter Rachel Scharf.
AG lawyer Andrew Amer reportedly responded by saying the problem with the Schwab collateral is that "while the funds are cash today, under the terms of the pledge agreement and control agreement they can be swapped out for less secure collateral like mutual funds."
Both sides agreed on a compromise in which the Trump legal team will maintain the Schwab account in cash and give KSIC exclusive control of the account.
A source within James' office told Newsweek via email that Trump "has conceded to the Attorney General's demands" to resolve bond-related concerns.
Other provisions of the deal include:
- The $175 million in collateral will stay as cash and will not be swapped for mutual funds or other financial instruments.
- The money cannot go anywhere else, like a lockbox.
- Trump and KSIC will provide a monthly account statement (reflecting $175 million in cash) to James' office and the court.
- The agreement between Trump and KSIC cannot and will not be amended without approval from the court.
- KSIC will submit to the jurisdiction of New York State Supreme Court in New York County, will waive its right to removal (to move a case to federal court or another jurisdiction), and will officially designate an agent of process in New York. That means that KSIC, though based in California, will officially designate someone who is able to accept legal service on their behalf in New York.
Views
Neama Rahmani, a former federal prosecutor and the president of the West Coast Trial Lawyers law firm, told Newsweek via phone that the decision surprised him.
"Basically, [Trump's] putting up the cash and frankly it's even better than a bond," Rahmani said. "As long as he keeps the money in the account, there's nothing Letitia James can say and do. Her hands were really tied there."
The fact that the AG's Office has set provisions for Knight in looking after the bond presents a pretty "airtight" resolution to the case he added, and James can't do much else in this situation if desired due to full cash being put up by Trump.
What's Next
This agreement should close the chapter of the civil fraud case.
Update 4/22/24, 3:20 p.m. ET: This story was updated with comment from Trump attorney Christopher Kise.
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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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