NEW YORK (Reuters) -A lawyer for Donald Trump tried to convince a judge on Monday that the insurer that provided the former U.S. president with a $175 million bond in his New York civil fraud case was empowered and strong enough to issue the guarantee.
The bond issued by Knight Specialty Insurance is meant to secure Trump’s compliance with a $454.2 million judgment won by state Attorney General Letitia James if he does not succeed in an appeal.
Justice Arthur Engoron imposed the penalty after finding that Trump, the Republican presidential candidate, fraudulently inflated his net worth and real estate assets to deceive banks and insurers into providing better terms.
James, a Democrat, challenged the bond this month, saying Knight lacked a “certificate of qualification,” and that Trump still had access to the Charles Schwab (NYSE:SCHW) account pledged to the insurer as collateral.
Knight is owned by billionaire Trump supporter Don Hankey.
At a hearing, Trump’s lawyer Christopher Kise assured Engoron that Trump couldn’t move money out of the account without Knight’s approval, and Schwab would not allow it. “We have to put the money somewhere,” Kise said.
Engoron, however, questioned the security of the collateral.
“You keep using the word agreement, what if they break the agreement?” he asked. “It all seems like a house of cards.”
Engoron is considering Trump’s bond at the same time jurors down the street are expected to hear opening arguments in Trump’s criminal hush money trial.
Trump defended the bond outside the courtroom at the trial.
“We put up cash and the number is 175,” Trump said. “She shouldn’t be complaining about the bonding company. The bonding company would be good for it because I put up the money. I have plenty of money to put up.”
Knight has said it was authorized to issue the bond, which is fully backed by cash in the Schwab account, and that it could access nearly $2.2 billion of assets at its parent company if something went wrong.
James said in court papers that a Trump-owned trust still controls the account, and Knight’s own financial arrangements appear insufficient to cover the amount of the bond.
Hankey previously said in an interview that he charged Trump a low fee as he did not anticipate problems.
“We thought it would be an easy procedure that wouldn’t involve other legal problems and it’s not turning out that way,” he said. “We probably didn’t charge enough.”
Hankey made his fortune in subprime car loans, with some regulators criticizing his companies’ debt collection tactics. He is worth $7.4 billion, according to Forbes magazine.
Trump was originally required to obtain a guarantee for the entire verdict while he appeals, but a state appeals court let him post a smaller bond.
https://www.investing.com/news/world-news/trumps-175-million-bond-goes-before-judge-on-new-york-ags-concerns-3388735
