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What you need to know about Trump's $454 million bail following his fraud trial

What you need to know about Trump's $454 million bail following his fraud trial

 


Donald J. Trump is there.

The $454 million judgment that a New York judge imposed on Mr. Trump in his civil fraud case took effect Friday, putting the former president in a precarious position.

Now he must either find the money quickly or persuade a company to post bond on his behalf, essentially vouching for him in court with an IOU.

Bail is probably his best bet: Mr. Trump, who also faces an $83.3 million judgment in an unrelated defamation case, doesn't have enough cash available to do it all himself, according to a recent New York Times analysis of his record. finances. If Mr. Trump can find a bond company willing to do such a large deal, he would have to pay the company a fee of up to 3% of the judgment and provide collateral.

The bond would prevent the New York attorney general's office, which brought the civil fraud case against Mr. Trump, from collecting the $454 million while Mr. Trump's appeal is heard. Without it, Attorney General Letitia James has the right to collect at any time.

Ms. James should give Mr. Trump up to 30 days, but if he fails to secure bail by March 25 and an appeals court denies him additional time, he has a lot to lose . The attorney general's office could seek to seize some of Mr. Trump's properties in New York, perhaps even a crown jewel like Trump Tower or 40 Wall Street.

The attorney general is in charge and can make this a very unpleasant experience for Trump, said Mark Zauderer, a partner at the law firm Dorf Nelson & Zauderer, a veteran New York business litigator who has won numerous appeal bonds.

As Mr. Trump races to secure bail, here's what we know about this perilous new phase.

Why does Trump owe $454 million?

Ms. James sued Mr. Trump last year, accusing him of orchestrating a plot to inflate her net worth in order to obtain favorable loans. This month, Judge Arthur F. Engoron ruled that Mr. Trump had done so and imposed several sanctions on him.

The most severe was a penalty of $355 million ($454,156,783.05) as of Friday afternoon, thanks to interest that continues to accrue. The judge said the sum represented Mr. Trump's ill-gotten gains from the scheme.

Nearly half of the base penalty, $168 million, reflected the interest Mr. Trump saved through deceptive lenders, while the remaining amount represented his purported profit on the recent sale of two properties. The judge's penalty essentially recouped that money, which will go into New York state's coffers if the decision is upheld on appeal.

In theory, Mr. Trump has two options for preventing Ms. James from collecting while he appeals. He can either write a check for more than $450 million to New York State, which will then hold the money on deposit, or obtain an appeal bond from a specialty company licensed to provide them.

In reality, unless Mr. Trump reaps a sudden and unexpected windfall, a bond is the only solution.

Mr. Trump's net worth, which he estimates to be in the billions, comes largely from the value of his real estate, not from his cash flow. Last year, he had more than $350 million in cash as well as stocks and bonds he could sell quickly, but that inventory is far less than he needs, according to the review. its financial records by the Times. Judge Engoron's $454 million judgment and the $83.3 million judgment Mr. Trump faces in the defamation lawsuit involving writer E. Jean Carroll will collectively eclipse the company's cash reserves. former president, forcing him to seek bail in both cases.

So far, he has not received any appeal bail in either case. On Friday, Mr. Trump's lawyers in the defamation case asked a judge to either give him more time or reduce the bail amount.

At its core, an appeal bond is a document filed with a court by a bail bond company, a financial institution that promises that a judgment will be paid. Under New York law, a defendant also owes 9% interest to the plaintiff until the judgment is paid or the appeal is resolved, an amount that is reflected in the bond amount.

As such, Mr. Trump's bail could reach nearly $500 million.

But the company providing the bond will be liable if Mr. Trump loses his appeal and doesn't pay, and so it will want the former president to have his share of the game.

To secure the bond, Mr. Trump will have to provide collateral to the company, including cash, stocks and bonds. Although every transaction is different, companies offering call bonds are generally hesitant to take a property as collateral, especially if a building already has a mortgage, experts said.

It won't be cheap. Mr. Trump will have to pay the company a premium, typically between 1 and 3 percent of the bond.

What happens if he doesn't get bail?

While there is no indication that Mr. Trump will fail to secure bail, that is easier said than done.

Only about a dozen licensed bail bond companies in New York have the capacity to handle a judgment of this size, experts say. And while some might salivate at the prospect of collecting a huge bonus, others might be frightened by the scale of Judge Engoron's sanction, or by its association with Mr. Trump's polarizing politics and procedural nature.

Bonds of this size are typically found in cases against large corporations, not individual businessmen, even wealthy ones like Mr. Trump.

For an individual, that amount is unprecedented, said Neil Pedersen, owner of Pedersen & Sons, a bail bond agency in New York that is not involved in the Trump case.

Mr. Trump is also a unique defendant: He is the front-runner for the Republican presidential nomination, and if he reclaims the White House, it could be difficult for the bail bonds company to collect its debts from a sitting president, particularly if it has stiff lenders. and lawyers in the past.

I wouldn't be surprised if he gets it or if he doesn't get it, Mr. Pedersen added.

If he doesn't, this is where things could go wrong for the former president. Ms James has a number of tools at her disposal to freeze her assets and ultimately recover the money.

With the help of a sheriff, she can collect from any entity that owns Mr. Trump's assets, such as a bank, as well as anyone who owes Mr. Trump money, such as a tenant of a of its buildings. Perhaps more importantly, she can file liens on her high-profile properties in New York, potentially triggering a foreclosure on the buildings.

In a recent interview with ABC News, Ms. James said as much, hinting that she had her eye on one of Mr. Trump's buildings in Lower Manhattan, a five-minute walk from his office.

We will ask the judge to seize his assets, Ms. James said in the interview, adding: “I watch 40 Wall Street every day.

Can he delay bail?

He can try, but the decision is not in his hands.

In federal court, Mr. Trump would have 30 days to obtain bail, but this case is in New York state court, where there is no grace period. Ms. James, however, is expected to give him that time to set bail, a window that closes on March 25, which happens to be the first day of his first criminal trial, which will be held in Manhattan.

Mr. Trump can also ask an appeals court to suspend the bail requirement and reduce the bail amount to a more manageable amount.

Can Trump supporters save him?

It is complicated.

New York's court system relies on state-regulated trust companies that have a long track record of posting bail.

By contrast, an IOU from a wealthy Trump supporter is unlikely to be accepted by the attorney general, Mr. Zauderer said, and the appeals court could refuse to accept it.

While there's nothing stopping one or more of Mr. Trump's billionaire benefactors from paying off his entire $450 million debt, that seems somewhat far-fetched. Not only would this require shelling out a huge sum, but it would also result in a significant tax bill for the donor(s).

It is unlikely that efforts on the ground will significantly reduce Mr. Trump's debt. Over the past eight days, a GoFundMe campaign has raised more than $1 million from more than 20,000 supporters.

Unless a more substantial bailout package emerges, Mr. Trump will have to pay most of the fine out of his own pocket, assuming Judge Engoron's ruling is upheld. To do so, Mr. Trump may have to sell or mortgage one of his properties.

And then there is his candidacy for the White House, which could constrain him even more.

The former president used a political action committee under his control to pay for lawyers and witnesses in his legal cases. But this committee does not have enough money to deal with the sanctions it faces. A super PAC coordinating his candidacy is legally prohibited from coordinating with him and cannot pay judgments.

Sources

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2/ https://www.nytimes.com/2024/02/24/nyregion/trump-fraud-trial-penalty.html

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