Trump's $175 Million Fraud Penalty Bond Deemed Inadequate by New York Attorney General

New York AG deems Trump's $175M fraud penalty bond inadequate, seeks to void it, as he faces unparalleled legal challenges, including a criminal trial, with high stakes for his political and business future.

Waqas Arain
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Trump's $175 Million Fraud Penalty Bond Deemed Inadequate by New York Attorney General

Trump's $175 Million Fraud Penalty Bond Deemed Inadequate by New York Attorney General

New York Attorney General Letitia James has deemed the $175 million fraud penalty bond posted by former President Donald Trump as inadequate due to the small, opaque offshore insurer underwriting it. Trump is facing unparalleled legal challenges in New York, including a criminal trial for allegedly covering up hush money payments.

The bond was intended to secure a $250 million civil fraud lawsuit filed by James against Trump, his family, and his company. However, the Attorney General's office has expressed concerns about the bond, stating that the insurer, Fortitude Re, is a small, offshore entity with limited assets and transparency. This has led to questions about whether the bond will be sufficient to cover the potential penalties if Trump is found liable in the civil case.

James has asked a judge to invalidate the bond, questioning whether the offshore insurer, Knight Specialty Insurance Company (KSIC), has the funds to back it up. She expressed concerns that KSIC is not authorized to write business in New York and has a small policyholder surplus of just $138 million. James also criticized Trump's team's apparent hold on the collateral put up to back the bond.

Why this matters: The inadequacy of Trump's fraud penalty bond highlights the ongoing legal battles and financial scrutiny the former president faces. The outcome of these cases could have substantial consequences for Trump's political future and his business empire.

Trump was ordered to pay $355 million, rising to $454 million with interest, after being found liable in February for inflating his assets to benefit from favorable loans and insurance terms. His attorneys had difficulty raising the full $464 million bond needed to appeal the case, leading to the $175 million bond with KSIC as a "lifeline" to avoid the seizure of his assets.

James is seeking to have the bond invalidated, which would require Trump to post a valid replacement bond within seven days or face the possibility of his assets being seized. This legal battle comes as Trump also faces a criminal trial in New York City for allegedly covering up hush money payments.

The criminal trial, which is the first-ever criminal trial of a former U.S. president, is unfolding in Manhattan and thrusts Trump's legal problems into the heart of his hotly contested race against President Joe Biden. Trump has been using the prosecution as a political rallying cry, portraying himself as a victim while juggling his dual role as criminal defendant and presidential

Key Takeaways

  • NY AG deems Trump's $175M fraud penalty bond as inadequate due to small offshore insurer.
  • AG asks judge to invalidate bond, citing concerns about insurer's limited assets and transparency.
  • Trump ordered to pay $355M, rising to $454M with interest, for inflating assets for loans.
  • AG's move could require Trump to post valid replacement bond or face asset seizure.
  • Trump also faces criminal trial in NY for alleged hush money payments cover-up.