Donald Trump’s attorneys claimed in a New York court filing Monday that he cannot acquire bail to secure the $454 million civil business fraud verdict against him while he appeals the case.
Attorneys for Donald Trump and his co-defendants in the fraud case said that it was “impossible” for them to acquire a total appeal bond, which would “effectively” demand “cash reserves approaching $1 billion.”
According to an affidavit filed with the Manhattan Supreme Court’s Appellate Division, defendants’ active efforts make obtaining bail for the full amount of the judgment “practically impossible.”
They stated that they sought out about 30 surety firms through four different brokers and spent “countless hours negotiating with one of the largest insurance companies in the world.”
The attorneys stated that if the appellate division contemplates refusing the requested stay of judgment, it should schedule oral arguments on the matter. If the division fails to issue the stay, the attorneys request that they be allowed to file an appeal with the Court of Appeals, New York’s highest state court.
In February, Manhattan Supreme Court Judge Arthur Engoron ordered Donald Trump and his co-defendants to pay a total of $464 million in penalties and interest for breaching a New York antifraud statute.
Of that sum, Donald Trump was sentenced to pay $454 million. Donald Trump’s post-judgment interest continues to accrue at a pace of around $112,000 each day.
The action, filed by New York Attorney General Letitia James, accused Trump, his two adult sons, his firm, and its senior executives of intentionally inflating Donald Trump’s asset valuations for years in order to increase his net worth and get financial benefits.
In a deposition last year, Donald Trump claimed to have “substantially in excess of $400 million in cash.” However, Monday’s lawsuit claimed that getting bail for the whole $464 million judgment is impossible.
The almost 5,000-page lawsuit contains a declaration from Gary Giulietti, head of Lockton Companies’ Northeast branch, describing it as the world’s biggest privately held insurance brokerage company.
Giulietti, who was recruited to assist the defendants in securing a bond, stated, “Despite scouring the market, we have been unsuccessful in our effort… for the simple reason that obtaining an appeal bond for $464 million is a practical impossibility under the circumstances presented.”
Only a few bond assurance businesses have been licensed by the US Treasury Department to underwrite such a huge bond, and many of them will only issue bonds up to $100 million, Giuletti said.
He further stated that none of these businesses will accept illiquid assets, such as real estate, as collateral.
“Simply put, a bond of this size is rarely, if ever, seen,” Giulietti wrote. “In the unusual circumstance that a bond of this size is issued, it is provided to the largest public companies in the world, not to individuals or privately held businesses.”
It would be unreachable for any private firm unless they have about $1 billion in cash or cash equivalents to put up as collateral while still being able to pay their other business responsibilities, Giulietti noted.
“While it is my understanding that the Trump Organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” he stated in an email.
Donald Trump’s attorneys also stated in the petition that bond issuers frequently need collateral equal to 120% of the judgment, which amounts to more than $557 million.
These issuers are also expected to seek a two-year advance on a 2% annual bond premium, requiring the defendants to pay more than $18 million up front, according to the defense counsel.
The defendants had earlier volunteered to deposit $100 million in bail, less than one-fourth of the total verdict, to prevent James from collecting the fines during the appeals process.
Appeals Court Judge Anil Singh rejected that suggestion but permitted the defendants to continue conducting business in New York and revoked Engoron’s three-year restriction on Donald Trump soliciting loans in the state. Singh’s ruling is temporarily in force until a full appeals court panel hears the application for a stay.
Alina Habba, Donald Trump’s attorney, did not immediately answer CNBC’s request for comment on the petition.
Donald Trump acquired a $91.6 million bond from Chubb Insurance earlier this month to secure a civil defamation verdict against him in favor of writer E. Jean Carroll, which he is appealing.
