Trump's $175 million bond can stand after attorneys agree to comply with new conditions
The $175 million bond posted by an insurance company for former President Donald Trump in a civil fraud case can stand after an agreement Monday that included assurances from his lawyers to comply with conditions from the attorney general's office.
New York Attorney General Letitia James' office argued it is concerned about the financial wherewithal of Knight Specialty Insurance company, which posted the bond for Trump on April 1.
According to Monday's agreement, the $175 million will stay as cash in a money market account, Knight Specialty will have exclusive control, but can only use the cash to pay for the bond if needed. The attorney general's office and the court will get monthly account statements.
The agreement will be finalized by Thursday, April 25, and some of the details require Schwab, the managers of the money market account, to agree to the terms.
The agreement between Trump and Knight Specialty Insurance Company cannot be amended without court approval, and Knight will submit to the jurisdiction of the court. The company waived its right of removal and its lawyers agreed to designate an agent to accept service of process in New York.
A bond is necessary to prevent James' office from collecting more than $464 million from Trump and other defendants after they were found liable for a decade-long fraud scheme.
In protesting the bond, James' office said $175 million in cash that Trump claimed to have provided as collateral remained under control of his revocable trust, and not in a Knight account.
Trump Organization lead attorney Chris Kise spoke for about 30 minutes on Monday, assuring the court that the $175 million bond was paid in cash and placed in an interest-bearing money market account that cannot lose value. Kise says the cash account is earning about $400,000 in interest every two weeks.
They said that Trump was still able to make withdrawals, or replace the funds with other assets that could fluctuate with the markets. Attorneys for James said they feared that the bond would no longer be secured if its value were to drop below $175 million.
The attorney general said in a filing on April 19 that she believed that, even if Trump's funds were under Knight's control, the company would not meet several requirements for a surety bondholder.
As CBS News has reported, Knight doesn't appear to meet a restriction under New York insurance law barring companies from putting more than 10% of their capital at risk. The attorney general's office noted that Knight has a surplus of only $138 million. Under New York law, given that amount of surplus, it may not take on liability of more than $13.8 million.
The attorney general also said that Knight relies on risk transfer practices that work to "artificially" bolster its surplus. James also argued that Knight's management is untrustworthy, violating federal law "on multiple occasions over the last several years."
Monday's hearing came as Trump sat in a courtroom just one block away, listening to opening statements by a Manhattan criminal prosecutor in a different case.
Trump is the first former president in U.S. history to be criminally charged and on trial. The jury in that case were told that prosecutors for Manhattan District Attorney Alvin Bragg would show evidence to support 34 felony counts of falsification of business records. Bragg's office claims Trump and his then-attorney Michael Cohen conspired to cover up reimbursements after Cohen paid $130,000 to an adult film star, to buy her silence about an alleged sexual encounter with Trump.
Trump has denied all allegations in both cases, and has entered a not guilty plea in the criminal matter. His attorneys have claimed the cases are built on flimsy evidence and have repeatedly attacked Cohen's credibility. They have accused James and Bragg of going after Trump as part of a "witch hunt" effort to hurt Trump's chances of winning the presidency in 2024. part of a "witch hunt" effort to hurt Trump's chances of winning the presidency in 2024.