Monday is former President Donald J. Trump's sentencing day, and he is concerned that a $454 million judgment could be awarded against him.
Hoping to avoid a financial crisis, Mr. Trump is working hard to prevent the New York attorney general from collecting fines imposed in a civil fraud case. Attorney General Letitia James, who filed the lawsuit accusing the former president of fraudulently inflating his net worth, has the power to begin a long and complicated process to freeze many bank accounts and seize some of his assets. .
Under New York state law, Mr. James could have enforced the $454 million judgment finalized last month, but gave Mr. Trump a 30-day grace period that expired on Monday. James could move to collect at any time, but he is not expected to take any active action on Monday.
If Ms. James does take action, depending on the extent of her efforts, her efforts could drain Mr. Trump's family business and end his final run as a New York mogul. And while Trump could delay or limit some damages, the legal process is “slow torture,” said Mark Zauderer, a veteran New York business litigator. says Mr.
“Mr. Trump has nothing to gain here,” added Mr. Zauderer, a partner at Dolph Nelson & Zauderer. “The question is how much he loses and how long it takes.”
To avoid a humiliating outcome, Trump would post $500 million in paid bail on his behalf, promising to cover the judgment if he loses his pending appeal and fails to pay. I have to look for a company. A bond of this size comes with conditions that require Mr. Trump to pledge more than $550 million in collateral to the company, including as much cash as possible.
That is the question. Trump boasts that he is worth billions, but much of his wealth is tied up in real estate, which bond companies rarely accept as collateral. As of last month, he had more than $350 million in cash and stocks and bonds that he could easily sell, but more than he would need to pledge as collateral, according to a recent New York Times analysis. It turned out to be much less.
His lawyers recently said his chances of securing a bond were “not realistically possible” after being rejected by more than 30 bond companies.
Now, Trump is hoping the appeals court will either suspend the sentence or accept a smaller bail amount. The court could issue a ruling as early as this week, and James could wait for the green light from the court before proceeding with collection. Alternatively, she might issue a list of properties and accounts she's eyeing, but wait before she actually moves to seize them.
Trump could put together a last-minute plan while awaiting the appeals court. You can also immediately sell real estate or other assets or seek financing from a bank or private equity firm to provide collateral for the bond.
And he could reap a $3 billion windfall when shares of his social media company start trading on the stock market as early as Monday. Mr. Trump is prohibited from selling his stock or converting it into cash for six months, but Mr. Trump could find a way to circumvent that restriction and use his own shares to fund the appeal bond. be.
If all else fails, Trump could force the entities involved in the fraud case to file for bankruptcy, which would automatically halt enforcement of James's judgment against the entities.
But the former president, who had several of his companies go bankrupt in the 1990s, is likely to view such a move as a political liability and a last resort. And the relief available through bankruptcy is limited. Bankruptcy does not discharge fraud claims and does not suspend judgments against Trump himself, only corporations. Ultimately, Ms. James will probably try to hold him responsible for the company's debts.
For weeks, Mr. Trump held out hope that the Manhattan Appellate Division could save him. In asking the court to suspend the sentence or accept bail of only $100 million, the justices of the same court heard the appeal and ordered the trial judge to issue a $454 million bond. Lawyers argued that the fine would likely be revoked. Lawyers said the ruling was “grossly disproportionate and unconstitutional.”
Trial Court Judge Arthur F. Engoron found Trump liable for conspiring to inflate his net worth in order to obtain favorable loans from banks and insurance companies. The $454 million penalty paid to New York state's general fund reflects interest payments Trump saved by misleading lenders and profits from the recent sale of two properties.
Mr. Trump, the presumptive Republican candidate for this year's presidential election, has denied any wrongdoing and accused Mr. James and Judge Engoron, both Democrats, of leading a witch hunt against him. He has also used the impending judgment to raise money for his presidential campaign, recently claiming that “Democratic Rep. Letitia James, a fanatical Trump hater, is trying to seize my property in New York.” “Their dirty hands got into my cash to thwart my campaign.''
Although the company does not have to pay the $454 million while the appeal is pending, it must obtain a bond that covers both the judgment and interest that will accrue at any time. Trump would have to pay companies as much as $20 million in fees to obtain such large bonds, which his lawyers have called “unprecedented” for a private company.
He can afford to pay it, but so far he has not been able to raise the cash he needs as collateral, in part because his assets are less liquid than they were just a few weeks ago. In mid-March, he had to post $91.6 million bail in a defamation lawsuit he lost against author E. Jean Carroll. Mr. Trump almost certainly would have had to post more than $100 million in collateral to Chubb, the insurance company that provided his bond. He cannot use the funds to back a second bond.
If Trump is unable to issue bonds, James could send so-called garnishment notices to banks and brokerages, effectively freezing his accounts. She can then sue to access the money in those accounts.
Public records show that Ms. James has formally filed a judgment against Mr. Trump in Westchester County, in preparation for claiming ownership of private property and golf clubs in the county.
However, any attempt to seize the property would likely result in a lengthy legal battle with uncertain outcomes. Mr. Trump tried to delay the issue at various times, and even if Mr. James won and forced the sale of the building, he would only collect what was left after the loan on the property was paid off.
“A lot of people say freeze and foreclose, but it's not that easy to foreclose on property,” Zauderer said.
He suggested that Mr. James could still do serious damage and collect large sums of money by going after Mr. Trump's bank and brokerage accounts.
“It’s a low-hanging fruit,” he said.