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The Republican Party’s nominee to face President Joe Biden could be facing a financial crisis on top of a mountain of legal obligations, including 88 criminal charges, with at least one criminal trial and verdict expected before Election Day.
In a revealing court filing on 18 March, lawyers for Donald Trump said that he has tried to get help from at least 30 companies who can post a bond in excess of $454m after he lost a civil fraud trial in New York earlier this year.
But none of them could, and now he faces the “practical impossibility” of coming up with the money before the state’s imminent deadline to enforce the judgment against him, according to his attorneys.
The extraordinary circumstances also raise the prospect of the GOP’s presidential nominee being a convicted felon on the hook for tens of millions of dollars he doesn’t have when voters cast their ballots in November.
Mr Trump also cannot get rid of debts obtained by fraud by filing for bankruptcy.
Trump argues to block enforcement while he appeals
Last month, Mr Trump got some relief after a judge agreed to halt a part of the judgment that would have effectively barred him from being able to borrow money. His lawyers sought that relief so that he could secure a bond as he appeals, they wrote in court filings.
Now, his legal team is asking a state appellate court to pause enforcement of the financial portion of the judgment, even if he’s not able to afford the bond that would pause collections while he’s appealing the entire ruling.
His attorneys have requested oral arguments to make their case.
Trump can keep trying to borrow money
A surety bond acts as a kind of paid guarantee to stall enforcement during an appeal.
However, according to his legal team, the companies he approached are “unwilling” to use his star properties as collateral after a judge found him liable for fraudulently inflating the value of his real estate portfolio.
Those companies “do not have the financial strength to handle a bond of this size” or are “unwilling to accept the risk associated with such a large bond.”
Those companies “will only accept cash or cash equivalents,” such as marketable securities, and typically would “require collateral of approximately 120 per cent of the amount of the judgment,” which in this case comes to nearly $560m.
Sureties would then likely charge bond premiums of approximately 2 per cent per year “with two years in advance – an upfront cost over $18m,” according to Mr Trump’s attorneys.
That money would not be recoverable, even in the event that Mr Trump wins his appeal.
Letitia James can try to target his assets
Last month, New York Attorney General Letitia James said her office is prepared to target his assets to begin collecting on what a judge determined the former president owes to the state in so-called “ill-gotten gains” from the result of his manipulated financial statements used to get favourable terms from banks and insurers.
“We are prepared to make sure that the judgment is paid to New Yorkers,” she said in February.
Ms James would likely need a court order to do so.
Mr Trump, his adult sons, two former Trump Organization executives and the entities associated with the brand-building properties in the Trump real estate empire were ordered to pay more than $464m at the conclusion of a three-year investigation and months-long trial targeting fraud in the family’s business.
Defendants were found to have engaged in a decade-long scheme to fraudulently inflate the value of his net worth and assets in annual statements of financial condition that were given to banks and lenders to secure more favourable financing terms for some of his star properties.
The total “disgorgement” owed that is now owed back to the state – money that is effectively forfeited as “ill-gotten gains” – amounts to roughly $364m, with an additional $100m in interest.
Post-judgment interest is accruing daily at the rate of 9 per cent per annum, or more than $114,000 for all defendants, including nearly $112,000 for Mr Trump alone.
Mr Trump could theoretically begin selling off his properties to cover the amount, but his attorneys have argued that his real estate assets — like Mar-a-Lago and 40 Wall Street in New York — have far more value than the amount at stake.
Ms James has said that if Mr Trump doesn’t have the funds, “then we will seek judgment enforcement mechanisms in court and we will ask the judge to seize his assets.” Entering a judgment indicates that her office is beginning the process of taking possession of Mr Trump’s properties.
Since the civil fraud trial took place in Manhattan, where Trump Tower and 40 Wall Street are located, a judgement there has already been entered. Massive outstanding loans on those properties, though, mean they are unlikely to be among the most at risk of being seized.
Instead, filings dated 7 March revealed that state attorneys have entered the judgment from the Manhattan civil fraud trial with the county clerk’s office in New York’s Westchester County — home to the former president’s Seven Springs estate and his Trump National Golf Club Westchester.
Trump will keep raising money as he campaigns
During a taped deposition in the case last year, Mr Trump claimed that he has more than $400m in cash available to him.
His 2021 statement of financial condition – the documents at the centre of the fraud case, and the most recent available from the trial – stated that he had roughly $294m in cash, a figure that Ms James alleged is inflated.
Mr Trump’s legal battles raise significant questions about the state of his finances and how and where he intends to raise millions of dollars for his litigation, with the office of the presidency and a victory to reclaim the White House serving as a potential shield against liability.
He already has secured a nearly $92m bond in his appeal of a defamation verdict stemming from E Jean Carroll’s lawsuit against the former president.
He was required to put up 110 per cent of the $83.3m judgment to pause collections while the appeal plays out.
Mr Trump lined up a loan through the Federal Insurance Company, a subsidiary of the Chubb Corporation, whose CEO was appointed to a trade advisory committee during the Trump administration.
But that company does not appear to be prepared to support his bond in his fraud verdict.
Chubb told Mr Trump that the company would be unwilling to accept real estate as collateral, according to Mr Trump’s attorneys.
Mr Trump’s campaign fundraising arms have collected millions of dollars from supporters to pay off his legal fees and attorneys who are working on his cases. Meanwhile, he is courting billionaire donors and transforming the GOP’s financial apparatus into one that can bankroll his campaign.
He also is expecting a major windfall from a long-anticipated merger between his Truth Social parent company and publicly traded shell company Digital World Acquisition Corporation. That “DJT” stock symbol – now set to return to Wall Street this month – was used for only one other publicly traded company: Trump Hotels and Casino Resorts, which filed for bankruptcy in 2004.
