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Trump's deal over $175 million fraud bond gives him some financial breathing room

By Lukas I. Alpert

The former president's lawyers agreed to certain restrictions pertaining to the cash collateral for the bond

Donald Trump's effort to appeal a $454 million judgment following the guilty verdict in his civil corporate-fraud case has been given a green light to proceed, after his lawyers reached a deal over the financial strength of a bond the former president had secured.

The deal gives Trump financial breathing room to continue his appeal of a ruling that found him liable for lying about the value of his assets in order to get better borrowing rates.

Trump had faced a financial crunch following the February verdict in New York Supreme Court, which found that the Trump Organization had for years misled banks and insurers by inflating or lessening the value of the company's real-estate assets as needed. The former president was ordered to pay $454 million in penalties and interest.

Trump, who is the presumptive Republican presidential nominee, had argued that the case brought by New York Attorney General Letitia James, who is a Democrat, was politically motivated, and he vowed to appeal. But in order to do so, Trump had to come up with cash or secure a bond for the full amount to satisfy the court that he could pay the verdict if he lost his appeal.

As a late-March deadline approached, Trump told the court he could not find a bond company that would back a bond for the full $454 million, because none would accept his real-estate assets as collateral.

Trump was then granted a last-minute lifeline when the New York Court of Appeals agreed to lower the bond amount to $175 million.

Trump turned to Don Hankey, a billionaire supporter, for help. A subprime lender in California who made his fortune offering car loans to people with low credit scores. Hankey offered to provide the $175 million bond through his surety-bond subsidiary, Knight Specialty Insurance Company.

Initially, the court accepted the bond, but then James challenged it - raising questions about whether Knight had enough money to back the bond and whether he was even authorized to offer it in New York state.

On Monday, Trump's lawyers agreed that Knight Specialty would have exclusive control of an account holding the $175 million of cash collateral for the bond, with monthly statements of the account balance going to James. Judge Arthur Engoron signed off on the arrangement.

Trump had to come up with the staggering bond amount not long after having to secure a $91 million bond in a separate civil case in federal court that found him liable for defaming the writer E. Jean Carroll, who had accused him of raping her in a department-store dressing room in the 1990s. Trump has denied the assault.

The financial maneuvering comes as Trump begins the first of four criminal prosecutions he faces, as his trial for allegedly falsifying business records by covering up hush-money payments made to the adult-film star Stormy Daniels and others begins in Manhattan.

Cases in Washington and Georgia alleging that the president illegally tried to overturn the 2020 election and a case in Florida alleging he illegally withheld classified documents after leaving office could begin later this year.

-Lukas I. Alpert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


(END) Dow Jones Newswires

04-22-24 1456ET

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