Ignore the presidential campaign and the upcoming criminal trial; Trump’s ruinous financial bind has to be his biggest concern at this moment.
Ignore the presidential campaign and the upcoming criminal trial; Trump’s ruinous financial bind has to be his biggest concern at this moment.
A s I’ve been trying to relate, former president Donald Trump’s financial peril is real. That has now become unmistakably obvious.
Trump’s legal team has asked the Appellate Division-First Department to accept a $100 million bond for the purposes of enabling him to appeal the civil-fraud judgment against him and of stopping New York attorney general Letitia James from beginning to execute that judgment — i.e., to start seizing his property if he can’t pay up in cash.
The problem, of course, is that the judgment against him is $450 million — with interest, which continues to accrue at about $112,000 per day.
Defendants are expected to post an amount that exceeds the judgment in order to stay enforcement and proceed with an appeal. Posting far less than a quarter of the judgment amount is not likely to be satisfying to the court — it will surely meet with vehement objection from James, an elected progressive Democrat who ran for office promising to get Trump on something, and who has been taunting him publicly about seizing his assets.
As the New York Times reports, Trump’s lawyers have represented to the appellate court:
The exorbitant and punitive amount of the judgment coupled with an unlawful and unconstitutional blanket prohibition on lending transactions would make it impossible to secure and post a complete bond.
As Rich and I discussed on the podcast several times over the past two years, while the criminal indictments against Trump have gotten the most public attention, the civil-fraud case was a potentially existential event for the former president financially. And so it is. He is currently squeezed not only by the cost of appealing (or paying) the $450 million judgment; he will also need to post substantial money or property — in the neighborhood of $90 million — to appeal the verdict returned against him by a federal jury in Manhattan on January 26 in the second E. Jean Carroll trial. That jury ordered Trump to pay Carroll an astounding $83.3 million — dwarfing the $5 million awarded by a different federal jury just last year in the first Carroll trial.
Trump’s problem, besides the sheer burden of needing to come up with so much money so quickly, is that the New York civil-fraud verdict returned in the bench trial by Judge Arthur Engoron, another elected progressive Democrat, makes it illegal for Trump to seek loans from financial institutions. Although that ban is limited to New York banks, New York is where the major banks are, and if they can’t lend to Trump, who will take on the risk of lending to him? At this point, a bank that lent to Trump would have to anticipate competing with New York state and Carroll, who will claim that they have first dibs on any collateral he posts, and against Trump’s other creditors, whose loan terms undoubtedly include the option of demanding payments if he gets to the point of defaulting on or needing to renegotiate his current obligations.
If Trump’s lawyers are correct that it is “impossible to secure and post a complete bond” for purposes of the New York civil judgment, it is equally impossible to see how he could secure and post a complete bond for the Carroll II civil judgment — which federal law calls for and Judge Lewis Kaplan (a Clinton appointee) has indicated he will require.
There are varying estimates of how liquid Trump is, including by Trump himself. Experts have gauged his cash on hand at about $400 million — clearly not enough. And it’s not like he could just pay that amount on judgment bonds; his business has major loan obligations, including some totaling around $250 million that must be satisfied or renegotiated this year — with renegotiation, again, complicated by the aforementioned civil-fraud penalty that nullifies his ability to borrow, at least in New York.
If Trump cannot persuade the courts to accept bonds valued at considerably less than what would normally be required, there are high risks that (a) the pending judgments will become final; (b) New York and Carroll will start litigation to collect the judgments; and (c) Trump’s capacity to appeal could, as a practical matter, become meaningless — i.e., the appeals could take years, and his money would already be gone by the time they played out.
Yes, we’re in the middle of a political campaign in which Trump is the leading Republican candidate for president. And yes, he has a criminal trial starting in less than a month. But make no mistake: The former president’s ruinous financial bind has to be his biggest concern at this moment.