The former president is squeezed for cash and time as he struggles to defeat the Democrats’ lawfare campaign against him.
The former president is squeezed for cash and time as he struggles to defeat the Democrats’ lawfare campaign against him.
Update: As predicted here this morning, New York criminal court judge Juan Merchan sided with Manhattan district attorney Alvin Bragg, denying former president Donald Trump’s motion to dismiss the indictment, or postpone trial for 90 days. Merchan ruled that trial will begin with jury selection on April 15 – three weeks from today.
M onday is a big day in the Democrats’ lawfare crusade against Donald Trump. That means, for the former president, it’s a big day in his race against time. He is simultaneously trying to get a lengthy postponement of his imminent criminal trial in Manhattan and seeking to block New York State from enforcing the $454 million judgment against him (on which interest accrues at over $112,000 per day) won by Attorney General Letitia James in her recent civil fraud case. While this was being written, the news broke that a state appellate court had given a significant victory to the former president and putative Republican 2024 presidential nominee: He will have to post a bond of $175 million and has ten days to do it — i.e., the court will not require a bond of $550 million, as James and the lower court sought, in order to stave off enforcement of the judgment, which the AG was poised to begin doing today.
The Criminal Prosecution
Trump is unlikely to get satisfaction on the criminal side of the ledger. As this is written, the former president is present with his lawyers in state criminal court in Manhattan, trying to persuade Judge Juan Merchan to grant an even lengthier delay to the start of the trial — which was initially supposed to start today. The prosecution (as I addressed over the weekend), involves Manhattan district attorney Alvin Bragg’s attempt to inflate into 34 felonies what, at most, is a single misdemeanor business-records-falsification charge, related to a lawful nondisclosure agreement — $130,000 in hush money, just prior to the 2016 election, for a porn star who claims to have had a tryst with Trump 18 years ago. The dispute at the center of today’s court hearing involves what Trump’s team alleges are discovery violations by Bragg’s office. Team Trump, in fact, is arguing that the indictment must be dismissed.
I doubt they will get an adjournment beyond the one Merchan has already given them, which anticipates the start of jury selection on April 15.
Bragg has countered that the trove of discovery Trump has received in recent days, in excess of 130,000 pages of materials, was not in the possession of the DA’s office; rather, the documents belonged to the U.S. attorney’s office in Manhattan (the Southern District of New York) and pertained to its prosecution of Michael Cohen, Trump’s former lawyer/fixer (and Bragg’s star witness). The SDNY was trying, among other things, to make a criminal campaign-finance case against Trump but failed — notwithstanding that Bragg has made Trump’s supposed commission of such federal crimes the covert centerpiece of his business-records-falsification prosecution (as I explained in the aforementioned weekend column).
Bragg says that because the documents were in the SDNY’s possession, the DA’s office had no discovery obligation, and that when he sought the documents from the SDNY a year ago, he was rebuffed. He adds that, upon examination, the court should focus more on quality than quantity — i.e., although 130,000 is a large number of documents, most of them are irrelevant, duplicative of information Trump already had, or inculpatory (the state’s main obligation is to turn over exculpatory information in its own files, not incriminating information in someone else’s). Trump counters that since Bragg knew he’d been rebuffed by the SDNY, he necessarily knew there were relevant documents, and should have made more zealous efforts to get them. Plus, Bragg’s office has already conceded that about 300 of the documents are relevant to the case. (Trump’s side says thousands of the documents are germane, and thus that last-minute discovery has been materially prejudicial.)
I expect Merchan to side with Bragg, as he has on every issue of importance in the case to this point. Moreover, as I’ve previously related, in postponing trial to April 15, Merchan admonished the lawyers for both parties, as well as Trump himself, to refrain from entering into “any commitment pending completion of this trial.” That sounds like a judge who is ready to go to trial, not one inclined to grant a lengthy continuance that could postpone the trial endlessly given the three other criminal cases against Trump that are jostling for calendar space.
The Civil Judgment
On the civil front, as noted above, an appellate court this morning granted Trump’s request that it block AG James from enforcing the staggering $454 million judgment unless he posted a bond of about $550 million to cover the full amount plus interest.
Trump had said he could not find a bonding company willing to underwrite a bond of that size unless he puts up cash (or the equivalent of cash in commercial paper); the bonding companies, the former president says, will not accept real property as collateral, since its value (as the civil trial showed) is more subjective and subject to fluctuation (especially a downward trend when we are talking about commercial property in the Big Apple). The appellate court has eased the pressure by ruling that Trump will need to post a bond of $175 million, about a third the size of what James was seeking.
Trump is not out of the woods yet. A bond of $175 million will still be tough to arrange. Trump, after all, just had to post a $91.6 million bond to block enforcement action by the writer E. Jean Carroll, who won an $83.8 million civil verdict against Trump earlier this year. His assets are stressed — though, obviously, not as stressed as they would be if James had her way.
When the bond being demanded was $550 million, the former president insisted that he was flush enough to put up the cash. This was a dubious claim, to put it mildly.
Trump’s liquidity has recently been estimated (including by him) at about $400 million. He is still trying to run a business. It is under monitoring because of the civil fraud case, but the appellate court previously stayed the penalties imposed in the civil fraud case that would prevent Trump and his organization from acquiring loans and conducting business in New York. That business reportedly has major loans that need either to be paid off or renegotiated this year.
Plus, he is both running for president and running up tens of millions of dollars in legal fees defending against the Democrats’ lawfare campaign. Although he has avoided using his own money for these purposes, there may come a point at which continuing to tap political fundraising money is no longer an option — or at least a sufficient option. Trump has gotten push-back from Republicans who object to the use of campaign donations to pay legal fees, and Democrats currently hold such a significant fundraising advantage over Republicans that Trump may have to go into his own pocket to stay competitive.
As Dan McLaughlin and I have detailed (see, e.g., here and here), Trump may have gotten a financial lifeline from the merger of his media company — Trump Media and Technology Group (TMTG), which owns Truth Social — with a public shell company. The deal means Trump will eventually be able to sell his majority share of TMTG, under the auspices of the newly merged company, which will publicly trade under Trump’s initials, DJT. At the moment, Trump’s stake is estimated to be worth over $3 billion. But his stock is “locked” — he is not permitted to sell it or even borrow against it for six months unless the board grants him a waiver.
Trump will dominate the board, so a waiver may be forthcoming if he seeks one. As a practical matter, though, the point of the lock is to prevent the crashing of company value if Trump is perceived as bolting. Moreover, it remains to be seen whether DJT will sustain this astonishing valuation over time (Truth Social is a comparatively tiny platform in tech world, and TMTG has not been a profitable company to date). While Trump appears to need access to cash to ease the pressure the civil fraud verdict is causing, he has to tread carefully with the new company to avoid causing its estimated value to plummet.
All that said, it was entirely appropriate for the appellate division to give Trump substantial relief. The disgorgement penalty is way out of proportion with the wrong proved at the trial, the inflation of his assets. Not only were there no fraud victims and no losses suffered by the state; Trump’s counterparties were sophisticated financial actors who did not rely on Trump’s statements of financial condition (these financial institutions do their own assessments, as Trump explicitly encouraged them to do), and who made money on the relevant transactions.
There are thus significant questions about whether the disgorgement penalty will be sustained when the appeal is considered on the merits. While I doubt Trump will get a sweeping win, I do believe the penalty will be drastically reduced. (I would not read into the appellate division’s reduction of the bond requirement a signal that it has predetermined that the disgorgement penalty is excessive. Trump will probably spin it that way, but he should be careful not to offend the appeals court that will rule on the matter, probably some time next year.) Moreover, Trump’s New York real-estate assets are not going anyplace. The appellate division undoubtedly concluded that a more modest bond would suffice because, if Trump lost his appeal, his properties would still be available for enforcement of the judgment.
For all her public bravado, James is probably not too unhappy about the appellate division’s ruling. Enforcing a judgment against a complex business conglomerate is hard, expensive work. While James could make Trump’s life even more difficult with litigation that pries into his assets and financial condition, Trump’s properties are insulated by layers of limited-liability companies and mortgage holders whose claims have priority over New York’s civil fraud judgment. Had James been permitted to commence enforcement action immediately, her army of state attorneys could have been tied up in courts for years, spending all their time trying to seize assets which, once other interested parties are heard from, might yield the state just pennies on the dollar for its efforts.
As Rich Lowry observed last week, James has been remarkably successful politically as the star of the Democrats’ lawfare crusade. The appellate court’s reduction of the required bond does not change that — it’s not like the higher court invalidated Judge Engoron’s decision.
We’ll continue watching the criminal and civil developments in New York today.