New York Attorney General Letitia James has challenged the legitimacy of the $175 million bond that a surety company posted on behalf of former President Donald Trump, sparking allegations of bias.
President Trump posted a $175 million bond on April 1, allowing him to fend off a possible seizure of his properties or other assets as part of a $464 million judgment in a civil fraud case that accused him of inflating asset values to get better loan terms.
Ms. James, a Democrat who brought the civil fraud case against President Trump (after vowing to go after him during her campaign for New York attorney general), challenged the “sufficiency” of the $175 million bond in a court filing several days after it was posted.
The New York attorney general said in the filing that she took “exception to the sufficiency of the surety,” claiming that the company that issued the bond—Knight Specialty Insurance Company (KSIC)—was not an admitted carrier in New York and lacked a certificate of qualification required by New York Insurance Law Section 1111.
Ms. James gave President Trump’s counsel, or KSIC, ten days to file a motion to justify the surety, threatening that the bond would otherwise become ineffective, a move that would then open the door to a seizure of Trump properties to satisfy the judgment in the case.
Is It Justified?
On the same day Ms. James filed the objection to the surety, Trump attorney Christopher Kise denounced the filing as “another witch hunt.”
He suggested the AG had personal or political motives behind the move, and did it to “stir up some equally baseless public quarrel in a desperate effort to regain relevance.”
More recently, the owner of the surety company, Don Hankey, told Reuters that he was taken aback by Ms. James’ challenge to the sufficiency of the bond, and also suggested the degree of pressure was unjustified.
“I’m surprised they’re coming down harder on our bond or looking for reasons to cause issues with our instrument,” he told the outlet.
Questions remain about the legal foundation of the challenge.
As a non-admitted insurer, KSIC is not regulated by New York state and is not required under insurance law to be licensed by the New York Department of Financial Services to write in the excess and surplus (E&S) insurance market, which is the specialty market that insures things standard carriers won’t cover, according to Business Insurance, an insurance industry publication.
The Excess Line Association of New York told Business Insurance that in New York, a foreign or out-of-state insurer must maintain a minimum policyholder surplus of $48 million for the lines of business they plan to write as excess line risks in New York.
According to a financial assessment, KSIC has $138 million in surplus.
Mr. Hankey told Reuters he thought providing the bond would be a relatively routine matter, before questioning whether Ms. James’ crackdown was motivated by him giving the former president a good deal on the bond.
“We thought it would be an easy procedure that wouldn’t involve other legal problems and it’s not turning out that way. We probably didn’t charge enough,” Mr. Hankey told Reuters.
While Mr. Hankey declined to disclose the fee, he said it was low because he didn’t think there was much risk involved.
Ms. James’ office did not respond to a request for comment from The Epoch Times on Mr. Hankey’s concerns nor broader allegations that Ms. James is acting in a biased way in challenging the legitimacy of the bond.
The Epoch Times also reached out to KSIC and the Trump campaign for comment.
Trump Property Seizure
Some experts have suggested that Ms. James’ objections are a technicality that could be overcome relatively easily.
Former federal prosecutor and Fox News legal analyst, Andrew Cherkasky, said on April 8 that he sees the matter as an “administrative or bureaucratic technicality that’s going to have to be worked out.”
Mr. Cherkasky said that it appears that KSIC doesn’t have to meet all the legal requirements in terms of all the services they provide in New York state but added that he believes “that’s something they’re going to be able to work out.”
He added that it appears that Ms. James is “desperate” to seize one of President Trump’s properties to show that her prosecution of the former president has caused him some pain.
The deadline Ms. James gave President Trump’s attorneys for KSIC to file a motion in support of the bond falls on Monday, April 15.
Paul Golden, a partner at New York law firm Coffey Modica, told Newsweek that if the motion fails, it’s likely that Ms. James would push to seize Trump properties.
“Presumably, if the motion fails, the Attorney General will take the position that the bond is without effect and that the Attorney General may start to take collection efforts,” Mr. Golden told the outlet.
“Of course, if for whatever reason a court rules the bond is without effect, then Trump would likely appeal that decision as well, and possibly seek a stay in the context of that separate appeal too,” he said.
New York Supreme Court Justice Arthur Engoron has set an April 22 hearing in the matter.
From The Epoch Times
