Lawyers for former President Donald Trump were in discussions to pull off what they'd described as a "practical impossibility" when a New York appeals court reduced the size of the bond they had to post because of a judgment in his civil fraud case by almost $400 million.
Don Hankey, the billionaire chairman of Knight Insurance Group, told NBC News he was negotiating to post a far heftier bond of $557 million with the Trump Organization when the state Appellate Division lowered the required bond to $175 million.
A bond for that amount was posted Monday night, underwritten by Hankey's Knight Specialty Insurance Co. Hankey said the bond was fully collateralized by cash from Trump's company. "It was a good experience," Hankey said.
The posting of the bond prevents New York Attorney General Letitia James from collecting on the $464 million judgment against Trump and his co-defendants in a civil fraud case while the appeals process plays out.
Judge Arthur Engoron handed down the massive judgment — an award of over $350 million that ballooned to $464 million with pre-judgment interest — after he found Trump, his company and top executives had committed “persistent” fraud over several years.
Trump immediately appealed the award, arguing that it was filled with errors and that the judge had double- and triple-counted some of the damages. In New York, if people or companies want to pause judgments while they appeal, they typically have to post security for the full awards, and then some.
Because state law requires a 9% annual interest rate on judgments while a party appeals, courts in New York generally require a security of 120% of the award. For Trump and his co-defendants, that would total $557 million, their lawyers said in court filings.
Trump's attorneys pleaded with the appeals court to reduce the amount they had to post, to $100 million. They argued that having to post the full amount was "impossible" and that it would require Trump and his company to start selling off assets because they didn't have that much cash on hand.
A single appeals court judge rejected that request in late February but gave Trump an expedited briefing schedule to make his case to a full panel of judges ahead of the time frame when James would begin collecting on the judgment.
Trump's lawyers then elaborated on the struggles to come up with the necessary funds.
“Defendants’ ongoing diligent efforts have proven that a bond in the judgment’s full amount is ‘a practical impossibility,’” they said in a March 18 filing. “These diligent efforts have included approaching about 30 surety companies through 4 separate brokers.”
They went on to say their efforts had proved that “obtaining an appeal bond in the full amount” of the judgment “is not possible under the circumstances presented.” That was in large part because most of the bond companies would not “accept hard assets such as real estate as collateral” but “will only accept cash or cash equivalents (such as marketable securities),” their filing said.
Experts told NBC News that Trump needed the appeals court to hit pause because if James started seizing assets, the results could have been disastrous for his company, potentially leading to bankruptcy.
Attorneys for Trump asked the appeals court to spare the defendants from posting any security at all while the appeal process plays out, contending that Trump's "real estate holdings — including iconic properties like 40 Wall Street, Doral Miami, and Mar-a-Lago, — greatly exceed the amount of the judgment" and could be used to satisfy the award if they lost their appeal.
Soon after, Hankey — who told Forbes he has supported Trump's political campaigns in the past — got involved. He told NBC News he'd been following Trump's troubles getting a bond in the news and "let it be known to an acquaintance of mine" with ties to Trump that the huge bond was something he could "consider."
He said he was on his second day of negotiations with a lawyer from the Trump Organization when the Appellate Division reduced the bond amount to $175 million and gave Trump 10 days to come up with it. That deadline was set to expire Thursday.
"When the bond was reduced, we thought they could cover the damages themselves and didn’t think we’d hear back from them again, but they called us back" a couple of days later, Hankey said. The talks went quickly, with the company saying it would collateralize the full amount using a combination of cash and bonds. The money it eventually did put up appeared to be all cash, Hankey added.
"We've done bonds in the past, but this is a large size for us — and everyone," he said, adding that his involvement had nothing to do with politics.
"This is what we do," he said. "I'd be happy to do this for a Republican or a Democrat."
