New York Attorney General Letitia James has expressed opposition regarding the $175 million bond held by Knight Specialty Insurance Company for former President Donald Trump. This bond is part of Trump’s ongoing appeal against a $460 million judgment from a civil fraud trial earlier this year.
In a recent filing, the Attorney General raised concerns about the financial stability of Knight Specialty Insurance and the adequacy of the collateral provided for the bond. According to the memorandum filed, the $175 million claimed by Trump as collateral is allegedly deposited in the DJT Revocable Trust, a fund over which Trump retains control and from which he can withdraw or alter the funds. The state argues this arrangement does not adequately secure the bond, as the value could fall below the necessary $175 million due to market fluctuations.
Furthermore, the state argues that Trump potentially benefits financially from this arrangement by earning interest on the bond amount, which could exceed the fees associated with posting the bond. In the event of Trump losing his appeal and failing to pay, Knight would be responsible for covering the $175 million bond.
The memorandum also highlighted potential legal issues with Knight Specialty Insurance’s qualifications as a surety. It pointed out that Knight’s financial surplus of only $138 million falls short of New York insurance law, which prohibits companies from risking more than 10% of their capital. Based on Knight’s surplus, their legal risk limit would be only $13.8 million, significantly less than the $175 million bond for Trump.
Additionally, the Attorney General accused Knight of engaging in risk transfer practices that “artificially” inflate its financial surplus and questioned the trustworthiness of its management, citing multiple federal law violations over recent years.
The case is set for further examination in court this Monday, with the state requesting that Trump be required to secure an alternative form of collateral within seven days of the court’s decision. Trump’s representatives have yet to respond to requests for comments on the matter.
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