Is Trump Unable to Secure a $464 Million Bond in Civil Fraud Case?
Introduction
On February 7, 2023, President Donald Trump is set to appear in a civil fraud case, but there is a significant hurdle: he needs to post a $464 million bond. Given his past financial struggles and the political nature of the case, securing such a large bond is proving to be nearly impossible.
Reasons Behind the Bond Issue
The requirement for a $464 million bond arises from the severe nature of the charges against Trump. A U.S. Attorney General (AG) has filed a case against him for alleged civil fraud in Wall Street real estate deals, totaling over 464 million dollars. This case is not just a financial matter; it's a political one. There are clear indications that the state is pursuing this case for purely political reasons.
Financial Constraints and the Lack of Bonding Companies
Cash Flow Issues: President Trump's personal finances have been a long-standing concern. He has been known to run into financial troubles, especially when it comes to paying his bills. This deficit is due to mismanagement and preferred spending on luxury items and personal expenditures. Even those who support him financially are likely to benefit from his mismanagement, leaving him in a perpetual state of financial struggle.
Properties and Liens: Trump's vast real estate portfolio is often touted as a source of wealth, but the reality is that much of this value is tied up in mortgages. When properties are mortgaged to the hilt, they become far less liquid assets. This ties up the cash value, leaving Trump with fewer options when it comes to securing a bond.
The Role of Bonding Companies: To secure a large bond like this, Trump would need assistance from a bonding company. However, standard bonding companies rarely write bonds over ten million dollars, and those over a hundred million are almost unheard of. Such companies often require that a significant proportion of the bond amount be provided as non-refundable cash or other liquid assets. Given Trump's poor credit rating and the tangled web of liens on his properties, this is an impossible feat for him alone.
In a nutshell, Trump doesn't have the cash readily available to secure the bond. As a result, he would need a syndicate to assist financially. Syndicates are common in the insurance industry, allowing high-risk insurance policies to be underwritten. However, under New York law, bonding companies cannot exceed ten times their working capital in outstanding bonds. For Trump's bond, a company would need over $4.5 billion in free working capital, which is simply unavailable for most insurance companies.
Conclusion
This case underscores the political and financial complexities of determining whether an individual can secure a large bond. The requirements for a $464 million bond highlight the severe challenges the Trump administration faces in navigating such financial and legal hurdles.