MANHATTAN (CN) — Donald Trump's lawyers consented Monday to an agreement with New York state prosecutors that blocks the former president from accessing a bank account that holds his millions of dollars of bond collateral. The deal moots the New York attorney general’s objection to an insurance company covering Trump’s $175 million fraud bond.
After New York Supreme Court Justice Arthur Engoron found him liable for civil fraud in February, Trump is on the hook for more than $454 million, which includes interest the sum has already gained.
Initially, Trump had to post at least the full value of the nearly half-a-billion-dollar judgment by a deadline last month, but a last-minute order granted him 10 more days to post a reduced sum of $175 million bond pending appeal instead — buying him some much-needed time to keep New York prosecutors from potentially seizing his namesake buildings and other assets.
Last week, New York Attorney General Letitia James urged the Manhattan state court to reject the bond, raising doubts about the creditworthiness the insurance company that issued Trump’s bond, and asked the judge to give Trump seven days to find a new surety.
Trump and his co-defendants failed to justify using Knight Speciality Insurance Company as the surety "on this extraordinarily large undertaking," prosecutors wrote in a memo last week.
Trump personal attorney Christopher Kise agreed to the deal during a 90-minute hearing in Manhattan civil court on Monday morning. At the same time, two blocks up Centre Street, Trump’s historic first criminal trial was commencing with opening arguments by the Manhattan District Attorney’s office.
Kise, after answering questions from the judge and then conferencing with state lawyers, told Engoron that Trump and his co-defendants would agree to maintain his $175 million collateral in the Schwab brokerage solely in cash and to sign over exclusive control of the account to Knight Specialty Insurance Corporation.
Under a previous agreement, a Trump trust shared control of the Schwab bank account.
“It all seems like a house of cards to me,” Justice Engoron opined at the hearing on Monday, casting doubt on the efficacy of the global banking system holding Trump’s cash collateral.
Kise repeatedly rebutted the judge’s doubts about the security of the collateral funds as a “conspiracy theory” and a “hypothetical” that called into question “one of the largest financial institutions, and one of the most respected in the world.”
“The bottom line is this is just about language in an agreement that probably could have been worked out without the necessity of a hearing," Kise remarked earlier in the hearing.
State attorney Andrew Amer said Trump’s collateral needs to be posted in “a true lock box” that “can’t be traded, can’t be withdrawn, has to stay cash.”
"While the funds are cash today, under the terms of the pledge agreement and control agreement they can be swapped out for less secure collateral like mutual funds,” he said.
The attorney general’s office ultimately consented to the terms of the agreement reached with Trump’s lawyers. “The AG is fine with all these conditions stipulated on the record,” Amer said at the conclusion of Monday’s hearing.
Knight Specialty Insurance chairman Don Hankey, a billionaire who made his fortune off subprime loans, did not attend the hearing. Knight Insurance president Amit Shah was present in court but did not speak.
Attorney General James brought the case against Trump in 2022, claiming the former president lied about the value of his assets on yearly financial statements to short lenders in various business transactions.
James has pledged to seize Trump’s signature real estate properties and other assets if he doesn’t comply with the $454 million civil judgment in time.
Trump defended Knight Specialty while speaking to reporters outside of the courtroom in his criminal trial up the street on Monday.
“The deal was approved with the attorney general if you can believe that, but the deal was approved,” he told pool reporters in the hallway. "She shouldn't be complaining about the bonding company. The bonding company would be good for it because I put up the money. I have plenty of money to put up."
Trump has denied any wrongdoing in either case and derided both prosecutions as “Biden witch hunts.”
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