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US-POLITICS-BIDEN

Joe Raedle

Hours after a New York judge <a href="https://www.washingtonpost.com/politics/2024/02/16/judge-engoron-ruling-trump-ny-civil-fraud-trial/" target="_blank">ordered</a> <a href="https://www.washingtonpost.com/donald-trump/" target="_blank" class="contextual_link">Donald Trump</a> to pay a $355 million penalty for submitting false data to financial institutions, the former president railed against the decision during a fundraiser at his Mar-a-Lago Club with some of the Republican Party’s wealthiest donors.

Trump claimed at that Feb. 16 gathering that the judge in the civil fraud case had made history by ordering him to pay such a staggering sum, according to two people who were there. He suggested that the judgment was so severe that the public would consider it unfair and rally in support. Over and over, he returned to the penalty, livid at its size.

The episode offered a glimpse of Trump’s preoccupation with a legal decision that threatens his wealth and has thrust his business empire into greater uncertainty than perhaps any time since the 1990s, when his Atlantic City casinos fell into extreme debt, leading six of his companies to file for bankruptcy.

Trump, who built his business and political identities around boasts of financial savvy, now faces an immediate cash crunch of more than a half-billion dollars — the combined cost of two legal battles that will now test the limits of his personal wealth.

Brendan McDermid

According to state Supreme Court Justice Arthur Engoron’s final <a href="https://www.washingtonpost.com/documents/a74a9352-4576-4a2c-a527-a34b47bf17b5.pdf" target="_blank">judgment</a>, entered Friday, Trump now owes New York at least $454 million — the $355 million penalty plus interest, which is now accruing at a rate of $112,000 per day. Separately, he faces an <a href="https://www.washingtonpost.com/national-security/2024/01/26/trump-e-jean-carroll-defamation-trial-closing-arguments-jury/" target="_blank">$83.3 million judgment</a> in a federal defamation case brought by the writer E. Jean Carroll.

Trump has vowed to appeal both cases, and filed his notice of appeal in the business fraud case Monday. But he must immediately grapple with the enormous sums that are at stake: To keep both judgments from being enforced while he appeals, he must put up the entire amount in either cash or bonds, according to legal experts. Usually, defendants must put up such bonds within 30 days of a final judgment to keep the plaintiff from collecting, experts said.

Most of Trump’s wealth is tied up in real estate, and it’s not clear whether he has enough cash on hand to cover what he now owes. Trump has not said how he plans to put up the money.

Lawyers for Trump and other defendants did not respond to a request for comment, nor did a spokesperson for his campaign. A lawyer for the Trump Organization declined to comment.

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Any route Trump chooses will come with complications. Paying the entire amount in cash could rock the stability of his business. But seeking a bond — in which a third party would guarantee payment if Trump loses his appeal — could be equally costly. Difficult decisions will have to be made quickly, even as Trump’s family company undergoes a <a href="https://www.washingtonpost.com/national-security/2024/02/16/trump-verdict-civil-fraud-trial/" target=_blank>court-ordered leadership shake-up</a> that may take some of those decisions out of the hands of Trump and his sons, who have also helped run the company.

The bond in the Carroll case is due in about two weeks, if Trump decides to post one to avoid paying the judgment during his appeal. On Friday, Trump lawyer Alina Habba <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.543790/gov.uscourts.nysd.543790.287.0.pdf" target=_blank>sought</a> to delay putting up that money, arguing that the penalty was excessive and likely to be reduced. In an order Sunday, the federal judge overseeing that case declined to immediately grant such a delay, saying Carroll’s attorneys should have a chance to weigh in.

Engoron has already <a href="https://www.washingtonpost.com/national-security/2024/02/21/trump-civil-fraud-judgment-new-york-engoron/" target=_blank>rejected</a> a different attempt by Trump’s lawyers to delay posting the larger bond in the New York civil fraud case. It’s currently due March 25, the same day his criminal trial for falsifying business records is <a href="https://www.washingtonpost.com/politics/2024/02/15/trump-new-york-hush-money-trial-schedule/" target=_blank>scheduled</a> to begin in Manhattan.

Erin Schaff

New York Law School adjunct professor Steven M. Cohen, who previously held a top position in the New York attorney general’s office, said the law requires Trump to put up the entire amount of the judgment to delay its enforcement while he appeals, either on his own or through a bond put up by a third party on his behalf.

The former president’s attorneys are trying to negotiate a bond deal that would tie up as few of his assets as possible, according to a person with knowledge of the talks who spoke on the condition of anonymity to share private business discussions. The New York state judgment is so large that Trump’s team began exploring whether multiple companies could provide portions of the bond, splitting the risk that any one of them would have to assume, the person said.

A bond is a binding agreement between the bond-issuing company and the court: If the company’s client loses their appeal and then fails to pay the required amount, the bond-issuing company is on the hook for the debt. Then that company turns to its client to recoup the loss.

Companies that issue bonds generally require their clients to put up collateral in cash or other assets.

Neil Pedersen, who runs a New York bond-issuing (or “surety”) agency, said beyond the extraordinary size of the bond Trump needs, the risk of having to collect from a former and possibly future president would probably weigh heavily on bond issuers’ decision on whether to accommodate him.

As a result, bond issuers might require Trump to put up the full amount, or nearly that, in cash, to avoid having to potentially press the occupant of the White House for assets. He would also have to pay a fee to the bond issuer, beyond the judgment penalty and interest, according to Pedersen.

“In my opinion, what this is going to come down to is whether or not he can put up cash,” Pedersen said.

Sarah Yenesel

Precisely how much cash Trump has is not known. He claimed to have “400-plus” million dollars during an April deposition in the fraud case. In an August financial disclosure filed with the Office of Government Ethics, he listed hundreds of bank and investment accounts with a total value of between $252 million and $924 million, according to a Washington Post analysis of the form.

Trump has to keep some cash on hand to operate his properties, such as his golf courses and hotels, as maintenance or investment needs require, according to banking experts. Freeing up hundreds of millions of dollars more would almost certainly require Trump to borrow against or sell some of his real estate, experts said.

A surety company might accept Trump’s properties as collateral, but that carries its own risks. Experts in issuing bonds may not be equipped to do their own investigations into Trump’s property values, and they may not know what his assets are really worth, according to New York trial and appellate attorney Mark C. Zauderer.

If Trump loses his appeal and doesn’t pay, the company would then have to try to get him to hand over the golf course, hotel or other property he had provided as collateral.

Trump’s history of misrepresenting the value of his assets was at the heart of the trial that resulted in the penalty he now faces.

“If the guy can give phony financial statements, he can give phony information to the bonding company,” Zauderer said, referring to Engoron’s finding in the case that the Trump Organization submitted false information to banks to obtain loans. “A bonding company who is going to put up several hundred million dollars here is not, in my opinion, going to do it easily.”

Trump also may need to maintain a certain amount of cash and a certain net worth to remain in compliance with his existing bank loans, which totaled at least $400 million in August, according to The Post’s analysis of the financial disclosure he filed that month.

“I think the real problem is what the interlocking sets of obligations are on these assets,” said Cohen, the former official in the New York attorney general’s office.

Some key details of Trump’s current loans are not public. But the terms of several previous loans with Deutsche Bank said he would default if he failed to “maintain $50 million in unencumbered liquidity and a minimum net worth of $2.5 billion,” according to testimony in the fraud case.

In 2016, he agreed to make a $25 million payment to settle lawsuits accusing <a href="https://www.washingtonpost.com/local/education/was-donald-trumps-education-venture-trump-university-a-scam/2015/09/13/299ed9c8-52c0-11e5-933e-7d06c647a395_story.html" target=_blank>Trump University</a> — his series of workshops on how to profit from real estate — of fraud. Rather than dipping into his cash reserves, which might have violated his bank covenants, Trump asked another lender for a new loan using his property on Central Park South as collateral, according to sworn testimony in the fraud case.

According to The Post’s analysis of his August financial disclosure, Trump’s largest lender is now Axos Bank, which in 2022 <a href="https://www.washingtonpost.com/politics/2023/07/27/trump-loans-axos-bank-gregory-garrabrants/" target=_blank>lent him</a> $100 million for Trump Tower in Manhattan and $125 million for Trump National Doral, his golf resort in Miami. In response to questions from The Post, Axos said that it does “not expect the New York court cases involving President Trump and his family to jeopardize the continued performance of these loans.” The bank declined to say whether Trump has inquired about taking out additional loans since the judgment.

Trump has sold two properties recently: the government lease on his <a href="https://www.washingtonpost.com/business/2022/05/11/trump-dc-hotel-sale/" target=_blank>luxury D.C. hotel</a> and the license to operate the <a href="https://www.washingtonpost.com/news/business/wp/2016/08/25/taxpayers-built-this-new-york-golf-course-trump-reaps-the-rewards/" target=_blank>Ferry Point golf course</a> in New York City. Given more time, his company could raise cash by selling other properties or borrowing against them, something he’s tried to do in a pinch previously.

Later this year, Trump may also be expecting a financial windfall from his social media company, Truth Social. Digital World Acquisition, a special-purpose acquisition company, recently <a href="https://www.washingtonpost.com/technology/2024/02/15/truth-social-trump-merger-sec/" target=_blank>won</a> a critical approval from the Securities and Exchange Commission to merge with Trump’s media start-up, which could give Trump a stake of publicly tradable shares worth nearly $4 billion, based on recent stock values.

Trump may not be able to sell any shares for six months after the merger. But he could try to borrow against those future shares to raise money more quickly, said New York University law professor Michael Ohlrogge.

“Trump could in theory borrow against those shares,” Ohlrogge said. It’s relatively common for banks to lend money to company founders, he pointed out. But it would be more complicated for Trump, he said, because a sell-off by Trump “could quite easily drop the price down a lot, because it would represent a large fraction of the currently available shares.”

All of the avenues to raising cash and satisfying the legal debt are likely to be complicated by an anticipated leadership change at the Trump Organization. Engoron’s ruling not only dealt Trump a massive financial penalty, but it also barred him from operating the company for three years and his adult sons for two.

“Trump Org. is basically a family business,” said one person with knowledge of the Trump Organization’s operations, who spoke on the condition of anonymity because they were not authorized to speak about the private business. “It’s not like a lot of companies where you have all these executives where someone else can just step in. You had operations people who ran each of the properties, but it was really only a few people at the top.”

Some legal experts have suggested that an appellate judge might consider Engoron’s $355 million penalty overly harsh. Letitia James (D), the New York attorney general who sued Trump, said Tuesday that she is “very confident” that her case will stand up on appeal. “We are prepared to make sure that the judgment is paid to New Yorkers,” she told <a href="https://abcnews.go.com/US/letitia-james-shes-prepared-seize-trumps-assets-pay/story?id=107381482" target=_blank>ABC News</a>.

Jabin Botsford

At a fundraiser in Greenville, S.C., on Tuesday evening, Trump again spent much of his time talking about the New York judgment, according to state Sen. Josh Kimbrell (R), who said he was among many in the audience who were sympathetic to Trump’s argument that the $355 million penalty was unfair.

“I think it is legally dubious, and he made that point pretty convincingly,” Kimbrell said. He said the former president did not address how he would pay the penalty.

Clara Ence Morse contributed to this report.

University of Wisconsin-Madison

Jonathan O'Connell is a reporter focused on investigations. He has covered economic development, commercial real estate and President Donald Trump's business. He joined The Post in 2010.

Jonathan O'Connell

Columbia University Graduate School of Journalism, MS

Montclair State University, BA in History

Shayna Jacobs is a federal courts and law enforcement reporter on the national security team at The Washington Post, where she covers the Southern and Eastern districts of New York. 

Shayna Jacobs

White House Correspondents Award for Deadline Reporting

University of South Carolina

Josh Dawsey is a political enterprise and investigations reporter for The Washington Post. He joined the paper in 2017 and previously covered the White House. Before that, he covered the White House for Politico, and New York City Hall and New Jersey Gov. Chris Christie for the Wall Street Journal.

Josh Dawsey

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Trump faces court orders to pay more than a half-billion dollars

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Former President And GOP Presidential Candidate Donald Trump Speaks To The Media In West Palm Beach, Florida

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