Former U.S. President Donald Trump gestures on the day of a court hearing on charges of falsifying business records to cover up a hush money payment to a porn star before the 2016 election at the New York State Supreme Court in Manhattan, New York, February 17. 15. 2024.
Andrew Kelly | Reuters
Former President Donald Trump is preparing to fight a hefty fine in New York's white-collar fraud case that could wipe out most of the money he is said to have.
But first he has to secure a bond – and that might not be that easy.
Trump was ordered Friday to pay about $355 million in penalties and more than $98 million in interest after a judge found the former president liable for fraud for manipulating financial reports to lenders became. Each day, accruing interest adds $87,502 to Trump's bill.
Unless he wants to pay the entire fine while his expected appeal is considered, Trump will have to post an appeal bond. This is typically up to 120% of the judgment plus current interest.
At that rate, Trump's original decision with interest would mean he would have to secure a bond worth more than $540 million. But it is unlikely that the real estate baron will be able to use his properties as security.
It's “not very attractive to take real estate as collateral,” said Neil Pedersen, owner of New York-based surety agency Pedersen & Sons.
Trump may need to liquidate some assets to secure a bond, Pedersen said. The bond company will also charge a fee that could run into millions of dollars.
It could be years before an appeal against Judge Arthur Engoron's ruling is filed.
A flag in support of former US President Donald Trump in front of Trump Tower in New York on October 1, 2023.
Yuki Iwamura | Bloomberg | Getty Images
Another complicating factor: Trump's status as a presidential candidate.
It is an “unprecedented” situation for a potential bond company to address, Pedersen said.
“No one has ever had to enforce a compensation agreement against what could be the next U.S. president,” he said.
Trump has vowed to appeal Engoron's ruling, which threatens not just his bottom line but his entire persona as a mega-rich business genius, which he has carefully cultivated over decades.
But bond brokers may have reservations about working with Trump, whose business practices and claims about his wealth have been successfully challenged in court.
Appeal bonds are used to ensure that a person ordered to pay a judgment cannot abuse the courts to delay or prevent payment.
“Whoever will connect [Trump] is committed to implementing this ruling,” said New York business attorney David Slarskey. “Who will do this?”
Trump, who said in an affidavit last year that he had “well over $400 million in cash,” could technically have the entire judgment plus interest deposited against him if he appeals the ruling. But his lawyer has already said he will post bail.
“We have to post the bail, which is the full amount and some,” Trump lawyer Alina Habba told Fox News on Monday.
“We will be ready for that,” she said.
Habba said she expects to post about $400 million in bail within a 30-day window to file an appeal, which begins after a court clerk issues Engoron's final judgment.
Engoron also banned Trump from operating a business in New York or applying for loans from financial institutions registered in the state for three years.
Habba also appeared to dismiss the question of whether Trump needs to sell his real estate assets in New York as his legal problems mount.
But Pedersen warned that this itself could cause “headaches.”
These assets are not liquid. So if Trump loses the appeal, the cash conversion process could be difficult — perhaps even more difficult in a case involving disputes over the value of Trump's properties.
Habba did not immediately respond to questions from CNBC about the process for securing appeal bail.
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Engoron's verdict in Manhattan Supreme Court came weeks after a jury in a separate civil case in New York federal court ordered Trump to pay $83.3 million for defaming writer E. Jean Carroll. That's in addition to the $5 million Trump was already ordered to pay in a separate Carroll defamation case.
After that case was decided, the former president took the unusual step of setting aside a $5.6 million cash bond while he appealed.
Trump critic and lawyer George Conway suggested that Trump had failed to obtain an appeal bond from a third party. Trump's lawyers disputed this, saying he simply wanted to avoid additional fees that a bond company would charge.
But with Trump's fines topping half a billion dollars, Slarskey and others have predicted that Trump could soon file for bankruptcy.
Forbes estimated Trump's net worth at about $2.6 billion in February.
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