- Trump's lawyers defended his $175M civil fraud bond — and Knight Specialty — in court filings.
- The filings show that Trump used cash collateral that's only semi-committed to the bond.
- His lawyers are fighting the attorney general's office over the need for Monday's surety hearing.
Lawyers for Donald Trump are defending the "respected" insurers behind his $175 million civil fraud bond in a series of new court filings.
The papers, filed in Supreme Court in Manhattan, challenge the need for next Monday's surety hearing, at which Trump's fraud trial judge and lawyers for the state attorney general's office will scrutinize both the cash and the company behind the bond.
The filings confirm that Trump has used cash, not property, to back the bond.
"The $175 million bond is collateralized by $175,304,075.95 in cash held in a Charles Schwab account pledged to KSIC, and KSIC has the right to exercise control over that account," Trump's lawyers wrote in the bond's defense.
The bond company is able to gain control of the account with two days notice, the lawyers also wrote, suggesting that Trump, and not the bank or the bond underwriters, actually controls the cash.
This wording — that the insurer "has the right to exercise control" over the money — appears to fall short of what bond writers usually demand of their cash customers.
Usually, underwriters demand an irrevocable letter of credit stating that the money is secure in a bank account and can only be withdrawn after the appeals have ended. Such letters of credit give no wiggle room — the money is "irrevocably" committed to the bond.
Attorney General Letitia James is allowed, under New York's civil practice rules, to ask for proof that Knight is financially sound and that the bond's collateral is sufficient.
The final call on whether the Knight bond sinks or swims will be up to New York Supreme Court Justice Arthur Engoron, who has set a Monday hearing on the matter.
On Tuesday, Engoron filed a response giving the AG's office until Friday to respond to the new defense challenge.
Trump's bond was underwritten by Knight Specialty Insurance Company, based in Los Angeles, run by billionaire Trump supporter Don Hankey, a so-called king of subprime car loans.
"KSIC is a respected, well-capitalized, Delaware-domiciled insurer that has long underwritten surety bonds and other types of insurance placed around the country," Trump's lawyers wrote.
Beyond Trump's Schwab account, Knight "independently maintains more than $539 million in assets and $138 million in equity," the filings say.
Beyond that, the insurer "has access to more than $2 billion in assets and $1 billion in equity" through its parent company, Knight Insurance Company," the filings say.
Read Trump's memorandum of law in support of his $175 million bond here.
The attorneys signing the filings include Christopher Kise, Alina Habba, and Clifford Robert, who represented Trump in his 10-week civil fraud trial.
Trump needs the bond to be in place while he appeals his big loss in the case.
In January, Engoron, found him liable for a decade of defrauding banks by lying about the net worth of his assets.
Without a bond in place, state Attorney General Letitia James could immediately collect on Engoron's massive judgment against him.
Trump's portion of the penalty started out in February at $454 million but has now risen, due to the judgment's continually-accruing interest, by nearly $6 million, according to a penalty-interest calculator maintained by the Associated Press.