Trump loses bid to pause $454.2 million judgment in NY civil fraud case

[February 29, 2024]  By Jonathan Stempel and Luc Cohen

NEW YORK (Reuters) -Donald Trump on Wednesday lost a bid to pause a $454.2 million civil fraud judgment against him for overstating his net worth and real estate values to dupe lenders, meaning he must soon find the cash or post a bond to prevent New York authorities from seizing his property while he appeals.

The decision by Associate Justice Anil Singh of the New York Appellate Division must be affirmed by a full panel of the mid-level state appeals court. Singh granted Trump's request for a stay of a portion of Justice Arthur Engoron's Feb. 16 decision barring the former president from running any New York corporation or seeking loans from the state's banks for three years.

Trump's lawyers did not immediately respond to a request for comment on Singh's decision.

In asking for the stay earlier on Wednesday, Trump's lawyers said he is unable to post a bond for the full amount of the judgment while he appeals and wants instead to secure a $100 million bond. A bonding company would be on the hook for any payout if Trump loses his appeal and proves unable to pay.

Trump is the frontrunner for the Republican nomination to challenge Democratic President Joe Biden in the Nov. 5 U.S. election.

New York Attorney General Letitia James sued Trump, the Trump Organization and other defendants in 2022 in state court in Manhattan, accusing them of falsifying the values of Trump's properties to obtain better terms from lenders and insurers. A three-month trial over the claims ended in January.

In their filing with the Appellate Division, Trump's lawyers said a stay of Engoron's decision was needed because Trump would suffer "irreparable harm" if James were free to sell his real estate assets to raise capital to pay the judgment.

The lawyers also said the "exorbitant and punitive amount of the judgment coupled with an unlawful and unconstitutional blanket prohibition on lending transactions would make it impossible to secure and post a complete bond."

They said a $100 million bond, together with Trump's "vast" real estate holdings and ongoing oversight by a court-designated monitor for the Trump Organization, would be more than sufficient to secure the judgment.

But Singh's decision means Trump may now apply for a loan to help post a bond.

Former U.S. President Donald Trump attends the closing arguments in the Trump Organization civil fraud trial at New York State Supreme Court in the Manhattan borough of New York City, U.S., January 11, 2024. REUTERS/Shannon Stapleton/File Photo

In a separate filing on Wednesday, James opposed a stay, calling it "especially inappropriate" given the defendants "all but concede" that Trump does not have enough liquid assets to satisfy the judgment.

"These are precisely the circumstances for which a full bond or deposit is necessary, where defendants' approach would leave (the attorney general's office) with substantial shortfalls once this court affirms the judgment," James wrote.

Both sides are expected to submit more written arguments in the coming weeks, and a decision could come after March 18.

RISK OF EVASION

James also said there was "substantial risk" that Trump might not pay up, or might move assets beyond her reach, if he loses his appeal. She cited the defendants' having "surreptitiously" concealed from the monitor a $40 million transfer, and Trump's recent announcement that some of his businesses had moved to Florida.

Trump has estimated his net worth in the billions of dollars, but much of that is in real estate, not cash.

Engoron imposed a $354.9 million penalty against Trump, plus daily interest that began to accrue in 2019. The payout had grown to $454.2 million with interest by Feb. 22, and additional interest is tacked on each day.

Trump is also seeking to avoid posting a full bond during an expected appeal of last month's $83.3 million defamation verdict in favor of the writer E. Jean Carroll. He has asked the judge in that case to let him appeal without posting any security, or alternatively by posting at most a $24.5 million unsecured bond.

(Reporting by Jonathan Stempel and Luc Cohen in New York; Additional reporting by Jack Queen; Editing by Will Dunham, Jonathan Oatis, Daniel Wallis and Noeleen Walder)

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