As always, fantastic commentary! The news cycle is such in Tsunami Trump world that I completely forgot that the special counsel that was appointed to investigate President Biden ultimately found the source to lack credibility / lied to the FBI. I could never reconcile Joe Biden taking a bribe, and thank goodness, he is properly vindicated, except to the ultra-MAGAs who believe that Taylor Swift put a spell on whoever.
I greatly hope that the $350 million fine will put him in his proper place once and for all, although I had hoped his company could never do business in the State of New York again. Funny how his beligerant attitude toward the judge in an effort to look tough to his base merely backfired on him. I don't think the jury took his arrogance and defiant attitude in a positive manner. Furthermore, if Judge Ergeron was deciding the penalty, trying to aggravate him only prompted his honor to impose a fine at the upper end of the scale, as well as underscores the contempt and lack of seriousness in the issue at hand, thus need for a penalty that would resonate with the thickheaded former President.
I don't want him to go through bankruptcy again until after he coughs up the money. The upside of his Presidential run is that he is unlikely to declare bankruptcy during the campaign to avoid looking like the helpless, big mouth weakling he really is. It will be interesting how this all plays out.
(BTW, Pancake looks to be either partially or entirely Maine Coon! People who don't like cats are control freaks, or simply don't understand the vast array of "personalities". But I digress...)
On surety. In a case like this, the surety could require almost any amount of collateral, including 100%. The 10% is the PREMIUM for the bond which is non-refundable. (10% is just a common premium; he could be required to pay more depending on his financial stability. Depends on how its rates are filed in NY.) Note that the surety has to be licensed in NY--he can't just post something from Putin Surety Association.
If trump loses, the surety has to fork over the whole amount of the bond--and would come after trump (the "principal") under an indemnity agreement (and common law indemnity, but they always require a written agreement). The collateral could be cash, assignment of stock, deeds of trust on the properties. (Note that with a bond, the surety does the work of collecting; there is a pot of money the plaintiffs can just waltz away with).
To the extent that any properties already have deeds of trust on them, the surety will be leery of simply having a second.
Similarly, according to a surety agent in NY, a filing of an appeal does NOT stop the plaintiff from beginning execution proceedings--not until the bond is posted. So if James managed to get a judgment lien on one of the properties before the surety could get its deed of trust, the surety's position would be behind that lien.
All this is going to be interesting to watch, particularly which surety is dumb enough to issue a bond. An appeal is, as you note, all or nothing as to the bond. I was a surety lawyer my entire career. I didn't focus on the underwriting side, but I'm going to assume that unlike other types of bonds depending on performance of a contract, which can have a lot of subtleties, appeal bonds are slam dunk: you win it or you lose it. So I would think an evaluation like yours about the likelihood of winning would have some weight in the underwriting decision.
Of course if a surety has trump tied up six ways from Sunday as to collateral, it might go for the premium despite the possibility or having to fork over the penal sum. Then, from the surety's point of view it could be win-win--38 mill in premium and foreclose on the collateral. Sureties have spent YEARS perfecting their indemnity agreements--very little wiggle room for trump to protest. They would have prevailing party attorney fees included. And interest on the amount owed. And pretty sure they would take a LOT of property collateral because they'd insist on the values found by the court, not something inflated.
Ever since the E Jean Carroll judgment I have spent much of my Substack time explaining surety 😉
So financially trump may be as bad off with a bond as just paying the judgment. Meanwhile, as he delays, 9% interest keeps going. He would have to pay THAT to the plaintiffs to the extent it becomes over the surety's penal sum. Delay is not his friend.
I just got the part about the plaintiff getting the whole sum immediately...so you’re saying the cost/benefit for the surety co is that if they think he is going to lose, then they know they are in for a bunch of enforcement proceedings on the indemnity contract (which I assume could drive up the premium?). Excellent point that they will base valuations on what the court (and now compliance officer assigned to Trump Org) says!!
a lot goes into the underwriting and hence the premium; I'm not sure how rates are filed in NY. Back at the start of my career I had to file rates, but for the life of me I can't remember how they worked. I didn't decide them, just filed what the company proposed.
Yes, surety will be in the collection biz big time if he loses. That's why
being second on a property isn't very attractive. Nor is a DOT on a property owned by a company who as a subsidiary could file BKO without upsetting the whole trump org too much. Again, his multi-pronged approach to corporate ownership has suddenly stopped being so smart. He might collateralize with a Letter of Credit--from someone other than the proscribed banks--if the surety trusts the issuing bank to be good for it. That just kicks the collateral issue down the line. I'm pretty sure the court itself won't take a LOC.
Thank you!! Yes I have been trying to understand all of the mechanics and you’re right: the 10% is basically only the purchase price of the bond, he has to collateralize 120% (!? that is what I understand). Note that for Carroll I he was unable to put up collateral so he just forked over $5.5m to a court escrow, I think paid by Trump Org. Of that is the case, I have no idea how he is going to come up for the collateral for Carroll II, let alone the NY judgment.
Thank you so much for the detailed explanation! (Need you to come on the podcast ☺️)
The penal sum of the bond will be what has to be collateralized. That will certainly be the 354 and probably the prejudgment interest, plus the extra percent the court requires to cover interest ON the judgment which continues to accrue.
A surety doesn't HAVE to require collateral but I'd question the Best Rating of any surety who decides to base the bond on the good history, financial and otherwise, of the principal (ie trump and all the other defendants). I'd say his "smart" reputation of delay delay delay is gonna back fire. on him. Wish I could get 9% on my own funds.
We don't know that he COULDN"T get a bond on Carroll #1. He may have just decided that 5 mill was chickenfeed and it wasn't worth the premium.
What you really need for your podcast is an underwriter from a major surety. I did claims, which means what I got involved in was underwriter mistakes, which gives me a somewhat jaundiced view.
Trump has appealed to SCOTUS that Presidents have absolute immunity. There is a lot of discussion that if SCOTUS rules in his favor it means President Biden can do what he wants. Is there a large side-effect that no executive agency can be sued about, say, regulations because they are carrying out the Presidents will. By implication, agency decision are his actions.
As an aside, Biden's first action, if he is given that immunity, should be to fire the conservative justices.
As always, fantastic commentary! The news cycle is such in Tsunami Trump world that I completely forgot that the special counsel that was appointed to investigate President Biden ultimately found the source to lack credibility / lied to the FBI. I could never reconcile Joe Biden taking a bribe, and thank goodness, he is properly vindicated, except to the ultra-MAGAs who believe that Taylor Swift put a spell on whoever.
I greatly hope that the $350 million fine will put him in his proper place once and for all, although I had hoped his company could never do business in the State of New York again. Funny how his beligerant attitude toward the judge in an effort to look tough to his base merely backfired on him. I don't think the jury took his arrogance and defiant attitude in a positive manner. Furthermore, if Judge Ergeron was deciding the penalty, trying to aggravate him only prompted his honor to impose a fine at the upper end of the scale, as well as underscores the contempt and lack of seriousness in the issue at hand, thus need for a penalty that would resonate with the thickheaded former President.
I don't want him to go through bankruptcy again until after he coughs up the money. The upside of his Presidential run is that he is unlikely to declare bankruptcy during the campaign to avoid looking like the helpless, big mouth weakling he really is. It will be interesting how this all plays out.
(BTW, Pancake looks to be either partially or entirely Maine Coon! People who don't like cats are control freaks, or simply don't understand the vast array of "personalities". But I digress...)
OMG Asha, I have cats named Egg and Bacon 😂
Louis Gohmert: "I will go down in history as the most embarrassing congressman Texas ever sent to Washington."
James Comer: "Hold my beer."
On surety. In a case like this, the surety could require almost any amount of collateral, including 100%. The 10% is the PREMIUM for the bond which is non-refundable. (10% is just a common premium; he could be required to pay more depending on his financial stability. Depends on how its rates are filed in NY.) Note that the surety has to be licensed in NY--he can't just post something from Putin Surety Association.
If trump loses, the surety has to fork over the whole amount of the bond--and would come after trump (the "principal") under an indemnity agreement (and common law indemnity, but they always require a written agreement). The collateral could be cash, assignment of stock, deeds of trust on the properties. (Note that with a bond, the surety does the work of collecting; there is a pot of money the plaintiffs can just waltz away with).
To the extent that any properties already have deeds of trust on them, the surety will be leery of simply having a second.
Similarly, according to a surety agent in NY, a filing of an appeal does NOT stop the plaintiff from beginning execution proceedings--not until the bond is posted. So if James managed to get a judgment lien on one of the properties before the surety could get its deed of trust, the surety's position would be behind that lien.
All this is going to be interesting to watch, particularly which surety is dumb enough to issue a bond. An appeal is, as you note, all or nothing as to the bond. I was a surety lawyer my entire career. I didn't focus on the underwriting side, but I'm going to assume that unlike other types of bonds depending on performance of a contract, which can have a lot of subtleties, appeal bonds are slam dunk: you win it or you lose it. So I would think an evaluation like yours about the likelihood of winning would have some weight in the underwriting decision.
Of course if a surety has trump tied up six ways from Sunday as to collateral, it might go for the premium despite the possibility or having to fork over the penal sum. Then, from the surety's point of view it could be win-win--38 mill in premium and foreclose on the collateral. Sureties have spent YEARS perfecting their indemnity agreements--very little wiggle room for trump to protest. They would have prevailing party attorney fees included. And interest on the amount owed. And pretty sure they would take a LOT of property collateral because they'd insist on the values found by the court, not something inflated.
Ever since the E Jean Carroll judgment I have spent much of my Substack time explaining surety 😉
So financially trump may be as bad off with a bond as just paying the judgment. Meanwhile, as he delays, 9% interest keeps going. He would have to pay THAT to the plaintiffs to the extent it becomes over the surety's penal sum. Delay is not his friend.
I just got the part about the plaintiff getting the whole sum immediately...so you’re saying the cost/benefit for the surety co is that if they think he is going to lose, then they know they are in for a bunch of enforcement proceedings on the indemnity contract (which I assume could drive up the premium?). Excellent point that they will base valuations on what the court (and now compliance officer assigned to Trump Org) says!!
a lot goes into the underwriting and hence the premium; I'm not sure how rates are filed in NY. Back at the start of my career I had to file rates, but for the life of me I can't remember how they worked. I didn't decide them, just filed what the company proposed.
Yes, surety will be in the collection biz big time if he loses. That's why
being second on a property isn't very attractive. Nor is a DOT on a property owned by a company who as a subsidiary could file BKO without upsetting the whole trump org too much. Again, his multi-pronged approach to corporate ownership has suddenly stopped being so smart. He might collateralize with a Letter of Credit--from someone other than the proscribed banks--if the surety trusts the issuing bank to be good for it. That just kicks the collateral issue down the line. I'm pretty sure the court itself won't take a LOC.
Thank you!! Yes I have been trying to understand all of the mechanics and you’re right: the 10% is basically only the purchase price of the bond, he has to collateralize 120% (!? that is what I understand). Note that for Carroll I he was unable to put up collateral so he just forked over $5.5m to a court escrow, I think paid by Trump Org. Of that is the case, I have no idea how he is going to come up for the collateral for Carroll II, let alone the NY judgment.
Thank you so much for the detailed explanation! (Need you to come on the podcast ☺️)
The penal sum of the bond will be what has to be collateralized. That will certainly be the 354 and probably the prejudgment interest, plus the extra percent the court requires to cover interest ON the judgment which continues to accrue.
A surety doesn't HAVE to require collateral but I'd question the Best Rating of any surety who decides to base the bond on the good history, financial and otherwise, of the principal (ie trump and all the other defendants). I'd say his "smart" reputation of delay delay delay is gonna back fire. on him. Wish I could get 9% on my own funds.
We don't know that he COULDN"T get a bond on Carroll #1. He may have just decided that 5 mill was chickenfeed and it wasn't worth the premium.
What you really need for your podcast is an underwriter from a major surety. I did claims, which means what I got involved in was underwriter mistakes, which gives me a somewhat jaundiced view.
Thanks for the introduction to Just Security!
So did the whole Smirnov op just become the classic example of reflexive response?
Trump has appealed to SCOTUS that Presidents have absolute immunity. There is a lot of discussion that if SCOTUS rules in his favor it means President Biden can do what he wants. Is there a large side-effect that no executive agency can be sued about, say, regulations because they are carrying out the Presidents will. By implication, agency decision are his actions.
As an aside, Biden's first action, if he is given that immunity, should be to fire the conservative justices.
What an insane news week! Thanks to you and all the legal eagles for great commentary and analysis.
trump started a go fund me page, you can report it for rule #9, it does break the rules. https://www.gofundme.com/f/stand-with-trump-raise-the-settlement
Pancake has the right idea! 😴😴😴