With all eyes on Donald Trump’s criminal trial, attorneys for the former president on Monday quietly resolved a dispute over the structure of a bond he secured as part of the massive judgment levied against him in the New York attorney general’s civil lawsuit.
“Where is everyone?” Judge Arthur Engoron quipped before hearing arguments on Monday – the only reference made to the criminal proceedings underway one block north at 100 Centre Street.
New York Attorney General Letitia James had challenged the validity of a $175 million bond posted by the former president’s business. If Judge Arthur Engoron had ruled in James’ favor, Trump could once again have been at risk of having some of his most cherished assets seized by the state.
But attorneys for the former president managed to avoid that fate – for now – by acquiescing to several stipulations proposed by the attorney general’s office.
James’ office had expressed concern with “awkward language” in the bond agreement that might allow the defendants, or their surety, to swap the cash bond with a “less secure” form of collateral, like mutual funds or other assets that can fluctuate in value.
Andrew Amer, a prosecutor with the attorney general’s office, described that possibility as a “huge loophole … that quite frankly you could drive a Mack Truck through.”
Amer proposed five conditions that would satisfy the state’s concerns, including a pledge to maintain the bond account with cash, and a stipulation to grant the surety, Knight Specialty Insurance Company, exclusive control of the account.
After a 20-minute break, Trump attorney Chris Kise agreed to the state’s proposed conditions. Kise had readied two witnesses to provide evidence on Monday, but the parties managed to negotiate their deal before any testimony was delivered.
MORE: New York AG asks court to reject Trump's $175M bond for civil judgment“What we’re really after here is to move on with litigation, with the process,” Kise had said earlier in the hearing. “The cash isn’t going anywhere…it’s cash. There is no ambiguity.”
Engoron accepted the new conditions, and Kise said the parties would enter a formal agreement into the court docket by Thursday, if not sooner.
Trump's bond saga began in February, when Engoron ordered the former president and his co-defendants pay $464 million in disgorgement and prejudgment interest for engaging in what he found to be a decade of business fraud. Trump attempted to delay the fine, telling an appellate court that finding a surety willing to handle a half-billion-dollar bond was a "practical impossibility."
James vowed to begin seizing Trump's assets, including his namesake buildings, if he did not pay the judgment in time.
"If he does not have funds to pay off the judgment, then we will seek judgment enforcement mechanisms in court, and we will ask the judge to seize his assets," James said in an interview with ABC News.
At the deadline neared for Trump to pay the judgment, New York's Appellate Division First Department granted the former president's eleventh-hour request to reduce the size of his bond, permitting him to post a bond of $175 million.
Days later, Trump and his co-defendants posted a $175 million bond collateralized using $175,304,075 held in a Charles Schwab brokerage account controlled by the Donald J. Trump Revocable Trust.
Because the company behind the bond was not admitted in New York, James filed a notice that required Knight Specialty Insurance Company to demonstrate they are capable of paying the bond if needed.
"KSIC is a respected, well-capitalized, Delaware-domiciled insurer that has long underwritten surety bonds and other types of insurance placed around the country," attorneys for Knight Specialty Insurance Company and Trump wrote in a filing last week.
The filing specified that the bond was secured by more than $175 billion held in a brokerage account controlled by Knight, which independently maintained more than $539 million in their own assets. The filing also stated that the company has access to more than $2 billion in assets through their parent company.
"By any standard, KSIC has therefore provided assurance to the Plaintiff judgment creditor that she can collect the designated amount if the award is affirmed on appeal," the filing said.
In a filing on Friday, the New York Attorney General argued that the bond itself should be rejected because the defendants failed to prove that Knight could handle "this extraordinarily large undertaking" and that the bond was sufficiently collateralized.
MORE: In win for Trump, appeals court lowers his bond to $175M in civil fraud caseAccording to James' filing, Knight does not have the exclusive right to control the money in Trump's brokerage account, which could become problematic if the value of Trump's assets in the account dips below $175 million. James also raised issues with Knight's business practices, which she argued should make the company ineligible to do business in New York.
"KSIC is not qualified to act as the surety under this standard because its management has been found by federal authorities to have operated affiliated companies within KSIC's holding company structure in violation of federal law on multiple occasions within the past several years," the filing said.
In an interview with ABC News on April 4, Don Hankey – the chairman of Knight Specialty's parent company – declined to comment on the attorney general's filing.
"Seldom do our applications or our bonds get turned down. I imagine it is being scrutinized very carefully, and they're checking to make sure all the i's are dotted and the t's are crossed," Hankey said. "It's a large amount for anybody."