As the Republican presidential front-runner Donald J. Trump continues his last-minute search for a bond company willing to put forward the collateral to forestall enforcement of the $454 million civil judgment against him next week, speculation abounds about what will happen if no collateral is forthcoming by the March 25 deadline and New York’s attorney general takes action to collect the full penalty.
Attorney General Letitia James is expected to freeze Mr. Trump’s bank accounts and initiate proceedings to seize one or more Trump properties. Trump Tower, Trump Park Avenue, 40 Wall Street, the Mar-a-Lago resort in Palm Beach, Florida, the Trump National Golf Club in Jupiter, Florida, Trump International Golf Links in Aberdeen, Scotland, and many other properties and assets are in Ms. James’s sights if President Trump fails to either pay the amount her office demands or procure a bond to block enforcement of the judgment temporarily.
To underscore the seriousness of her intent, a lawyer from Ms. James’s office on Wednesday sent a letter to the Manhattan appeals court weighing the ex-president’s request for a stay on enforcement of the judgment. Among other claims, the letter argued that, contrary to President Trump’s legal team, the amount of the penalty Ms. James seeks is not at all unusual or inappropriate.
But what the former president’s enemies see as a catastrophe that would sink President Trump’s hopes for a second term may actually evoke sympathy and help him politically more than it hurts him.
It may even push some banks to move offshore out of concern over the possibility of further enforcement actions that, while supposedly neutral, reek of political partisanship.
That’s the view of Charles Trzcinka, a business law expert and chair of the finance department at the Kelley School of Business at Indiana University.
Tough Markets
In Mr. Trzcinka’s view, volatility in the real estate market is largely to blame for the seeming reluctance of insurance companies President Trump has approached to accept any of his considerable real assets as collateral for a bond to forestall collection of the $454 million penalty.“Nobody has $454 million in cash. He will have to sell assets or be subject to seizure if he can’t get a court to stay the judgment,” Mr. Trzcinka said.
The civil fraud judgment that New York State Supreme Court Judge Arthur Engoron issued on Feb. 16 seeks disgorgement of funds that the judge considers ill-gotten on the grounds of chronic misrepresentations of the value of Trump Organization properties as stated in documents provided to banks and insurers. Judge Engoron’s 92-page opinion dealt brusquely with the arguments of professors and bankers who denied any irregularities in the Trump Organization’s statements of financial condition.
The civil prosecution, undertaken by a Democrat attorney general and overseen by an assertive judge, strikes some as politically driven, and a step as brazen as seizing a high-profile Trump property will actually foment sympathy for the candidate, Mr. Trzcinka believes.
“This is the largest penalty in history for a syndicated loan. There was no victim and all his supposed victims testified in his favor. The court was obviously politically motivated,” said Mr. Trzcinka.
“I think that if Letitia James seizes Trump Tower, it would dramatically boost him in the polls,” he added.
Mr. Trzcinka described both the prosecution, and the massive penalty it has led to, as not only politically unpopular but controversial with members of the real estate profession, who are concerned about their livelihoods in an environment where law enforcement officials feel empowered to decide what industry standards are and how to enforce them.
“Governor Kathy Hochul is getting hammered by real estate firms that are associated with banks. She has been constantly trying to defend the ruling as ‘one of a kind.’ But who gets to define what the limits of the law are?” Mr. Trzcinka said.
“The principle used to be that if somebody is hurt by a transaction, they have to prove their damages in court. Now what is the limiting principle?” he said.
Hence, along with the political fallout, Mr. Trzcinka sees far-reaching consequences in the New York real estate market. With officials acting arbitrarily toward people and organizations they dislike, some lenders may decide it is safer to do business elsewhere.
“This threatens the whole market in New York. I can see these banks moving to a jurisdiction where the rule of law is enforced regardless of politics,” he said.
A Backfiring Case
The attorney general and judge in the case may well have anticipated the difficulties that President Trump is experiencing in his efforts to put forward a bond payment.They may have arrived at the huge figure of $454 million—plus steadily rising interest—not on the basis of an objective calculation of the amount that should be disgorged but based on the calculation that most of President Trump’s assets are in real estate, suggested Brian Domitrovic, a professor in the history department at Sam Houston State University in Texas.
“Of course wealthy businessmen don’t have hundreds of millions in cash. They have it in illiquid investments,” Mr. Domitrovic told The Epoch Times.
The nearly impossible position in which the penalty has placed President Trump—at one of the most politically sensitive moments imaginable, as the November election looms and the field of candidates shrinks to two—have met with widely different reactions, noted Keith Naughton, principal of Silent Majority Strategies, a Germantown, Maryland-based consultancy.
“There is no evidence in the polls that these civil judgments are hurting President Trump politically. They are providing plenty of fodder for MSNBC and all the media outlets dependent on anti-Trump stories. But those people are not voting for Trump anyway,” Mr. Naughton told The Epoch Times.
At the same time, the steep penalty may have dampened enthusiasm among some erstwhile Trump supporters who do not want to give donations that will simply go toward defraying legal fees, Mr. Naughton conceded. Another issue, he said, is the combined effect of the constant and myriad legal and financial woes on President Trump’s endurance.
“The stress on President Trump is clearly growing. As that stress rises, he is more likely to make mistakes on the campaign trail and get distracted away from his main goal: defeating President Biden. That might have been the real goal of these lawsuits all along,” Mr. Naughton said.
Mark Graber, a professor at the Francis King Carey School of Law at the University of Maryland, said he found it “troubling” that a candidate who may soon be president faces such severe financial difficulties.
Money problems of this magnitude, Mr. Graber said, can make candidates vulnerable to financial inducements.
“I do think that Trump will try to find some way to use politics to recoup the money. How I do not know, but mixing politics with his economic straits is not a good recipe for the country,” Mr. Graber said.
The Epoch Times has reached out to the Trump campaign and to the New York attorney general’s office for comment.
