On Monday March 18, Donald Trump’s lawyers revealed that Trump had failed to secure the $464 million appeals bond he needs to avoid paying the half-billion-dollar penalty as he appeals the New York civil fraud judgment against him. Securing the bond was a “practical impossibility… about 30 different bond companies having turned down Trump's request, in part because very few will consider a bond of anything approaching that magnitude, and the rest will not accept hard assets such as real estate as collateral,” they said.
Trump is running out of time.
Unless Trump is able to obtain an appeals bond before then, New York Attorney General’s office plans to collect from Trump on Monday, March 25. As soon as March 25, New York prosecutors and law enforcement could initiate a wide-ranging action to freeze and then seize Trump’s assets.
Forbes estimates that Trump has about $400 million of cash and liquid securities, some of that money being already encumbered. Earlier this month, Trump obtained a $91.6 million appeals bond for the second New York civil judgment against him for defaming and sexually assaulting E. Jean Carroll. Those same funds cannot be used to collateralize a second bond. Trump needs collateral of $557 million to post the $464 million bond.
Trump is facing a liquidity crisis.
Over $540 million in legal fines currently weigh on Trump, threatening to deplete his $400 million estimated cash reserves and force him to sell or borrow against his real estate empire. It is a well-known fact that Trump could have easily avoided his actual $540 Million cash crunch. There are two viable paths that would have saved him a lot of lifelong headaches, not to mention money.
Trump could have simply invested the estimated $400 million inheritance he received from his father in 1999. Or, in 2017, he could have divested his business empire when he became president in January 2017, and simply reinvested the proceeds in the stock market.
In both cases, if the billionaire ex-president had made this one move years ago, he would be much richer and more liquid today. He may even have avoided the $450 million bill for lying about his assets. In 2017, if Trump had diested and reinvested, Trump would likely be at least $2 billion richer. If he had invested his inheritance, it would have boosted his fortune by at least $1 billion.
In short, Donald Trump is in a financial bind today not just because he committed financial fraud on an enormous scale, sexual abuse, and defamation. He is also here because his business empire has not kept up with the markets.
So much about being a genius!
Michel Ouellette JMD, ll.l., ll.m.
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