On Monday night Trump raged on Social Truth: “The Bonding Companies have never heard of such a bond, of this size, before, nor do they have the ability to post such a bond.” The editorial page of The Wall Street Journal, more colorfully, last month likened Engoron's fraud verdict, which occasioned Trump's need for so large a bond, to “using a Hellfire missile to annihilate a shoplifter.”
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Had Levinson ever heard before of a bond this size?
No, he said, and he's been in the business 35 years. “That’s a really large bond,” he told me, “Especially for a private entity.” (Publicly held companies typically have much more capital than privately held companies like the Trump Organization.) Levinson said he’d brokered nine-figure appeal bonds for publicly traded companies but never for a privately held company. Even for a publicly held firm, Levinson said, “that’s a large amount of liquidity to have on hand.”
But this is no ordinary white-collar case. Trump operates—in business as much as politics—with an impunity much more characteristic of organized crime than the (admittedly rough-and-tumble) world of New York real estate.
In addition to having less cash on hand, private companies differ from publicly held companies in another way. Claudia Markarian, an underwriter at Zurich Insurance, explained to the court that underwriters for a private company like the Trump Organization depend much more on the truthfulness of that company's officers, simply because—unlike at a publicly held company—there's little public documentation available to cross-check. Thus, when the Trump Organization's chief financial officer, Allen Weisselberg, explained to Markarian that certain property valuations she was shown had of course been made by an outside appraisal firm, there was no easy way to discover that Weisselberg was lying his head off her. (Weisselberg pleaded guilty to two counts of perjury earlier this month and is headed back to jail after previously serving three months for tax fraud.)
Michael Cohen, the former Trump Organization attorney who served a three-year sentence for violating campaign finance laws, also pleaded guilty in that 2018 case to making financial misrepresentations on the Trump Organization's behalf to a bank. At Trump's fraud trial, Cohen explained that Trump would “arbitrarily” select a number (using, Cohen said, his “mob voice”). Then Cohen and Weisselberg would find a way to justify it:
I would sit down with Allen and we would make the changes. The document would then be photocopied that had all of the changes at which point in time Allen and I would return to Mr. Trump to demonstrate that we achieved or [were] close to the number that he was seeking and I had no use for that document any longer.
Cohen said he did this with Trump Tower, Trump Park Avenue, Trump World Tower United Nations, 100 Central Park South, Seven Springs, and the Miss Universe Pageant.
The $454 million penalty level was large, Judge Engoron explained in his opinion, because at the trial Trump and his fellow defendants displayed a “complete lack of contrition and remorse” that “borders on the pathological.” Their “refusal to admit error,” the judge wrote, “constrains this Court to conclude that they will engage in it going forward unless judicially restrained.” Engoron further noted that the Trump Organization had a history of corporate misbehavior in New York state—he cited, among other examples, the Trump University fraud and the Trump Foundation fraud, two cases earlier litigated by the state attorney general—and “the more evidence There is of defendants' ongoing propensity to engage in fraud, the more need there is for the Court to impose stricter injunctive relief. “This is not defendants’ first rodeo.”
I asked Levinson why Trump couldn't persuade anyone to take his real estate holdings as collateral for an appeal bond. I figured it was just because nobody on Planet Earth (except Chubb's Evan Greenberg) can imagine that Trump would ever surrender collateral of any kind. Then there's the question of securing an honest valuation. The Washington Post's Catherine Rampell offered a deft analogy to Trump offering his assets as collateral after getting caught misrepresenting their value. It's like selling a glass engagement ring you claim to be a diamond ring, she wrote, and then, after a judge finds you liable for fraud, putting the fake diamond ring up as collateral for an appeal bond.
But it turns out there's another reason, Levinson explained. Trump's collateral is mainly real estate, and real estate is hard for a bondholder to convert into cash. Because you must sell at fire-sale prices (“Everyone knows you have to sell it”), you have to discount its collateral value up front by something like 40 percent. And that's before you consider that New York's commercial real estate market is in terrible shape right now. Real estate’s only practical value as collateral is that you might persuade a bank to accept it in exchange