New York Attorney General Letitia James has submitted a formal request to void the $175 million bond posted by former President Donald Trump as part of the ongoing civil fraud case against him. This action is based on concerns about the financial stability and legality of the California-based Knight Specialty Insurance Company (KSIC), the entity that issued the bond.
In her 26-page filing, James argues that KSIC was not authorized to conduct business in New York, as it is a smaller insurer with a policyholder surplus of only $138 million, which does not meet the financial requirements to back such a substantial bond. According to New York state law, businesses like KSIC are restricted from exposing themselves to liabilities greater than 10 percent of their surplus. In this case, the bond of $175 million far exceeds this limitation, presenting a liability of $161.2 million more than what is permissible.
The Attorney General also raised concerns about the insurer’s management practices, citing that KSIC and its affiliates have previously been found by federal authorities to have violated federal laws. This point underpins the broader argument that KSIC may lack the necessary stability and compliance to support the bond.
James’s motion further highlights what she refers to as “shadow insurance” practices by KSIC, where the company allegedly sends 100% of its retained insurance risk to affiliates in the Cayman Islands. This, she argues, allows KSIC to artificially boost its financial standing by reducing liabilities it records, which could mislead regulators and the public.
This legal challenge comes after a September ruling by Judge Arthur Engoron, which found that Trump and the Trump Organization committed extensive fraud in their business dealings. The judge’s ruling also barred Donald Trump Jr. and Eric Trump from serving as officers or directors in any New York-based company for two years.
The hearing to address these issues is set to coincide with the opening statements in Trump’s separate New York criminal trial, intensifying the legal scrutiny surrounding the former president. James’s aggressive push to ensure that the financial undertakings tied to Trump’s bond are sound reflects ongoing efforts to hold him accountable under state law, amid broader allegations of fraudulent business practices by him and his organization.