When Donald Trump posted the $91.6 million bond on Friday allowing him to appeal the E. Jean Carroll decision without paying her immediately, it set off an interesting scramble to unpack why Federal Insurance Company—a subsidiary of Chubb Insurance Company—would lend to a notoriously unreliable borrower.
But there was also some fine print in the bond that would have, curiously, given Trump an additional 30 days to come up with the money—as well as another 30 days for FIC to come up with the money if Trump failed to pay. That meant Trump had found a way to unilaterally stall paying up, pending the consent of the court.
It looked like just the latest way Trump had, like Darth Vader before him, altered the deal. And for three days, it seemed as if Trump had gotten away with a minor tweak in court paperwork that would have created a two-month delay in having to pay a cent to the journalist he defamed—even if he lost the rape defamation case on appeal.
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But over the weekend, Carroll’s attorney spotted the odd jumble of legalese and pressured Trump’s legal team to give up the ploy for extra time. On Monday, she alerted U.S. District Judge Lewis Kaplan of the new deal. And in a sign of just how interested he is, the judge immediately responded in a handwritten note scribbled over her letter to the court.
“The parties shall submit revised documentation promptly,” the judge wrote back.
According to Neil Pedersen, who runs an eponymous appellate bond agency in Manhattan, Trump’s extension on paying up was “not standard.”
The episode is merely the latest example of the many twists and turns that continue to unfold as Carroll fights to punish the man who keeps denying that he sexually attacked her in the dressing room of a Manhattan department store—even though one federal jury concluded he did it and a second federal jury fined him to stop his lies about the assault.
It also adds a degree of intrigue to the relationship that Trump has developed with an insurance company that’s led by a financier he once appointed to a government board.
Federal Insurance Company swooped in last week to provide a last-minute lifeline to the real estate tycoon, whose cascading legal troubles have suddenly threatened his wealth and well-being. Faced with the prospect of handing over $83 million after losing a defamation trial to a woman he despises and continues to slander, Trump managed to secure what amounts to an expensive loan to hold off on her payday while he appeals the trial verdict.
Trump is navigating a relatively obscure corner of the legal world, one that rarely makes headlines or gets media scrutiny. In the simplest terms, Carroll is owed a ton of money, and this outside company guaranteed that Trump is good for it while he fights the judgment—and it’ll pay if he’s not.
Surety firms that are in the business of fronting money for legally imperiled people and companies typically give themselves a certain amount of time to make good on their promise—in some cases as short as 10 days, Pedersen said.
“Companies try to insert certain things to give them a little breather if they have to pay the judgment,” Pedersen said.
But Trump and FIC got together and ironed out a deal that showered them with a lot of leeway: If Trump loses the case, he would have 30 days to pay Carroll. And if he doesn’t, the company has up to an extra 30 days to do it for him. Stretched to the maximum, Carroll could win her historic case and still be forced to wait another 60 days for her money—a whopping sum that would have earned $3 million if it were invested in the S&P 500 stock market index during a similar time period at the start of the year.
N. Alex Hanley, an expert in how companies appeal enormous judgments, thinks the potential two-month gap doesn’t sound all that odd, given the immense amount of money in question and the huge players involved.
“These corporations are big battleships that take a long time to turn around,” he told The Daily Beast.
But others felt that the agreement put Carroll at a severe disadvantage.
“From what I can see, there’s no basis for it. If you have to pay, there’s no reason to give Trump another 30 days. There’s no reason to give a company with billions upon billions of assets a 30-day grace period,” Pedersen told The Daily Beast.
Still, all of the insurance and surety experts interviewed for this story read the situation as a cautious company trying to buy time—particularly given the track record of the man at the center of the storm.
“Especially with somebody like Trump,” said Tom Gober, a forensic accountant and certified fraud examiner with extensive experience in the insurance industry.
The executives at FIC knew they were taking on a huge risk by fronting the money for Trump. His foray into the gambling world ended in disaster with four entities—the Trump Taj Mahal, Trump Plaza, Trump Castle, and Trump Hotels and Casino Resorts—going into corporate bankruptcy. He just lost a bank fraud trial that barred him from doing business in the global financial capital of New York. And he’s poised to return to the White House, where he’s threatened to become a dictator “on day one” and be beyond the reach of the law.
As such, the insurance company likely saw the need to give itself extra time now to chase after him for any cash it might have to turn over to Carroll if he eventually loses the case.
“They’d have 60 total days to try to squeeze blood from a turnip,” Gober said. “Knowing all of the public record being what it is on Trump’s false statements and times he hasn’t paid his bills, all of that, it wouldn’t surprise me. I’m sure the surety company would like as much time as they can justify. Plus it gives them time. They earn interest on that money before they have to pay it out. They’d much rather not have to make the payment.”
This odd arrangement has some financial and legal sleuths taking a closer look at the angel who came to Trump’s rescue.
FIC’s parent company, Chubb, is led by Evan G. Greenberg. While president, Trump appointed Greenberg to the U.S. Trade Representative’s advisory committee for trade policy and negotiations in 2018. He’s also the son of Hank Greenberg, the former CEO of insurance supergiant AIG, whose profile became synonymous with the 2008 Great Recession and was once deemed by then-respectable journalist Matt Taibbi as one “who perhaps more than anyone else was responsible for the galactic balance-sheet goat-f*ck that caused AIG's implosion in the first place.”
While speaking in 2019 before a crowd at The Economic Club of Washington, D.C., the younger Greenberg asserted that he only knew Trump “from a distance” and “you know, in business.” That gap is closing now that Greenberg’s company is on the hook for $91 million from a man who’s often made a mockery of his lenders.
The initial 60-day window would have given the company more time to harangue Trump with the $83 million bill, something Hanley called “the ideal scenario for a surety.”
“If there’s the ability of the judgment debtor to pay the claim, it makes closing the bond far simpler. Otherwise, the company will make the payment to the judgment creditor, they’ll have to issue a satisfaction of judgment, then they’ll go get the money back from Trump,” Hanley said.
But Carroll’s lawyer, Roberta Kaplan, blew that up on Monday when she knocked it down to 15 days for the first phase and 15 days for the second phase, keeping the surety company on the hook at the front end and Trump responsible for the inevitable bill. Judge Kaplan, who is not related to her, will have to weigh in as well.
The only thing that matters now is whether Carroll can convince a panel of judges at the 2nd Circuit Court of Appeals that her damages-only New York City trial in January holds up to scrutiny. And if it does, then Trump will have to pay up—and fast.
“I suppose it’s more onerous to him,” Hanley said.
Making matters more absurd is that Trump will have to repeat this high-wire act later this month, as he tries to fight off the $464 million judgment issued by a New York state judge who concluded Trump and his top lieutenants had engaged in outright bank fraud by lying about the tycoon’s net worth and the most mundane statistics in his real estate portfolio.
