Trump lawyers acknowledge civil fraud bond was issued without 'certificate of qualification'

[moniss]

12. My feeling would be for the surety

to be required to escrow the $175 million. Accepting the idea that the surplus of the main company will cover the bond of the subsidiary is illegal. Surpluses are not allowed to swing like that. For good reasons. I have pointed out before that the subsidiary has suddenly posted a large increase in it's surplus on the web site. Where did this suddenly come from? You cannot borrow your way to surplus health since a loan is a liability accounted for against your surplus. Your surplus is premiums minus financial liabilities including for risk issued.

The idea that some Cayman Islands account somewhere will somehow be available to Knight to cover the bond is pure BS. You either have the assets secured to cover the risk or you don't. That account arrangement/promises hardly meets the definition of secured. That definition in these kinds of things means that you have assets in escrow or trust in accounts completely under your control. Not some "joint" control with the applicant for the bond.

Engoron needs to bring in some expertise on this matter. White collar crime investigators. He should demand that escrow of the full amount of the bond be established entirely at the sole control of the surety and he should demand proof of the premium terms for the bond and whether actual payment of the premiums has been made and where those funds came from.