The face-off between Donald Trump and Letitia James, the New York attorney general, could reach a denouement as soon as Tuesday when James assumes the legal right to begin seizing the former US president’s assets in lieu of a $454m fine Trump says he can’t meet.
But anyone expecting Anthony Miranda, sheriff of the city of New York, to show up at Trump’s premiere property and home on 5th Avenue to cart off the faux-Louis XIV furniture, the golden cherubs, crystal chandeliers or chisel the 24-carat gold from the architraves and cornices, may be disappointed.
Collecting a financial judgment is a slow and arduous process, according to New York real estate attorneys, especially when the assets that could be seized to satisfy that judgment are properties withheld in a complex web of ownership and titles, subject to mortgages and co-ownership claims.
The same problem that Trump says he faces raising a bond against his properties is the same problem that James could find in liquefying his assets to satisfy the punishment brought in after she won a fraud trial against Trump’s real estate empire.
“Bonds people do not like to use property as collateral because it’s hard to liquify the asset if there’s a default,” said Adam Leitman Bailey, a real estate attorney, “and for the attorney general this isn’t so easy either. It’s going to be very difficult to seize his properties. It takes a lot of work.”
First off James’s office is likely to send out a letter of garnishment to every bank in New York and the US requiring them to freeze Trump’s bank accounts and to deliver the cash, bonds or possessions held in security deposit boxes to her office in New York.
Last week the New York attorney general’s office filed judgments in Westchester county, where Trump’s Seven Spring’s golf course and private estate is located, an indication that James is preparing to move on his real estate assets.
That comes as Trump awaits a decision from a New York appeals court on his application for a stay on the judgment. The court may deny it or decide to say nothing, leaving James free to act. Trump has said in his affidavit to the court that he doesn’t have $454m so the next step is to seize his cash and property.
“If he does not get a stay … I do not see a good solution for him,” says Mitchell Epner at Rottenberg Lipman Rich in New York. “James can go back to … court and seek an order requiring a property interest be handed over to her, and Trump would have very limited ability to resist that.”
James has said she looks out of her office window at 40 Wall Street, a 72-storey, neo-gothic tower built in 1929 before the economic crash and once owned by Ferdinand and Imelda Marcos, that Trump acquired the 99-year ground lease on in 1995 for $1m.
“We are prepared to make sure the judgment is paid to New Yorkers,” James told ABC News in a tone of barely concealed contempt after the February judgment. “And yes, I look at 40 Wall Street each and every day.”
But, Epner says, James would not send the sheriffs round to padlock the doors and lock the tenants out.
“The purpose of allowing a judgment creditor to take possession is not to harm innocent third parties, but to guarantee that payment is made. If the court were to order the building be turned over, then the question would then be how do we do this without causing unnecessary harm to the tenants.”
But New York is going through a commercial real estate crisis, and 40 Wall Street, despite being surrounded by high-end stores like Tiffany and Hermès is no exception.
In 2014, the mortgage lender Capital One valued it at $257m though Trump assessed it at $550m on his annual financial statement. About $120m is owed on a mortgage.
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“Trump doesn’t own the property,” says Bailey. “They could sell the ground lease but the real estate market in commercial property is so down now it’s hard to know what it would go for, especially for assets that are inflated like Trump’s are.”
Moreover, there’s no certainty that the court’s $454 judgment will make it through the appeals process intact. Verdicts can be overturned on appeal, and the prosecution in the case used a legal statute rarely – if ever – used for this purpose.
Trump’s legal team have argued that if the attorney general sells off his property, and the judgment is overturned or the fine lessened, then irrevocable harm would have been done to his company.
Further, James has to hope that Trump hasn’t placed his properties in an irrevocable trust for his children in which he collects the interest but no longer has control. “The attorney cannot touch anything in an irrevocable trust,” said Bailey.
If it’s held in a limited liability company with other parties, and James attempts to seize and sell it, that would set off a series of lawsuits before there would be foreclosure. Even if successful, the bank holding any mortgage would take repayment priority over the state after an auction.
“Letitia James will be able to get the cash and the furniture but that won’t come anywhere near the judgment,” Bailey said. “James probably knows that she used an arcane statute not meant for this type of case, and knows the decision will get cut down on appeal. If she gets $100m that would be good news for her.”
But on Friday, the prospect of Trump coming through on the $454m judgment suddenly looked up. His Trump Media & Technology Group – the parent company of the Truth Social platform – completed a Spac merger with Digital World Acquisition Corporation, valuing his stake at about $3bn.
If shares in the company begin trading on Monday then they could theoretically be used as collateral on a bond that would keep James off his back while Arthur Engoron’s judgment is appealed. But that’s a long shot.
“If I was Donald Trump, I would be calling up every US billionaire I know to ask them to borrow the money,” said Bailey. “He needs a sugar daddy to come in right now and bail him out.”
