Trump Legal News: Some Assembly Required

AG Letitia James gave Donald Trump a 30-day grace period to come up with the bond he needs to post in order to protect his assets while he appeals the judgment against him for criminal fraud. He claims he can't do it, and so, with 3 days to go, she's begun taking steps to collect.

Specifically, James already filed notices of judgment in New York City, which is the first step in going after Trump properties in that municipality, including Trump Tower. And yesterday, she did the same in Westchester County, NY, where Trump has an estate, Seven Springs, and a golf course called Trump National Golf Club Westchester. According to CNN, James has not yet filed paperwork in Chicago or in Florida, though presumably those are on her to-do list. Neither CNN nor anyone else appears to be certain whether James has filed paperwork in New Jersey, home to Bedminster. The loss of that property would be particularly bitter for Trump, as it's his favorite, and is where he has said he wants to be interred when he dies.

We've already written a fair bit about this subject in the last several days, but let's do one more, exhaustive rundown of Trump's options here. We suspect this is as thorough a breakdown as you'll find, so buckle up:

1. Let James Do Her Thing: Trump could wash his hands of this particular problem, and let James collect in whatever way she sees fit. He really, really, really does not want to do this, however, as James will sell whatever properties are easiest to sell, and at whatever price she can easily obtain. Then she will turn around and satisfy any creditors who have claims against the various properties. This approach will produce less money for Trump than any other.
   
   
2. Sell, Sell, Sell: Alternatively, Trump could sell his properties himself. Of course, time is running out, and it's not so easy to sell nine-figure real estate in just a few days. He would probably get better prices than James would, but he'd still be negotiating from a position of weakness. That's not good for someone who's already a poor negotiator. And again, most or all of his properties are likely encumbered in one way or another, plus he'd probably be on the hook for capital gains taxes. So, he might struggle to realize the $500 million or so he needs.
   
   To give a small sense of the many nuances and subtleties that Trump (or James) will have to deal with, consider this case study, courtesy of reader M.R. in New York City, NY:

   You had written about the value of 40 Wall Street and the amount of equity Donald Trump may still have in it. New York City offers a free online recorded documents database (called ACRIS, in case you want to start looking up other properties or find the source documents yourself), so I took the opportunity to see what is publicly available for this asset. It appears the property is actually set up as a ground lease where Trump is the tenant and another entity is the landlord. Trump has secured a $160,000,000 mortgage on the property with Ladder Capital, which he has had since 2015. Ladder Capital's reputation in New York is not great as they are known to be sharks. Prior to Ladder Capital he had a $160,000,000 loan with Capital One starting in 2005. A few conclusions that can be drawn here:
   
   

   1. Trump's leverage on the property did not increase since 2005 and, in fact, likely decreased due to natural rent growth that would be included in his lease.
      
      
   2. Trump's use of a ground lease allowed him to purchase the property for less than it would otherwise be worth, seeing as it will revert to the leaseholder at the expiration of the lease's term. He will have to pay rent during the lease term to the landlord as well.
      
      
   3. It is typical for a New York City office building to have a mortgage worth between 35-50% of the asset's value. While it's a minor quibble, I think it's wrong to imply that it would be unusual or financially irresponsible to have this sort of financing. Rather, it is unusual for commercial office buildings to be owned without any debt.
      
      
   4. If the loan makes up 50% of the property's value, then he has $160,000,000 of equity left in the asset. If the loan is 35% then he has about $300,000,000.
      
      
   5. His loan documents will prohibit him from using that equity as collateral for anything else, including a surety bond.

   Thanks, M.R.!
   
   
3. Surety Bond: Speaking of surety bonds, earlier this week, we wrote that it's nearly impossible to secure such bonds these days using commercial real estate. We're hardly experts in this area, but we read several commentaries that said that was the case, including one from Mark Cuban.
   
   That said, reader J.P. in Hancock, ME wrote in to push back against that assertion:

   I am writing to respectfully disagree with your analysis today of Trump's difficulty in posting a bond.
   
   I worked at a bank for 30 years (JPMC), and while I was not on the loan side, I was close enough to have a good sense of how it works and what the lending policies are.
   
   You are far too categorical in your statement that no one will lend against commercial real estate in the current environment. In doing so, you are unwittingly validating his claims and thus letting Trump off the hook a little too easily. While many of the midsize and smaller banks may be in crisis mode due to bad real estate exposure, plenty of the large stable banks—think JPMC, BofA, Wells, and a small handful of large foreign banks—will still lend against real estate collateral, albeit in a highly conservative and selective manner. This is exactly the kind of environment when strong banks try to press their competitive advantage and make loans to good customers with solid properties. Yes, there are certain sectors of commercial real estate they might not touch, but lending against a prime property in a good location, with sufficient overcollateralization, is something that lots of banks might look at in general.
   
   But there is one big problem: One of the cornerstones of solid lending policy is to know the character of the borrower. Do they have a history of defaulting in the past? (Yes for Trump, three times, I think.) Are they litigious? (Yes, again.) Do they possibly pose reputational risk given what you know of their conduct in the past? (Another yes.) I think many financial firms would gladly lend perhaps 70 cents against $1 of real estate value for a loan collateralized by some of the prime properties under Trump's control. The reason they won't is the risk of reputation, litigation, and potential for fraud. Or they don't feel comfortable that the collateral isn't already pledged.
   
   The more lightly regulated hedge funds (or the people behind them) might make these sorts of loans in a minute, and there are plenty of them with right-wing sympathies (think Renaissance and the Mercer family). This might still be a way out. The caveat here is that they are no dopes and would only lend if the collateral was free and clear. And there are lots of hedge funds, both liberal and conservative, that would simply love to do a loan at the right rate with the right amount of collateral.
   
   My suspicion is that either offers have been made for a loan and Trump doesn't like the rate or the amount of collateral required, or that the lenders have been unable to find sufficient unencumbered assets. It's quite possible that the whole Trump empire is a house of cards that's about to fall.
   
   But if he walked into a number of firms tomorrow with the right amount of good-quality real estate collateral, he could get a loan within 24 hours.

   Thanks, J.P.!
   
   
4. Creative Bond: As we noted yesterday, an alternative to one surety bond (or one loan from a hedge fund) would be to secure a bunch of smaller bonds/loans from different entities, so as to spread the risk around. This is the solution that James has suggested to Trump, and he's rejected it out of hand. One has to assume this means he doesn't have the assets to pull it off.
   
   
5. SPAC: As we noted yesterday, the Miami-based SPAC Digital World Acquisition Corporation (DWAC) is supposed to hold a meeting today at which the stockholders will vote whether or not to merge with Trump Media and Technology Group (TMTG). If the meeting goes forward (DWAC has been known to cancel such meetings at the last minute), then the merger might give Trump the money he needs to cover his exposure.
   
   We do not presume to understand the finer points of this sort of high finance. However, we will quote one sentence from the linked article (from Investor's Business Daily): "If the merger is completed, Trump's 90% stake in TMTG could be valued at around $4 billion, based on DWAC's current stock price." There are two clauses there doing a LOT of heavy lifting. The first is "could be valued at around $4 billion." The main asset of Trump Media is Truth Social, which is failing. We do not see why anyone would cough up $4 billion in order to own it. But maybe that's beyond us.
   
   The second clause is "If the merger is completed." There are currently four lawsuits from various parties linked to either DWAC or TMTG, and there is also an ongoing federal investigation. It strikes us as rather unlikely that the merger will be signed, sealed and delivered in the next 72 hours. Or the next 72 months, for that matter. Plus, as we noted yesterday, even if the merger does go through, Trump will not be able to sell stock for 6 months. He COULD try to use stock as collateral, but then the lender would be at risk of getting stuck if the price collapses.
   
   Maybe Trump knows better than we do about this SPAC business, but if he did, why would he be working so hard to reduce his bond?
   
   
6. Mercy from the Judge: As we have noted, Trump has asked an appellate court in New York to reduce the bond. Maybe they'll do it, although there's really no legal basis for it. They're expected to rule next week.
   
   
7. Mercy from James: Alternatively, Trump could go to James and ask her to extend his grace period. He surely would not be pleased to ask a Black woman for a favor, however. Meanwhile, she has indicated that she's not really open to negotiating. That said, if he offers some more substantive amount than the $100 million he's currently trying to get the courts to accept, then she might become more flexible.
   
   
8. Phone a Friend: The sleazy option is for Trump to get a loan from a supporter who has the cash to spare. The problem is that most individuals aren't going to be too open to pledging $500 million they might well not get back. And those individuals who would not mind losing the $500 million, because of other potential benefits, like Vladimir Putin or Mohammed bin Salman, are extra sleazy and would become a political millstone around Trump's neck. "Do you really want to vote for a president who is deeply in debt to Saudi Arabia/Russia?" Democrats would ask.
   
   
9. Bankruptcy: Finally, Trump could go bankrupt. He's done that before, but this would be his first personal bankruptcy. The good news for him is that going BK would buy him some time. The bad news is that he would be subjecting himself to the fiats of the bankruptcy court and the trustee that would be appointed. So, this would basically be a variant of the first option on the list (Let James Do Her Thing), just slower. Also, since his "success" as a businessman is a huge part of the brand, there could be some political fallout from admitting failure in such a high-profile fashion.

In short, Trump needs to pull a rabbit out of a hat, and there might not be any rabbits to pull. (Z)

Senate: Good, Bad and Ugly News for the Democratic Caucus

There has been a fair bit of news out of the Senate in the last 24 hours or so. We'll start with the good (for the Democrats), since that's listed first in the headline. Sen. Bob Menendez (D-NJ) has seen the writing on the wall, and announced yesterday that he will not enter the Democratic U.S. Senate primary in New Jersey, scheduled for June 4.

Menendez made a point of keeping open the option of running as an independent if he is "exonerated" over the summer. First, he's not going to be exonerated. Second, New Jersey Democrats are clearly not interested in having him represent them anymore. So, if he does mount a bid, he's not going to get many votes; surely not enough to deny the Democratic nominee in blue, blue New Jersey. In fact, this kinda sounds like "bargaining" to us; once he moves on to the depression stage and deals with that, then he'll be at "acceptance" and will stop fooling himself that he might win another term.

And now the bad news. Over in blue, blue Maryland, a new poll from The Washington Post/University of Maryland says the leading candidate in the U.S. Senate race is... former governor Larry Hogan (R). In head-to-head matchups against the two likeliest Democrats, he wins by double digits. Specifically, up against David Trone, Hogan comes out on top, 49%-37%, and up against Angela Alsobrooks, Hogan wins 50% to 36%.

There is, however, one fly in the ointment for Hogan. Despite these numbers, 55% of respondents want the Democrats to control the Senate while only 35% want the Republicans in charge. Needless to say, electing a Republican is not a good way to help give control to the Democrats. So, maybe the vast majority of the undecideds are undecided between Trone and Alsobrooks.

And finally the ugly news. At a time when Senate Democrats are hoping to put their judge-approval process into overdrive, the ever-inscrutable Sen. Joe Manchin (D-WV) has announced that he will not vote to approve any judge who cannot get at least one Republican vote.

Who knows what is going on here. Manchin says it's a matter of principle, and that he's putting his belief in bipartisanship into action in some small way. If so, it is stupid. First, the difference between "one Republican vote" and "zero Republican votes" is largely meaningless; the former scenario is not ACTUALLY bipartisan. Further, he's supposed to be casting his votes based on HIS assessment of the candidate, not what his colleagues think. Also, he somehow did not discover this principle until his last 8 months (or so) in office. Where was it during his first couple of decades?

The alternative explanation here is that Manchin is keeping open the possibility of running for office again, and this is a way to send a message to West Virginia voters. It could be an independent run for his U.S. Senate seat, or maybe he'd like to be governor again. The state only prohibits someone from serving more than two consecutive terms, so Manchin would once again be eligible for the office. Only he knows what the plan is. (Z)

Newsom: A Demonstration of His Political Clout?

It took more than 2 weeks, but Gov. Gavin Newsom (D-CA) has scored a victory. The ballot initiative that he championed, which is meant to try to address California's problem with homelessness, has been approved by voters.

The reason it took so long for the result is that it was necessary to wait for every mail-in ballot to arrive and be counted because the final tally was very close. In the end, 3,603,999 voters (50.2%) supported the measure while 3,575,162 (49.8%) opposed it. That's a margin of less than 29,000 votes in a state with 35 million people. It doesn't get much more "skin of your teeth" than that.

So, is this a victory for Newsom, the aspiring presidential candidate? Presumably, since it did get passed, and since it will allow him to say that he took "action" in response to the #1 issue of California voters. Given how much political capital he invested (appearing in seemingly infinite commercials in favor of the proposition), it clearly would not have passed without his support. So, he can claim a lot of credit. All the credit, really.

On the other hand, despite investing all that time and energy, the initiative barely made it. And a big reason for that is that California has already thrown gobs of money at this problem, without a lot of return on investment. This being the case, a lot of voters were rather skeptical about spending even more. And the odds are high that, in 2-3 years, homelessness will still be the state's #1 concern. So, Newsom can run for president saying "See? I did something about the homeless issue!" and his opponents can answer "But did you, really?" (Z)

Election Interference: Russia's Got a New Form of Rabble-Rousing

If you see any hard-to-accept news stories this election season, particularly if those stories are pro-Trump or pro-Republican, check the source. And if the source is the D.C. Weekly, The New York News Daily, The Chicago Chronicle, or The Miami Chronicle you know you are quite literally dealing with fake news.

Yes, that is the latest scam being run by the Russians as they attempt to influence American politics. They've chosen some domain/newspaper names that sound credible, and now they are using them to push "news" stories about American politics and about the war in Ukraine.

It's kind of a ham-fisted, low-tech way of doing things, and the websites are not very well done. Maybe the Russians are spending so much on their invasion of Ukraine they've had to cut the salaries of their hackers. Also, the various search engines are not yet giving much precedence to results from the sites, so it's not actually that easy to find them. That means that, at least for now, those who want to read news coverage from a Russian mouthpiece will have to stick with Fox. (Z)

I Read the News Today, Oh Boy: Conspiracy

We are never sure how hard the week's theme is; last week's was discovered very quickly by some readers. In fact, the first e-mail arrived 3 minutes after we went live with last Friday's post.

Here's the answer key, courtesy of reader J.H. in Flint, MI:

All the headlines contain the name of a board game:

• Schumer: Netanyahu Should Go
• Schumer Has a Candidate for West Virginia Senate Race: Guess Who?
• Trump to Seniors: Sorry!
• Trump Legal News: What Next?
• Venue Shopping: Judicial Conference Ends Kacsmaryk's Monopoly
• Looking Forward to 2024, Part VI: Reader Predictions, Economy and Finance Edition
• I Read the News Today, Oh Boy: Hair of the Dog
• This Week in Schadenfreude: Navarro Is Headed to the Crowbar Hotel
• This Week in Freudenfreude: "My Life Is Incredible"

We had some readers who did not know about the game "Finance." It was one of the games in the evolution from "The Landlord's Game" to "Monopoly." We never played "Finance," but reader J.H. in Lake Forest, CA has, and says "Finance" was more fun. We can believe that, since "Monopoly" is... not the best game design, let's say.

Here are the first 30 readers to get it right (we're expanding from 25):

1. B.M. in Chico, CA
2. W.L. in Springfield, MO
3. R.D. in Cheshire, CT
4. J.T. in Philadelphia, PA
5. A.J. in Baltimore, MD
6. N.F. in Liège, Belgium
7. R.C. in Eagleville, PA
8. B.P. in La Habra, CA
9. A.P. in Kitchener, ON, Canada
10. D.D. in Carversville, PA
11. V.S. in Oak Bluffs, Martha's Vineyard, MA
12. C.S. in Cincinnati, OH
13. D.L. in Uslar, Germany
14. K.R. in Austin, TX
15. J.F. in Fayetteville, NC
16. J.H. in Lake Forest
17. E.M. in Jersey City, NJ
18. B.R. in Arlington, MA
19. J.H. in Flint
20. M.J. in Oakdale, MN
21. P.Q. in Metuchen, NJ
22. J.J. in Los Angeles, CA
23. J.S. in Germantown, OH
24. B.K.J. in San Diego, CA
25. R.B. in Atlanta, GA
26. M.B. in Albany, NY
27. C.F. in Miami, FL
28. J.P.M. in Eagle Mills, NY
29. M.G. in Arlington, VA
30. S.G. in Durham, NC

This week's theme would be in "Arts & Literature" in "Trivial Pursuit," because that's where they put vocabulary questions. It relies on only some words to the right of the colons, not all. And a hint: This is the kind of puzzle that even someone in a gang, a cartel or the USC alumni association could solve.

If you have a guess, send it to comments@electoral-vote.com with subject line "March 22 Headlines." (Z)

This Week in Schadenfreude: Moreno a Part of the Rainbow Tribe?

Bernie Moreno (R) hadn't even won his Ohio primary, and he already had his first scandal on his hands. In short, the AP discovered an account at Adult Friend Finder (AFF) that was created in his name. Whoever created it knew Moreno's preferred nickname ("Nardo"), had access to his e-mail address, and had access to the computer in his office.

The account is pretty old (early 2000s), so what's the problem? Well, the first issue is that he's married, and has been since well before the account was created. The second issue is that the profile page says: "Hi, looking for young guys to have fun with while traveling." These things will not do for a candidate who is backed by evangelical and anti-LGBTQ groups. And while Moreno actually used to describe himself as an LGBTQ ally, he transitioned to a hardline anti-gay stance once he entered politics.

Once the AP broke the story, a fall guy quickly came forward and took full responsibility for the profile. That would be Dan Ricci, who says he was working as an intern at Moreno's car dealership at the time, and that he created the account as a "juvenile prank." Maybe that is true, maybe it isn't. Truth be told, we are 50/50 on whether we believe Ricci or not. It would be instructive if Moreno's membership status, or lack thereof, at other such sites was known. However, the only reason that the AFF account came to light was that the site had a massive data breach. So, there's no way to dig deep and see if Moreno is also registered at, say, Grindr or SCRUFF.

But for our purposes, it really doesn't matter. What happens in someone's bedroom, as long as it doesn't harm anyone, should be their business (and that of their partner or partners). However, once someone decides to start poking around in other people's love lives, they become fair game to be poked at themselves. Moreno is now learning that the hard way, and we suspect there are going to be at least some anti-LGBTQ voters in Ohio who are not persuaded by his claims that he didn't do it. Since control of the Senate could depend on this seat, it wouldn't surprise us if some outside group funded by dark money grabbed the ball(s) and ran ads on the subject. (Z)

This Week in Freudenfreude: Send in the Choir

And now, the companion to the previous piece. Christopher Landis is the choir director at Hingham Middle School in Massachusetts. He's also gay. However, he kept his identity a secret from his students, because while Massachusetts is a blue state, there are still many pockets of social conservatism there. Keeping the secret meant that he did not tell any of his charges about his pending wedding to fiancé Joe Michienzie.

One wonders exactly how much in the dark Landis' students really were, since "my friend Joe" was in attendance for every public performance the choir gave. Certainly, a couple of the parents figured it out, and they contacted Michienzie to see if they might do something in honor of the wedding. Michienzie thought it would be nice to have a choir performance, and so an e-mail went out to the 70 choir members. The two parents who were organizing were hoping to get maybe 15 volunteers, but Landis is quite beloved by his students, so they got... 50. There were multiple weekends' worth of secret rehearsals, along with numerous other logistical challenges that had to be dealt with.

The rehearsals-in-secret apparently worked, because Landis had no clue what was going on until guests at his wedding rehearsal brunch started picking up their phones and pointing their cameras in his direction. At that point, Michienzie announced the choir members, who filed in and performed a stirring rendition of The Beatles' All You Need Is Love. Here's the video:

John Lennon obviously did not live to see the performance of the song he wrote, but we suspect he would have approved.

Anyhow, with all these book bans, and anti-drag-show laws, and other LGBTQ-limiting actions that come from groups like the ones that support Bernie Moreno, the justification is always "think of the children." Invariably, it seems, the children show that they are doing just fine with all of this, thank you very much. (Z)

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