Donald Trump secured a huge victory late last month when a New York court reduced his half-billion dollar bond to $175 million after his lawyers expressed difficulty with producing bond for the full judgment while he appealed. But the former president's lawyers may have made a crucial misstep in failing to disclose that a billionaire financier had offered to put up the full $464 million judgment, according to ProPublica, and legal experts say it could cost them.
"It's unethical to either initially knowingly present false information or to fail to correct misinformation that's been provided to the court," Loyola Law School professor Laurie Levenson told Salon.
While lawyers don't always have "straight information" from their client, they do have an "ethical obligation" under the code of conduct to correct false statements and information, she explained, noting that if Trump's lawyers "at some point" knew they'd "made a misrepresentation" to the court, they had the "responsibility to clear that up."
"You have, first, a duty to push on your client to tell you the truth and find out what's really happening," Levenson said, adding that a potential ethics concern "shows the court that they just cannot trust Trump's lawyers" and incentivizes the court to "push harder for verification of the facts."
Prior to the appellate court's ruling, Trump's attorneys told the court it was a "practical impossibility" to obtain a surety for the full amount. The lawyers explained that around 30 firms Trump approached declined to cover him, either because they didn't want to take the risk or did not want to accept real estate as collateral. Those rejections made posting the total "an impossible bond requirement," they said.
Before the appeals panel reduced the bond, however, a billionaire lender approached Trump's team about providing a surety for the full sum. In an interview with ProPublica, California billionaire Don Hankey said he contacted Trump's lawyers several days before the bond shrank, telling them he was willing to offer the full amount and use real estate as collateral.
“I saw that they were rejected by everyone and I said, ‘Gee, that doesn’t seem like a difficult bond to post,’” Hankey told the outlet.
The appellate court ruled in Trump's favor as Hankey and representatives for the former president negotiated. The court did not provide an explanation for its decision, and Hankey later gave Trump a bond for the lowered amount.
Whether Trump lawyer Alina Habba and the rest of Trump's legal team were made aware of Hankey's offering to cover the full amount is unclear. Trump's lawyers did not respond to ProPublica's requests for comment.
That uncertainty raises the question of whether they did violate the relevant ethics rule, Rule 3.3 (a)(1), according to Stephen Gillers, a New York University law professor specializing in legal ethics.
If Trump's legal team were aware their statement about meeting the bond was untrue, they violated the rule, Gillers told Salon. However, if it was not true but they thought it was before learning it was false, their statement would not amount to a violation though they would have been required to "correct the statement" upon learning of its "falsity."
"If the statement was true when they said it and then later events made it false, some may see the rule as ambiguous on whether the lawyers would be required to correct the statement," Gillers said, explaining that even in that instance, he believes "the lawyers would have had a duty to correct the statement."
At the time Trump's attorneys informed the court of their difficulty posting the bond, Hankey told ProPublica he had not yet contacted the Trump team.
Because of the timeline, the lawyers could claim "they didn't know whether he could support the full amount," according to Bennett Gershman, a Pace University law professor and former New York prosecutor, who noted that the legal team's "knowledge is critical."
"But what this episode demonstrates is that the failure of Trump’s lawyers to notify the court that was considering their motion shows their incompetence, indifference to ethical conduct, or just simply scorn for proper lawyer conduct," he told Salon.
Should the court find the Trump legal team violated the ethics rules, Gillers said they could be "referred for discipline" either by the court, the attorney general or a member of the public, or a disciplinary committee can pursue the issue without "the need for an outside complaint."
The disciplinary actions for such violations can take a number of forms, Levenson added. Though dependent on the jurisdiction and disciplinary body, the process would begin with a hearing and could result in a private or public reprimand. More "serious consequences" could be suspension or even disbarment, she explained.
Though she doesn't expect severe outcomes to occur should Trump's lawyers be found in violation of the rule, Levenson said a violation would be "at least, a blot on their record."
"First and foremost, they'll have no credibility, not only with this court, but frankly with other courts," she explained. "I mean, a judge can't trust lawyers who have previously made false representations and not tried to repair them."
"The appellate court may feel they were blindsided by Trump’s lawyers failure to at least notify them of the potential to obtain a surety for the full amount," Gershman added, noting it is an "embarrassing moment" for the court. "As the court may see it, the lawyers sat back and let the court make a difficult decision that, as it turns out, [it] didn’t have to make."
The former president's bond scramble arose from the civil fraud case brought by the New York attorney general, who accused Trump and his co-defendants of defrauding banks and insurers by exaggerating his assets and net worth on financial statements. Trump had a month to post bond or risk having his properties seized and posted it last week after receiving a 10-day extension from the appellate court.
Still, the former president is not quite out of the woods with his bond yet. In a brief court filing last Thursday, the New York attorney general asked Trump or Hankey's company to show the company had the means to fulfill the $175 million bond, ProPublica notes. The possibility that his lawyers failed to disclose relevant bond information to the court could also diminish Trump's victory, experts said.
The court could change its decision and "impose a higher bond" after asking Trump's attorneys to explain themselves, Gillers said.
While Levenson thinks the court is "unlikely" to reexamine the surety and subsequently reset it, she said the appellate court could consider this information when deciding on any other issues regarding the bond that arise, such as if the government requests for it to be raised.
"It always matters whether you've given true representations to the court," Levenson said. "It matters for the ruling on that issue. It's going to matter for the ruling on subsequent issues. It matters for your reputation. It matters for how other courts view you. It always matters."
