Saturday, May 18, 2024

Top 5 This Week

Pulling back the Curtain on Trump’s $175 Million Bond Swindle in New York

New York AG Scrutinizes Validity of Trump's $175M Bond as Insurer's Finances Raise Red Flags.

Trump New York
Photo: Gage Skidmore

An investigation by The Daily Beast has uncovered alarming details about the obscure insurance company, Knight Specialty Insurance, that Trump roped in to provide the bond. It’s a company that appears to be as unscrupulous and devoid of ethical principles as the twice-impeached former president himself.

After a 90-day hearing, Judge Arthur Engoron ruled that former President Donald Trump engaged in extensive bank fraud for over a decade and was hit with a staggering $464 million judgment, which has been increasing every day because of accruing interest. 

Trump encountered significant hurdles in securing the requisite bond to legally prevent New York Attorney General Letitia James from seizing his assets, as reputable surety companies proved reluctant to aid him in light of the fraud allegations and Trump’s long history of not paying back his debts. The ruling underscores the gravity of the financial misconduct claims against the former president and the challenges he faces in shielding his real estate empire from potential forfeiture amid the escalating legal implications.

Unlicensed in New York

But eventually he was able to enlist a California-based insurance firm connected to Don Hankey Jr to provide him with a bond to fend off asset seizures. The company, Knight Specialty Insurance Company, is not only unlicensed in New York, but it has also not been vetted by a voluntary state entity that verifies its eligibility standards to prove financial stability. This lack of verification raises concerns about the financial stability of the company and its ability to pay out such a large sum of money.

The reason for Knight’s lack of oversight and vetting is disturbingly simple: the company does not seem to have enough money in its coffers to legitimately post Trump’s bond. In fact, the $175 million bond accounts for a staggering one-third of the company’s total assets and more than its total surplus funds. As New York’s former top financial regulator Maria T. Vullo put it, “It’s incomprehensible for a carrier to underwrite” such a bond, given Knight’s financial limitations.

In a court filing last Thursday, Knight Specialty Insurance Company revealed that its liquid assets are likely insufficient to fully cover the bond required for Trump. According to a financial assessment, Knight has just $138 million in surplus capital reserves. To meet Trump’s bond obligation, the company would need to commit 127% of its surplus—far exceeding the 10% limit imposed by New York law on state-regulated sureties.

Knight’s president, Amit Shah, defended the company’s position, stating that as a non-New York excess lines insurer, Knight is not subject to the same solvency regulations governing domestic insurers under New York’s surplus lines insurance laws. While Shah claimed Knight has over $1 billion in equity capital, the financial statements provided show only $26 million in cash and bank deposits, with an additional $483 million held in stocks and bonds.

Letitia James Rejects Bond

Letitia James
Photo: Matt Cohen

In light of these revelations, the New York Attorney General’s office has given Trump and Knight 10 days to justify the validity and sufficiency of the bond surety provided.

But the shadiness doesn’t end there. The legal document from Knight Specialty Insurance doesn’t even explicitly promise that the company will pay the $175 million if Trump loses his appeal. Instead, the agreement states that Trump himself will be responsible for paying the sum, effectively negating the entire purpose of the bond. 

Trump’s latest charade appears to be a calculated effort to evade the financial penalties of his alleged fraudulent behavior. And the consequences he is attempting to avoid could prove catastrophic for the former president’s fortune, allegedly amassed through illicit means, as well as his already severely diminished credibility.

And who is the billionaire behind this shady insurance company? None other than Don Hankey Jr., a MAGA supporter who has built his fortune on the backs of vulnerable Americans through predatory subprime auto loans and illegal repossessions, including from active-duty military personnel. 

Hankey has been widely criticized for the actions of his subprime auto financing enterprise, Westlake Services. Back in 2017, Hankey’s company was hit with a lawsuit by the Department of Justice for unlawfully repossessing 70 cars from US servicemembers. And in 2022 the Department of Justice fined the company $225,000 for further violations of Servicemembers’ Civil Relief Act of 2003. 

“I believe this paper isn’t worth much and there are more shenanigans behind it,” said one former regulator who spoke only on condition of anonymity, likely fearful of retribution from the Trump machine.

Usually, defendants like Donald Trump would secure a bond through a surety company regulated by the New York State Department of Financial Services (DFS). These insurers are vetted to ensure they are qualified to provide the required coverage. However, it appears that Trump is pursuing an alternative route facilitated by Knight Specialty—operating within the “excess and surplus lines insurance” market.

By utilizing an excess and surplus lines insurer, Trump appears to be circumventing the rigorous vetting process and solvency requirements imposed on typical insurance providers operating in New York. This strategy allows him to obtain bonding capacity that may have been unavailable or too costly through traditional channels, given the high-profile nature of his case and the risk of trusting Trump to actually pay what he owes. 

Trump & Accountability

The investigation by The Daily Beast has uncovered a tangled web of shady dealings and questionable practices surrounding the $175 million bond obtained by Donald Trump through Knight Specialty Insurance. The lack of oversight, financial stability, and explicit guarantees from the insurance company, along with Trump’s history of fraud and deception, raise serious concerns about the legitimacy and sufficiency of the bond. 

The involvement of a MAGA supporter and predatory lender like Don Hankey Jr. further muddies the waters, as his company has a history of unlawful practices and violations. Against the backdrop of Hankey’s notoriously unethical business practices, Trump’s strategy underscores a troubling disregard for accountability. 

As the Attorney General’s office scrutinizes the validity of the bond, the public is left to question whether this is yet another attempt by Trump to evade accountability and buy time for his next scheme. However, Trump’s latest charade is unlikely to withstand scrutiny from legal authorities, who are determined to ensure he faces justice for his alleged bank fraud and deception. And it serves as yet another reminder that no amount of wealth and legal maneuvering should be able to shield the former president or anyone else from the long arm of the law.