The New York attorney general’s office has raised concerns about the $175 million bond that Donald J. Trump recently posted in his civil fraud case. The case involves a $454 million judgment against Mr. Trump that was imposed last year after a trial in which the attorney general accused him of fraudulently inflating his net worth. Mr. Trump had to obtain the bond as a financial guarantee while he appeals the judgment, to prevent the attorney general from seizing his assets. The bond was provided by Knight Specialty Insurance Company, a California firm owned by billionaire Don Hankey, known for his involvement in subprime loans.
The bond from Knight, which is a legal document rather than an actual transfer of money, promises to cover $175 million of the judgment against Mr. Trump if he loses his appeal and fails to pay. Mr. Trump pays a fee to Knight and pledges a significant amount of cash as collateral. However, the New York attorney general, Letitia James, has raised questions about Knight’s qualifications to issue appeal bonds in New York. She has demanded that the company or Mr. Trump’s lawyers justify the bond within 10 days, seeking assurance that Knight is financially capable of fulfilling its obligation if Mr. Trump defaults. Mr. Hankey stated that Mr. Trump pledged $175 million in cash as collateral, which is being handled by a brokerage firm, allowing Mr. Trump to earn interest on the money.
Mr. Trump’s lawyer criticized Ms. James, calling her case a “baseless and vindictive political crusade” and her objections to the bond an attempt to regain relevance. Knight Insurance Group’s CEO, Amit Shah, claimed that the company had the authority to issue the bond through the Excess Line Association of New York. The parent company of Knight Specialty Insurance Company is part of the Hankey Group, a conglomerate of eight companies based in Southern California. Mr. Hankey, known for his involvement in risky and lucrative loans, stated that he had offered to help Mr. Trump post bond after a New York judge imposed the $454 million judgment in the civil fraud case.
The judge in the case has tentatively scheduled a hearing to discuss the bond, following the attorney general’s concerns. Ms. James is seeking clarification on Knight’s financial capability to fulfill its obligation if Mr. Trump defaults. While Knight may lack the funds itself, it should be able to tap into the collateral pledged by Mr. Trump. After the appeals court lowered the bond amount, representatives of Mr. Trump contacted Mr. Hankey to arrange the bond, which he agreed to do for business reasons. Knight Insurance Group specializes in collateral-based debt that requires borrowers to pledge valuable assets.
The bond issued by Knight Specialty Insurance Company for Donald J. Trump’s civil fraud case has come under scrutiny by the New York attorney general’s office. The attorney general has questioned the company’s qualifications to provide such bonds in New York and demanded justification for the bond within 10 days. Despite Mr. Trump’s lawyer dismissing the concerns as part of a political crusade, the judge has scheduled a hearing to address the issue. Knight, owned by billionaire Don Hankey, has stated that it has the authority to issue the bond through a nonprofit created by New York State. Mr. Hankey, known for his involvement in risky loans, offered to help Mr. Trump post bond after a $454 million judgment was imposed in the case.
