It may be that the bond company didn't report their financials because they have insufficient collateral to secure a bond of this magnitude. In which case the bond is no good, Trump doesn't have a bond, and he is out of time.
"The financial statement that is missing does not seem to be Trump's. Rather, the court appears to be demanding these documents from Knight Specialty Insurance Co. to ensure that the company is sufficiently capitalized and authorized to post the bond," Rubin wrote on Wednesday."
@jumbanho Maybe, but as of now Trump doesn't have a bond, and the bond company seems to have not provided evidence of sufficient collateral. Seems like that is the story.
@mastodonmigration I agree it's a story, and the bonding company many not have the collateral (which would have severe implications for Trump), but if it is just a delay tactic, it exemplifies how Trump plays the legal system to his advantage.
"But the surety bond was missing vital information typically included in those filings, experts say. These standard elements include documents related to power of attorney for the bond provider, Knight Specialty Insurance Company, a financial statement from the company and a certificate of solvency from the Department of Financial Services."
"...you always have to have a certificate from the Department of Financial Services saying that you're licensed to issue a surety bond," he said, referring to the missing certificate of solvency under Section 1111 of New York Insurance Law."
Adam Pollock, a former assistant attorney general in New York, said, "This bond is deficient for a number of reasons... Including that the company doesn't appear to be licensed in New York and doesn't appear to have enough capital to make this undertaking."
I have not seen that they have mitigated this deficit, and I would be appalled if it could be achieved overnight, with no review of their books and such.
Would love to see our favorite Law and Crime reporter @Brandi_Buchman get some credit for breaking this story 20 hours ago, and not going down the "Trump lawyers made a mistake" rabbit hole, when everyone else got it wrong.
So, this is not over yet. The Trump/Knight bond saga continues...
UPI reports that a modified bond filing has been added:
"Trump's initial bond, posted on Tuesday, was rejected and returned for correction, as reflected by the New York County Supreme Court's website, due to a missing financial statement and other documentation. These missing documents have been added in a new filing."
"The financial statement comes from Knight Specialty Insurance Company, the underwriter for the bond. It is signed by Don Hankey, the billionaire chairman and CEO of Hankey Group, and Amit Shah, president of Knight Specialty Insurance. The statement assures that the company can cover the $175 million bond."
However! There is more... see next reply in thread!
In a new legal filing, James "takes exception to the sufficiency of the surety to the undertaking given by Defendants" and the bond issued by Knight Specialty Insurance Company (KSIC) "without a certificate of qualification pursuant to Insurance Law."
"James wants to know if Knight can pay the $175 million bond."
"James' office has filed a notice of exception to the surety that requires either Trump and/or his legal team or the surety to demonstrate by motion that the surety is financially capable of performing under the bond."
"If you seek a bond from a company not admitted in New York, as Trump did with Knight, you cannot get a certificate of qualification from DFS," they said.
"So, by law, you have to demonstrate to the court why the surety you obtained is capable of paying under the bond if the judgment creditor files a notice of exception to the surety, as we did here.
"At a minimum, that requires a showing that the surety is financially sound and that the face amount of the bond is sufficiently collateralized by identifiable assets."
"New York City-based attorney Nicole Brenecki told Newsweek that KSIC does not meet the "surplus" mandate for posting the bond in New York State."
"The entity is relatively unknown and allegations have been circulated that it has ties to Trump himself," she said. "As such, and given that the bond has already been significantly reduced, it seems reasonable for the AG to verify whether this particular company has the ability to pay the bond."
And there's more! CBS is now all over this with an amended story that includes the James notice of exception and a lot of analysis. Won't summarize, just enjoy the madness:
"Within 10 days, Trump or the company must file a motion to "justify" the bond, meaning Knight must prove that it is financially capable of paying the bond."
The Don's are certainly giving us a lesson in NY State bond surety. Who knew you actually have to prove you have the money and that it won't go walking if and when it comes time to pay up.
"Over the past two years, Axos Bank, as well as its largest individual shareholder, California billionaire Don Hankey, have collectively extended more than $500 million in financing that has benefited Trump, records show..."
"Defendants or (Knight) shall file a motion to justify the surety within ten days of the service of this notice, failing which the Bond shall be without effect, except that the surety shall remain liable on the Bond until a new undertaking is given and allowed,” state lawyers wrote in the filings. "
Translation?: If Knight doesn't respond, no bond for Trump, but Knight still on the hook for $$$.
Every new news story has a additional detail. This Independent story notes the motion hearing to rule on the validity (surety) of the Knight bond is now scheduled for April 22.
The Trump/Hankey bond matter got some play on MSNBC today. Interesting revelation toward the end of the piece:
"Many of [Trump's properties] are already pledged to other lenders... Axos Bank in which Don Hankey is the largest individual shareholder, has $225 million of outstanding loans to Donald Trump on... Trump Tower and the Doral Golf Course."
"Mmm-hmm. There it is," co-host Steele interjected as Sanders-Townsend exclaimed, "That bank has problems."👀
Not only is Knight unlicensed in NY, it "hasn’t even been vetted by a voluntary state entity that would verify it meets minimum “eligibility standards” to prove financial stability."
And, get this! Knight doesn't even promise to "pay the money if the former president loses his $464 million bank fraud case on appeal. Instead, it says Trump will pay, negating the whole point of an insurance company guarantee..."
Yes, this Daily Beast story is behind a subscription (free) wall, but it is a doozy! Well worth the effort if you are following this evolving story.
Another gem...
"New York law limits how much money state-regulated surety companies can post on a single bond to 10 percent of a firm’s total “capital and surplus.”... [but Knight] only has $138 million in “surplus,” vastly exceeding the government-set cap because the Trump bond alone makes up 127 percent of the company’s reserves."
"Understand that Knight Specialty has a problem. This bond cannot be approved. Under the CPLR [Civil Practice Laws and Rules] the surety will remain obligated under the bond until a replacement bond is filed. Trump is unlikely to get a replacement bond. Knight Spec will be liable AND Trump won't have a stay [on enforcement],"
Maybe, you'd think they had to know the bond would not pass muster. But what Hankey probably didn't bargain on was being held liable for the money anyway. Oooops!
"Thus NY AG James looks to be soon greenlit to execute on her $450 million judgment against Trump as if Trump posted no bond."
"But the Trumpian part is that even though, or perhaps because, it may be part of a Trump scam, Knight now too may be on the hook for $175 million as it won't automatically get out from underneath its own proffered surety."
The fact that Knight may get dinged gives me an immense sense of balance. It's like the Trickster God running this place peeked out and said "not so fast. ironic man"
@mloxton@mastodonmigration@GottaLaff
I've heard that when you make a deal with the devil, you get precisely what you asked for, not what you actually wanted.
You can always be sure of the immutable laws of the universe: the the speed of light in a vacuum, gravity will bend space, and Everything #Trump Touches Dies.
Nothing particularly new here, except the mention of a Hankey Kushner linkage, but a very good summary by @jaykuo and a nice read while we wait for the "real" media to catch up with this story.
Two dates to keep an eye on are Monday the 15th when Knight (Hankey) is supposed to file a financial justification for the bond and a hearing on the following Monday, the 22nd, with Judge Engoron on the entire matter which should be very interesting indeed.
Sorry team, it's too convoluted to summarize this nonsense, but the bottom line is that the US company that has put up the bond for Trump seems to not have the assets to pay the bond, and is backed by an impenetrable opaque Cayman registered affiliate company that experts say would make collection close to impossible.
"If Trump fails to meet the Monday deadline for showing the fitness of the bond, the New York attorney general could begin enforcing the fraud ruling..."
So, Trump has now filed something that claims the bond is adequate and says that it is backed by an account with enough cash.
"In court filings Monday night, Trump said the bond secured by Knight Specialty Insurance Company is backed by Trump’s Charles Schwab account with more than $175 million in cash. Knight Specialty can take control of the Schwab account and is fully backed by its parent company to assume any risk, one of Trump’s filings said."
"The insurance company now has a “first priority lien and security interest” on whatever money is stored in that account. The Trump trust will be required to ensure it contains “no less than $175 million in cash or cash equivalents at all times,” according to the memorandum."
"Reacting to the bond court filings, Weissmann posted on X, formerly Twitter: "Something's fishy here. If Trump has $175M free and clear, why not just directly post it and not pay a fee for a surety bond? And the agreement does not give Knight a lien on the account as collateral and seems to afford Trump a two-day window to dissipate the account."
"In a series of posts, Allison Gill, who posts on social media using the account for the Mueller, She Wrote podcast, said that the documents appear "shady," while also asking why Trump doesn't just pay the bond outright if he appears to have the cash."
"I'm no expert, but I think to back a bond, the guarantor has to have at least enough cash to cover it. But here, they say Trump is covering it and they have access to Trump's Schwab account."
"Legal experts are now questioning details of the new bond filings. Some suggest a portion of the $175 million might also currently be in use to secure other debts or obligations."
"This wording — that the insurer "has the right to exercise control" over the money — appears to fall short of what bond writers usually demand of their cash customers."
"The final call on whether the Knight bond sinks or swims will be up to... [Judge] Engoron, who has set a Monday hearing on the matter."
"On Tuesday, Engoron filed a response giving the AG's office until Friday to respond to the new defense challenge"
Note that the Business Insider article has a link to Engoran's order giving NY until Friday to respond, and that this order includes the entire filing by Trump/Knight (all 108 pages!).
"...the parent company appearing to have "adequate capitalization" without having "authority to do business in New York or to issue surety bonds," Germain pointed out. "The question, I think, is whether that reinsurance would clearly and unconditionally apply and require KIC to pay the bond, and whether the AG would be able to enforce that reinsurance commitment if KSIC was unable to pay," he said."
"The former president, Germain said, appears to be "trying to use an incapable insurance company as a front to avoid meeting the statutory requirement," but "it's not going to work."
The court, Germain said, will have to determine whether Knight Insurance's reinsurance makes the parent company's capital "immediately available" to Knight Specialty if the $175 million bond has to be paid to ensure "prompt payment."
"The AG has valid reasons for questioning the validity of a bond posted by an out-of-state insurer without a certificate from the Insurance department, and having inadequate capitalization to cover the bond... also somewhat doubtful that a reinsurance policy would so clearly cover a default on a surety bond."
"Trump's apparent decision to not put up the money himself "also raises the question of whether the collateral is double-pledged to secure another obligation..."
The AG's office in a filing said that Trump and other defendants in the case had failed to show there is enough identifiable collateral to back the bond for the judgment in Manhattan Supreme Court.
“Based on KSIC’s policyholder surplus in its most recent annual financial statement of $138,441,671, the limitation of loss on any one risk that KSIC is permitted to write is $13.8 million,” the lawyers wrote. “The face amount of the bond exceeds this limitation by $161.2 million.”
"The state also argued that because Trump still has access to the $175 million in cash he placed in an account as collateral, the court should find that he and his codefendants “failed to meet their burden to demonstrate that the Bond is ‘sufficiently collateralized by identifiable assets.'”
"[The insurer] is only worth $138 million, which is smaller than the size of the bond, and alleging it is using a “shadow” company in the Cayman Islands to “appear more financially stable than it actually is."
"...but there’s nothing suggesting that money is “locked,” meaning Trump could withdraw some of that $175 million at any time..."
As CBS News has reported, Knight doesn't appear to meet a restriction under New York insurance law barring companies from putting more than 10% of its capital at risk, and the attorney general's office noted that Knight has a surplus of only $138 million. Under New York law, given that amount of surplus, it may not take on liability of more than $13.8 million."
"The attorney general also said that Knight relies on risk transfer practices that work to "artificially" bolster its surplus. James also argues that Knight's management is untrustworthy, violating federal law "on multiple occasions over the last several years."
"Lawyers representing Trump and James' office are expected to meet in court on Monday for a hearing on the bond. Trump, however, will likely be in a different New York City courtroom on Monday, when his hush money criminal trial is set to resume with opening statements after jury selection was completed."
So, a bit anti-climatic. The judge has agreed to let the bond stand provided the collateral stay as cash in the account and provide monthly account statements to the AG.
"According to Monday's agreement, the $175 million will stay as cash in a money market account, Knight Specialty will have exclusive control, but can only use the cash to pay for the bond if needed. The attorney general's office and the court will get monthly account statements."
According to Monday's agreement, the $175 million will stay as cash in a money market account, Knight Specialty will have exclusive control, but can only use the cash to pay for the bond if needed. The attorney general's office and the court will get monthly account statements.
The agreement will be finalized by Thursday, April 25, and some of the details require Schwab, the managers of the money market account, to agree to the terms.
The agreement between Trump and Knight Specialty Insurance Company cannot be amended without court approval, and Knight will submit to the jurisdiction of the court. The company waived its right of removal and its lawyers agreed to designate an agent to accept service of process in New York.
Was there not some point that the prosecutor's office was making about the money in that account restricted from being used in some other way, such as collateral for a different loan, concurrently?
The whole reason for reduced bond is he didn't have full amount. But tomorrow he will. So will they require he post the whole thing then? If not, he'll have played the courts for suckers again.
He is not going to have any money tomorrow. The shares will still be locked up and as soon as anyone starts moving volume there will not be buyers so the the price will crater. It's like monopoly money.
If that's true, I'm relieved. I got the impression he was getting the 1st tranche of unlocked shares, and so he could immediately start selling tomorrow.
And of course, whenever he gets them, if he tries to dump them all at once it will drive the price down, so I think he won't be that stupid.
But if he isn't getting unlocked shares tomorrow, please accept my apology for being 'henny penny'.
Also, he is not playing the courts for suckers. Nothing that has happened is out of the norm for the way courts work in these kinds of high $$$ business fraud cases. His bond was reduced. He tried to get away with sketchy collateral and the court made him shore it up. It does the public a disservice to continue to henny penny about how he is getting away with stuff. He's not. His day of reckoning is coming, not be as quickly as we might like, but justice is being served
@mastodonmigration@GottaLaff If Judge Engoron rejects the sketchy $175MM bond Monday, there's a low but nonzero chance that on Tuesday Trump will be sitting in the lower Manhattan criminal courthouse, unable to scream, unable to leave, when news arrives that Tish James has slapped a foreclosure notice on his 40 Wall Street building, less than a mile away.
@mastodonmigration@GottaLaff Background to the above post: next Monday, opening arguments will begin in Trump's criminal trial AND Judge Engoron will conduct a hearing to decide whether Trump's bond is adequate or if A.G. James can start seizing his New York properties.
Does #Schwab investments actually know they're on the hook for this? Because neither banks nor investment companies leave your money sitting around doing nothing. Their reserve requirements are not 100% of what you put in.
The hearing on the INsufficiency of trump’s bond is scheduled for Monday 4/22 in Judge Engoron’s court.
trump sure has bought himself a lot of time keeping the New York DA from executing on Engoron’s judgment. Judge Engoron issued his findings and judgment on 2/16, and was filed with the clerk on 2/23. Originally the DA could have begun seizing trump assets on 3/25 absent a bond.
But trump got the amount of the bond reduced (possibly by misleading the court about availability of the larger bond) AND a 10-day extension until April 1 to file a bond in the new amount. But the bond filed on that date has not been accepted because of irregularities. Now the hearing on that isn’t till April 22! All the while the NY DA has not been able to start collecting the judgment.
Here’s the timeline in an easier to follow format :
Engoron issued his findings and judgment on 2/16; an order wasn’t filed with the clerk until 2/23 (wonder why that took a week).
Originally NYAG could begin seizing trump assets on 3/25 absent a bond for $445+ mill.
On 3/21 trump got the bond amount reduced (maybe by misleading the appellate court about availability of a bond for the full amount) PLUS a 10-day extension until April 1 to file the much smaller bond!
The bond trump filed on April Fools Day (‼️) HAS NOT BEEN ACCEPTED because of multiple serious DEFICIENCIES; there won’t be a hearing until 4/22 in Engoron’s court.
All the while the NYAG has been STAYED from collecting a judgment she should have been able to start collecting on March 25. Who knows what steps trump&co are taking during this delay to make it more difficult to collect⁉️
Feel like the wheels of justice are just grinding away slowly. Nothing with government ever happens at the pace we might like to see it happen, but that doesn't necessarily imply a conspiracy, just business as usual. Trump is doing everything he can to gum up the works, and is succeeding to a degree, but he is losing, and his day of reckoning is coming.
Let's take the latest ploy with the bogus bond. This is a pretty novel move, and there probably isn't a way to just reject it out of hand. So, a legal proceeding is required, which will take a little bit of time. The bond is almost certainly bogus, so it will get shot down, but the state has to follow a legal process. A couple weeks is not that big a deal in the grand scheme. And, who knows, Hankey may find himself in hot water too when the dust settles.
The interesting thing on the 4/22 hearing will be Trump team’s showing where the $100M + for the bond came from. Could be shenanigans going of with Truth False which would catch the eye of the SEC and other federal lawyers. Especially as the stock drops like a stone.
Not sure there is any $100M + in any account. Hankey could just be making stuff up. Nothing any of these characters say should be given any credit unless it is in a sworn statement or filing, and even then it is likely some sort of misleading ruse.
After the Appellate Division cut trump a break by significantly reducing his bond, he files this questionable nonbinding bond. trump seems to be making a mockery of the New York Courts. They WILL NOT be in good humor.
Kind of wonder if most serious judges actually react to such shenanigans. They deal with criminals every day. It probably comes as no surprise that a criminal uses every trick in the book to get away with stuff. Their job is to see that the law is applied. They might feel a bit annoyed by a particularly sneaky gambit, but bet it doesn't change how they deal with the criminal all that much.
🎯🎯🎯🎯 There are a LOT of questions. The wording of the bond doesn’t bind Knight to pay if trump doesn’t, just promises trump will pay. Knight’s capitalization is much too low for the size of the bond. Knight not approved or even known to New York authorities to post bonds.
And possibly much more delay in the offing for a variety of reasons. We KNOW trump & lawyers supposed to be in Manhattan Criminal Court on April 22! Of course a defendant in a civil case doesn’t hafta be in court; I’m not sure if any of the lawyers are the same on the election interference/payoff criminal case and Engoron’s civil fraud case …
Yup. The bond does seem to be entirely inadequate. It will be interesting to see how this plays out. One of the more fascinating aspects is the bond my be rejected, but Hankey (Knight) still on the hook for the $175M.
Not necessarily — if he’s able to use the delays to rearrange his assets to render himself & company “judgment-proof”.
And yes, I know the monitor appointed by Judge Engoron is supposed to be micromanaging trump org business, but they have already hidden things from her.
Ps—I’m not a Debbie Downer about trump accountability here; I KNOW the law will catch up with them eventually, and fervently hope Engoron’s judgment here will be the beginning.
It’s just this delay of nearly a month and counting suddenly hit me, so I wondered what they could be up to? I know lifelong criminals gonna keep criming!
@mastodonmigration@GottaLaff I’m still a bit confused though. I understand that the initially filing was rejected because it lacked required information, James is challenging the validity of the bond itself, and non-involved lawyers reviewing the publicly-available information say it doesn’t satisfy the terms. But has the court actually/officially rejected it on these grounds yet? Or are we still just speculating/hoping that it will be?
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