Former President Donald Trump’s attempt to challenge his massive $454 million civil fraud conviction in New York appears to be relying on a highly unusual and potentially deceptive bond arrangement, according to a report by The Daily Beast.
Last week, Trump posted a $175 million bond to appeal the fraud conviction, after his lawyers had previously claimed he was unable to find anyone willing to guarantee the full amount. To secure the bond, Trump turned to Knight Speciality Insurance Company, led by billionaire Don Hankey, known as the “king of subprime car loans.”
However, according to former regulators and legal experts, the bond itself raises significant concerns and appears to be highly irregular. Based on a legal filing, the bond essentially amounts to a promise that Trump himself could pay the full cost if he loses the appeal, effectively negating “the whole point of an insurance company guarantee.”
Alarmingly, it appears that Knight Specialty Insurance Co. may not even have the financial capacity to cover the bond if required. The court filing states that the company has financial reserves of just $138 million, while a related corporate entity claims a $1 billion surplus, but it is not explicitly stated that this entity would be liable for the bond.
Maria T. Vullo, a law professor at Fordham University and former New York’s top financial regulator, expressed disbelief, stating, “Based on the financial statement provided, Knight Specialty is providing a bond that is one-third of its total assets and greater than its surplus, which is incomprehensible for a carrier to underwrite.”
Furthermore, experts who reviewed the bond filing noted that it appears to state that it is “Donald J. Trump” who “shall pay” any bond, an arrangement that is far from normal practice. N. Alex Hanley, CEO of the civil bond company Jurisco, confirmed, “This is not common.”
The New York Attorney General, Letitia James, has also raised questions about the bond’s sufficiency and the issuer’s ability to pay it, stating in a legal filing that she “takes exception to the sufficiency of the surety to the undertaking.” A hearing on Trump’s bond and the potential issues surrounding it is scheduled for April 22.
Hankey, the billionaire behind Knight Speciality Insurance Company, insisted in a recent interview that he had accepted collateral for the $175 million bond but admitted he was unsure of its exact source, stating, “I don’t know if it came from Donald Trump or from Donald Trump and supporters.”
Overall, the highly irregular nature of Trump’s bond arrangement, coupled with the apparent lack of financial capacity from the issuing company, has raised significant concerns and scrutiny from legal experts and regulators alike.
