When a sub-prime lender and a real estate fraud get together to post a bond, raucous hilarity ensues.
In shocking news, Donald Trump's financial savior, Don Hankey, is backfiring spectacularly in his shady attempt to curry favor with the Orange Menace. Sneaky language, insufficient funds, and Hankey's big mouth seem to be problematic.
In reality, though, a strict reading of "Bond No. 350588" shows that even the smaller company isn't technically on the hook for paying out the $175 million if higher courts ultimately cement his loss to the AG.
Buried in the typical legalese of the contract is the phrase: "Knight Specialty Insurance Company… does hereby… undertake that if the judgment… is dismissed… Donald J. Trump… shall pay… the sum directed."
In other words: If Trump loses the case, Trump will pay. But that's no different than Trump's obligation before the bond was issued.
"Getting into the weeds, the company undertakes that Trump will pay," said one bond industry source who declined to be publicly identified for this story.
Daily Beast
So Knight's angle here is that while their parent company has the money, they don't need it because the wholly reliable Trump is going to pay if and when his appeal fails. Also, Knight's parent isn't on the hook when Trump fails to pay, just the underfunded company. The fact that the bond issued isn't appropriate to keep the Attorney General of New York from collecting against the judgment doesn't make it not a bond, however. Hankey may be on the hook for it, and the AG may be able to go after Knight's $175 million as part of the total judgment:
He was reacting to a comment on X by lawyer Dave Kingman, who wrote that Knight will not be able to post the $175 million.
"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]," he wrote.
The question rests on whether Delaware-based Knight Specialty will be able to post the bond in New York.
NewsWeek
To make matters more interesting, Trump's lawyers were caught in an apparent ethics violation about their inability to find anyone to insure the $454 million judgment amount when Hankey started talking. There is going to be a lot of explaining to do, however as the Appellate court gave Trump an unexplained break on the total amount, perhaps they'll also give him another get out of jail free card.
His lawyers had told the appellate court it was a "practical impossibility" to get a bond for the full amount of the lower court's judgment, $464 million. All of the 30 or so firms Trump had approached balked, either refusing to take the risk or not wanting to accept real estate as collateral, they said. That made raising the full amount "an impossible bond requirement."
But before the judges ruled, the impossible became possible: A billionaire lender approached Trump about providing a bond for the full amount.
The lawyers never filed paperwork alerting the appeals court. That failure may have violated ethics rules, legal experts say.
ProPublica
