DailyBeast, subheadline, "New records show the company that rescued Donald Trump from property seizures in his bank fraud case are potentially over-leveraged—and the AG wants answers." Details:
The aggressive move by AG Letitia James came after Knight Specialty Insurance Company—a relatively unknown entity with tangential political connections to the former president—was forced to reveal its finances.
Lawyers for the law enforcement office made a court filing that “hereby takes exception to the sufficiency of the surety,” noting that KSIC is trying to operate “without a certificate of qualification.” Under New York law, state regulators have certain standards to ensure that an insurer is “solvent, responsible and otherwise qualified to make policies or contracts of the kind required.”
The AG has given Trump and his rescuers 10 days to, as government lawyers put it, “justify the surety.”
What’s more, the additional scrutiny has called into question whether this insurance company even has enough money to meet the capital requirements for posting the bond.
[...] In a midday court filing, the Knight Speciality Insurance Company revealed that it currently only has $138 million in “surplus.” That means the bond it has decided to post for Trump smashes through the 10 percent barrier, topping a whopping 127 percent of the company’s dedicated reserves.
But just before the new paperwork was filed, Knight Specialty Insurance president Amit Shah told CBS that the company has a novel theory as to why the state capital requirements don’t apply to their firm: because Knight Insurance isn’t even registered to operate as a surety in New York.
[...] It’s unclear what happens now, [...]
It appears the Judge will hear matters. A commenter at another site -
https://www.emptywheel.net/2024/04/04/bullshit-and-also-aileen-cannon-post/#comment-1047563
- explains:
Trump’s $175 million bond troubles came up a couple of days ago. But it took a day to figure out which company’s f/s the court wanted, as part of the documentation Trump failed to provide. It turned out to be the insurer’s, not Trump’s. But the problems with Trump’s bond seem incurable.
The NYAG objected, as was her right, to the $175 million appeals bond Trump provided for several reasons. One was that the issuer was not subject to jurisdiction or registered to do business in NY. Insurers and bond issuers are also regulated businesses, so that can’t be fixed simply by filing a little paperwork overnight.
A bigger problem is that the issuer failed to provide its most recent 2023 annual financial statement. That’s necessary because under NY rules, an issuer needs to maintain minimum free cash (and possibly net worth) requirements. An issuer cannot issue, for example, a single bond worth more than 10% of its free cash.
Knight Specialty Insurance’s net worth is about $537 million, its free cash about $137 million. The maximum value of a single bond it could issue to a NY court would be less than $14 million. This bond is for $175 million, which makes it non-compliant. Trump couldn’t fix that even if he prepaid Knight the full amount of the bond.
Given that Trump has only a few days to fix an unfixable problem with this issuer, the easiest way for him to fix this problem – given that the Trumps have bragged for days that he secured the bond with “cash and marketable securities” – is to prepay that amount to the court.
Whose problem is this? Trump’s. [...] Trump’s job was to ensure the bond would comply with NY state rules, an entirely predictable problem any competent bond lawyer could have spelled out to him. Trump either didn’t ask what rules he had to comply with, or was trying to pull a fast one. Justice Engoron has scheduled a hearing to discuss all this in person.
Without any independent knowledge of facts or law at issue, the statements stand on their own, Crabgrass being merely a bystander finding the situation interesting and newsworthy. Readers are urged to further research things, perhaps starting at -
WEB SEARCH = trump new york $175M bond sufficiency questions
E.g., NYTimes -
In a statement on Thursday, a lawyer for Mr. Trump, Christopher M. Kise, slammed Ms. James, calling her case a “baseless and vindictive political crusade” and her objections to the bond an effort “to stir up some equally baseless public quarrel in a desperate effort to regain relevance.”
Mr. Hankey and Amit Shah, the chief executive of Knight Insurance Group, the parent company of Knight Specialty Insurance Company, did not immediately return requests for comment on Thursday. Mr. Shah told CBS News that Knight had the authority to issue the bond through Excess Line Association of New York, a nonprofit created by New York State that serves as a facilitator between brokers and regulators.
In the earlier interview, Mr. Hankey said he had made contact with representatives of Mr. Trump after a New York judge in February imposed a $454 million judgment in the former president’s civil fraud case and offered to help him post bond. Mr. Hankey said his motivation was business, not politics.
Knight Insurance Group is one of eight companies under the Hankey Group, all based in Southern California. Mr. Hankey earned a reputation as a provider of risky and lucrative loans, specifically collateral-based debt that can be arranged more quickly than conventional loans and requires borrowers to pledge valuable assets.
His companies are known for relentlessly calling people who miss payments by a day, and repossessing vehicles from delinquent borrowers, according to news accounts and regulators.
Mr. Hankey said representatives of Mr. Trump called him after the appeals court lowered the bond to $175 million and asked if his company could arrange the bond.
NYT noted, "[...] the judge in the case, Arthur F. Engoron, has tentatively scheduled a hearing for April 22 to discuss the bond."
____________UPDATE___________
10:21 AM Tuesday, April 9, 2024
Newsweek publishes that the NY State Fraud Trial Judge rejected bond papers to be amended, and that a Trump defendants' current financial statement will need to be filed with amended bond papers (the supervisory person appointed to oversee defense business operations likely will have a role in assuring bona fides of any financial filing, given how the trial hinged on fraudulent financial statement practices, as did the guilty verdict).