Letitia James Rejects Donald’s Bond

The vise tightens

Letitia James, credit: Getty, Pool

In yesterday’s post I listed TEN awful things that happened to Donald in the last 48 hours, and I promised I would update you on one of them: how Donald’s $175 million bond is on track to be a major headache for Donald and his lawyers.

When Donald told the appeals court it was a “practical impossibility” to secure the required $464 million bond as he filed the appeal in his fraud judgment, the court reduced the amount of the bond by almost $300 million. 

Donald was able to find a surety company willing to front the cash, Knight Specialty Insurance Company (KSIC), owned by “Republican billionaire Don Hankey — a man dubbed ‘the king of the subprime auto loan’ whose Axos Bank has previously helped refinance loans on several of [Donald’s] luxury properties.”

On April 1, he submitted the court with the money. It was supposed to be a done deal, but it turns out New York Attorney General Letitia James doesn’t like the bond and is proving to be Donald’s major nightmare.

Letitia James rejects Donald’s bond

AG James is now scrutinizing the $175 million bond in a new filing that casts doubt on the company, KSIC, that provided it. Allegedly, Knight Specialty lacks proper certification to operate in New York State, raising concerns about its ability to cover the bond. 

Despite claiming $2.7 billion in assets, only one of KSIC’s entities seems capable of fulfilling the bond requirement. Financial records indicate a shortfall in the necessary surplus necessary to back the bond. 

Additionally, KSIC is not registered to act as a surety in New York.

The attorney general has demanded justification for the bond within 10 days. This throws another wrench into the proceedings after Judge Engoron already rejected documents submitted as part of the bond for not including a recent financial statement.

It looks like the entire bond “victory” the media claimed for Donald may be no victory at all. 

Donald’s bond is “returned for correction”

As KSIC posted the bond this past Monday, with the express purpose of preventing Donald’s assets or bank accounts from being seized, they submitted documents to the state of New York.

Shortly after receiving them, the court rejected the documents because they “failed to include a current financial statement, power of attorney or to list an attorney-in-fact.”

By Wednesday, the New York State Supreme Court’s electronic filing system marked Donald’s “Bond/Undertaking” as “returned for correction.”

Donald’s attorneys received the following communication:

“The court has returned the documents listed below for the following reasons: Please include a current financial statement and Power of Attorney …

… Additionally, please list the name of the Attorney-in-Fact under the signature line on the Undertaking. Please use the ‘Refile Document’ link for Doc. No. 1707 to resubmit the corrected filing. Thank you and have a great day.”

By Thursday, the documents had been resubmitted giving Letitia James exactly what she needed to look more closely into the insurance company’s finances. 

James says KSIC is not permitted to pay bonds in New York

Letitia James’ office now says that the insurance company Donald chose to cover the bond “is not admitted in New York and, therefore, ineligible to obtain a certificate of qualification from the Department of Financial Services (DFS).”

In other words, Donald could be left holding the bag for the entire amount of the original judgment (plus interest) if his bond is rejected.

James' office has now filed a notice of exception. This means the surety must be shown to be “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,” James’ office 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.

In order to qualify, the surety company has to show it’s 1) financially sound, and 2) the total amount of the bond “is sufficiently collateralized by identifiable assets.”

ProPublica is reporting that, before this appeals court ruling lowering the bond amount, the same billionaire who backed the $175 million bond approached Donald with an offer to provide a bond for the full $464 million:

In an interview with ProPublica, billionaire California financier Don Hankey said he reached out to Trump’s camp several days before the bond was lowered, expressing willingness to offer the full amount and to use real estate as collateral.”

The problem? “[Donald’s] lawyers never filed paperwork alerting the appeals court that Donald had a way to pay the full initial amount. That failure may have violated ethics rules, legal experts say.

Judge Engoron schedules a hearing 

Judge Engoron has agreed to Letitia James’ request and scheduled a hearing on the matter for April 22.

Just yesterday, James requested that Judge Engoron permit Barbara Jones, the independent monitor overseeing the Trump Organization’s finances (essentially, Donald’s financial babysitter), to investigate whether Donald’s defense “withheld relevant and responsive information” during the trial, a serious allegation in light of the fact that former CFO Allen Weisselberg pleaded guilty to perjury charges last month.

This is all good news for those who value transparency, accountability, and the rule of law. The recent developments have put the spotlight on the financial capabilities of the surety company chosen by Donald, and Letitia James is doing a perfect job holding him accountable every step of the way.