surety bond (noun): a bond guaranteeing performance of a contract or obligation
The definition above is from Merriam-Webster Dictionary. Sure, there are any number of articles these days about what surety bonds are and how it all affects Trump’s current legal problems but it’s really quite simple. Doubts arose as to whether Trump’s surety bond was actually “sure” and now we have a whole new one to consider. Not only was Knight Insurance not licensed to do business in New York (something that’s correctable and not as big a deal as it sounds) their parent company isn’t even based in the U.S. Uh Oh.
Again, consider the definition. As for the judgement entered in Trump’s NY fraud case to prevent the state from beginning to collect (seizing assets and/or property) while he appealed he’d have to put up over $450 million, either in cash or bond. Well, despite boasts (in a deposition for the NY trial no less) he didn’t have that kind of cash on hand. He also couldn’t come up with bond of that amount. He went begging to the appellate court and got it reduced to $175 million and STILL had trouble. But someone came through. Or did they? It turns out Knight Insurance is as questionable as its owner, and enough questions about the bond were raised that a court hearing is set for April 22.
It seems there are legitimate questions about whether Knight Insurance actually has the cash on hand to pay up if Trump loses his appeal. Now, the principle owner of Knight is a legitimate, if sleazy (he’s been sanctioned more than once) if legitimate multi-billionaire and is also the principle owner of a bank which could, ostensibly transfer money to Knight. Maybe. I’m sure a lot more checking into that bank is going on as I write this. It gets weirder because a close look at the agreement suggest Knight might not actually have even intended to be the one to pay up if it came to that. They apparently took very little upfront from Trump, and the agreement indicates a certain amount of expectation that should worse come to worse, Trump will come up with the bulk of the $175 million himself!
No wonder New York AG Leticia James requested the court take a look at this. If Knight isn’t really guaranteeing payment if Trump loses his appeal and/or couldn’t pay up even if it had to then common sense says it’s not actually a surety bond. It’s more like a “the check is in the mail” promise, hence the court hearing. Now, as an article in Salon tells us Knight Insurance has a layer of insulation that hadn’t been apparent at first. Although technically based here in the U.S., the parent company is not. Worse, it’s based in the Cayman Islands, a notorious tax haven country known for it financial/banking secrecy laws! It will certainly be interesting to see how forthcoming Don Hankey (Knight’s owner) or his lawyers will be come the 22nd. If they decide to play the “talk to the head office” card it could get ugly and fast. From the linked article:
The financial details are complicated, but the gist is this: the bond’s issuer is itself insured by the similarly named but island-based parent company — and since that island is a notorious tax shelter for the rich and powerful, that parent does not have to divulge key financial data, like whether it has enough cash on hand to cover a sudden $175 million bill.
I know folks don’t like me digging into the weeds but we have to talk a bit about RE-insurance. Insurance companies are required by law to maintain a certain cash on hand vs. liabilities ratio. Actuaries price out the cost of a given policy based on the likelihood of having to pay out a claim, or even a series of claims in relatively short order. Sometimes an insurer gets hit with a huge claim (say $175M) or a string of large claims all at once. Think for example of the the insurer of that cargo ship that took out the Key Bridge is going to have to shell out. Or what happens when there’s a large natural disaster. So, insurers themselves obtain RE-insurance to spread the risk and keep from going bankrupt.
With me so far? We already knew legitimate concerns have been raised about whether Knight Insurance could cough up the $175 million to the State of New York. That alone brings the validity of the bond into question. Now we find out they are based in a tax haven country known for banking/financial secrecy, and so is their re-insurer! Salon cites what Tom Grober, a financial analyst told The Daily Beast last Friday: “The Caymans are widely recognized as a ‘secrecy jurisdiction.’ He goes on to indicate if you were to call and ask if Knight had enough to cover this secrecy laws could allow them to withhold the information. Salon also cites a former California (where Knight is ostensibly based) Commissioner:
Dave Jones, a former California insurance commissioner, told the outlet that the $175 million bond was already “problematic” in the extreme. It’s connection to a foreign jurisdiction just makes it worse.
“What the New York AG must be thinking is, ‘What recourse do I have in Cayman Island courts? If I get a judgment against the bond, even if I sue the reinsurer, can I enforce that judgment in a Cayman Island court? Maybe, maybe not,’” Jones said. “It raises a whole other level of complexity.”
If I were AG James I’d sure as hell want the court to be taking a hard look at all this and she’s prevailed on the court to do exactly that. I’m not an expert in all this (far from it) but it seems to me the “sure” part of that $175 million surety bond is anything but. I’m starting to believe the odds are good the court will agree and toss it out. The only question will be if Trump gets another grace period (and if so then how many days) or James can go ahead and start collection proceedings of the judgement.
Finally, keep in mind while all this is taking place on the 22nd and Trump will be in New York City, he won’t be in judge Engoron’s courtroom! Nope, he’ll be in a different building in a different judge’s courtroom. As a criminal defendant Trump will have to be present in court each day unless judge Merchan chooses to adjourn the criminal stuff for a day (or two, depending on how long the bond hearing takes) so Trump can sit with his lawyers in front of judge Engoron. I’m betting the answer to that will be a big, fat NO. It might actually help that the lawyers in front of Engoron don’t have to “perform” for Trump.
How Trump will contain his rage in criminal court on the 22nd is quite the question. You just know he’ll be ready to explode over the tiniest thing. ALL he’ll be able to think about is judge Engoron ruling his bond for the NY civil judgement has been rejected and banging his gavel. It should make for one hell of an evening come Monday, April 22. I don’t know about you but I’ll be all settled in to watch Psaki, Maddow, O’Donnell and Ruhle pick apart the day’s goings on. Given her background in finance and the extra time to prepare if I were you I’d plan to stay up late (if you live in the eastern time zone as I do) to catch Ruhle’s 11th Hour show.
One thing the U.S. absolutely must do is either make tax havens (i.e. the Caymans) illegal for American businesses (and close any and loopholes like pretending that because there is a po box in Bumf*ckistan, it isn’t an American Co.) to do business in or use as a business address as it were OR tax the ever-loving f*ck out of them when they do. This crap is bull-shit and it stinks like nothing else can-it is the stench of corruption, living off the backs of others, not paying your way (or your business’), aw hell it just stinks worse than dog shit.
It is time for this to end–past time in fact. We really do need new, progressive blood in the house and senate. Badly need it.
Ms. James surely won’t fall for this boondoggle.
His bond should have never been lowered.
He successfully trumped the court by saving himself several million dollars.
The original $500 million bond should be put back into place, with no exceptions.
Everything he is involved in is a scam, why should his ‘bond’ be any different?
Everything he does is about delay, delay, delay! How many times will our system keep playing into his hands? If they decide on April 22nd that this bond is faulty, I see absolutely no reason to allow Trump even more time to rectify the situation. Time’s up! Asset seizure time is way overdue!