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Trump got his $175 million bond from billionaire fan’s firm

By Erik Larson, , Bloomberg News (TNS),
Published: April 2, 2024, 10:56am

NEW YORK — A billionaire Donald Trump supporter whose California company is known for subprime auto loans and who has ties to one of the former president’s banks arranged his $175 million appeal bond in New York state’s civil fraud suit, though he said politics had nothing to do with it.

Don Hankey, whose fortune stems from car dealerships, real estate and financial services, is chairman of Knight Specialty Insurance Co., which posted Trump’s bond on Monday, three days before a court-imposed deadline. It gives Trump a lifeline by putting a $454 million judgment on hold while he appeals.

Hankey said Knight reached out to Trump’s team to offer its services after hearing about the former president’s trouble arranging a bond, which was initially set at 120% of the judgment, or about $540 million. The appeals court lowered the bond to $175 million after Trump said he didn’t have enough cash.

“I heard they were looking for somebody and this is what Knight insurance does,” Hankey, whose net wealth is estimated at $7.4 billion by Forbes magazine, said in an interview. “We have the liquidity and I’m just happy to provide it.”

The 80-year-old billionaire said his support for Trump had nothing to do with his decision to offer his company’s services to the former president, who is campaigning to return to the White House in the November election.

“Yes, I voted for him in the past, but this is a business deal and this is what we do,” Hankey said. “I have never met Donald Trump, nor talked to him on the phone.”

Hankey said he is also one of the biggest non-institutional investors in San Diego-based Axos Bank, which in 2022 refinanced Trump Tower for $100 million at a time when the Trump Organization’s asset valuations were in question amid the New York fraud probe. Hankey said he wasn’t aware of that deal until after the fact and that his ties to Axos had nothing to do with Trump’s bond.

Axos didn’t immediately respond to a request for comment.

The niche appeal bond industry was thrust into the spotlight earlier this year after Trump lost two civil trials that led to combined damages of more than half a billion dollars. The court requirement that bonds equal 110% to 120% of a judgment is intended to ensure a trial loser will pay the winner if their appeal fails. But Trump said 30 companies he reached out to would not take his real estate as collateral and would only take cash, raising the prospect of a “fire sale” of his assets or seizure by the state.

Hankey said that Trump’s lawyers used all cash collateral for the bond, after initially offering 20% cash and 80% investment-grade bonds.

“We were fine with the investment grade bonds,” Hankey said, adding that decision to use all cash came from Trump’s team.

Knight is one of several affiliated companies that are part of the Los Angeles-based Hankey Group, a homegrown empire that also owns Westlake Financial Services, Hankey Capital and a Toyota dealership in North Hollywood.

In January, a jury hit Trump with $83.3 million in damages in a defamation suit by writer E. Jean Carroll. A few weeks later the judge overseeing New York’s fraud case ordered Trump to pay $454 million for inflating the value of his assets in bank transactions for more than a decade to get better terms on loans.

Trump used a unit of Chubb Ltd. to arrange his bond in the Carroll case. But Trump said the sheer size of the fine in the New York fraud case brought by New York Attorney General Letitia James made a bond difficult if not impossible to arrange.

The bond also puts on hold about $10 million in fines against Trump’s sons Eric Trump and Donald Trump Jr., as well as former Trump Organization Chief Financial Officer Allen Weisselberg, who are also defendants.

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