Here's exactly how Donald Trump landed $175 million insurance bond amid mounting legal tussle - Hindustan Times
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Here's exactly how Donald Trump landed $175 million insurance bond amid mounting legal tussle

Apr 16, 2024 06:20 PM IST

Amidst a $464 million civil fraud judgment, Donald Trump secures a legal lifeline through a $175 million bond from Knight Specialty Insurance Company.

After weeks of legal maneuvering and cryptic court filings, the details of former US President Donald Trump's deal with Knight Specialty Insurance Company have finally come to light.

Former President Donald Trump attends jury selection at Manhattan criminal court in New York, on Monday, April 15, 2024, for his trial over charges that he falsified business records to conceal money paid to silence porn star Stormy Daniels in 2016, . (Jeenah Moon/Pool Photo via AP)(AP)
Former President Donald Trump attends jury selection at Manhattan criminal court in New York, on Monday, April 15, 2024, for his trial over charges that he falsified business records to conceal money paid to silence porn star Stormy Daniels in 2016, . (Jeenah Moon/Pool Photo via AP)(AP)

The former President was compelled to relinquish control of his Charles Schwab investment bank account, valued at over $175 million, in order to prevent the New York Attorney General from seizing his properties following a ruling of bank fraud.

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“The $175 million bond is collateralized by $175,304,075.95 in cash held in a Charles Schwab account pledged to KSIC, and KSIC has the right to exercise control over that account,” stated a joint memorandum by the company and Trump's legal team.

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Don Jr., Trump's eldest known son, represented the Donald J. Trump Revocable Trust in consenting to the deal last month, granting Knight a security interest over the brokerage account.

Knight now holds a “first priority lien and security interest” over the funds in the account, mandating that the Trump trust maintain a minimum of $175 million in cash or cash equivalents at all times.

The Schwab account in question differs from another used by Trump as collateral for a $92 million bond in a separate legal matter.

Court filing questions bond's ability to justify the surety

Challenges from the New York attorney general's office prompted these filings, questioning Knight's ability to justify the bond's surety. Knight defended its financial stability, lamenting itself as a well-capitalized insurer despite not being licensed to issue surety bonds in New York.

“Knight Specialty Insurance Company is not a New York domestic insurer, and New York surplus lines insurance laws do not regulate the solvency of non-New York excess lines insurers,” Amit Shah, Knight's president, quoted to CBS News.

Questions arose regarding New York regulations limiting a company's exposure to a single borrower, with Knight admitting it exceeded the state's limit. However, Shah asserted Knight's substantial equity and access to assets through a reinsurance agreement with its parent company.

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The $175 million bond temporarily halts a $464 million civil fraud judgment against Trump and co-defendants, pending appeal. Knight, owned by billionaire Don Hankey, faced scrutiny for its owner's previous legal entanglements, including a settlement over illegal repossessions.

Despite Hankey's support for Trump's 2016 campaign, he emphasized the bond as a business matter: “This is what we do at Knight Insurance, and we’re happy to do this for anyone who needs a bond,” he told the Associated Press.

A hearing on the bond's validity is scheduled for April 22.

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