Is Trump's $175 million civil fraud bond valid in New York?
When former President Donald Trump posted a $175 million bond in New York on Monday, it appeared that he had evaded a financial crisis. He had paused enforcement of the more than $460 million judgment against him following a civil fraud trial, while his appeal is pending.
But the surety bond was missing vital information typically included in those filings, experts say. These standard elements include documents related to power of attorney for the bond provider, Knight Specialty Insurance Company, a financial statement from the company and a certificate of solvency from the Department of Financial Services.
"There seem to be serious issues," said Bruce H. Lederman, an attorney who has filed many bonds in New York, including for a real estate developer challenging a judgment. Lederman said he was struck by "glaring errors" in the bond.
"In all the years I've been doing this, you always have to have a certificate from the Department of Financial Services saying that you're licensed to issue a surety bond," he said, referring to the missing certificate of solvency under Section 1111 of New York Insurance Law.
On Wednesday, the New York Supreme Court clerk's office returned to Trump's attorneys the bond filing "for correction." There was no reason publicly specified in the request for correction.
Adam Pollock, a former assistant attorney general in New York, said, "This bond is deficient for a number of reasons."
"Including that the company doesn't appear to be licensed in New York and doesn't appear to have enough capital to make this undertaking," Pollock said."
Knight Specialty is not licensed in New York to issue surety bonds, and Lederman noted the company's absence from the Department of Financial Services database. But it contends it is nevertheless authorized to issue the bond.
The company also does not appear to meet a restriction under New York insurance law barring companies from putting more than 10% of their capital at risky.
Knight Insurance's president Amit Shah said thatrestriction does not apply to them. He said Knight has over $1 billion in equity.
"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," he said. "So we don't believe we need the 10% surplus."
The billionaire behind Trump's bond is Don Hankey, the chairman of Knight Insurance, which owns the subsidiary that wrote the bond.
Hankey said that Trump used "cash" as collateral for the bond, a total of $175 million.
"First he furnished about $120 million worth of bonds that we OK'd, so we assumed it would be investment-grade bonds and cash. But as it turned out, it was all cash," he told CBS News in a brief phone call on Tuesday.
But Trump retained that $175 million cash collateral, according to Shah. He said the money is in an account that is "pledged" to the company. He would not specify the type of account. Trump paid a premium to the company that Shah declined to disclose.
"It seems to me that the underlying case is about the [New York] attorney general requiring strict compliance with the law," said Lederman.
"The law requires an insurance company posting a surety bond to be authorized in New York," he said. "And there are serious questions about if this bond was properly posted."
Under a New York law known as CPLR 2502, an "insurance company [shall be] authorized to execute the undertaking within the state."
more:
http://www.cbsnews.com/news/donald-trump-175-million-civil-fraud-bond-valid-new-york/
Do something positive.
| 
