State of New York vs Trump, et al - the civil fraud case against the Trump Organization

[RTH10260]

MTN Michael Popok discusses the bond once more

[RTH10260]

Glen Kirschner comments, bcriticizing the appelate court for downsizing the bond without disclosing its reasoning.

[Volkonski]

Trump’s $175 Million Bond Is Even Shadier Than It Looks

https://www.thedailybeast.com/trumps-do ... n-it-looks

The little-known insurance company that rescued Donald Trump by providing a last-minute $175 million bank fraud bond isn’t just unlicensed in New York; it hasn’t even been vetted by a voluntary state entity that would verify it meets minimum “eligibility standards” to prove financial stability.

Perhaps even more troubling, the legal document from Knight Specialty Insurance Company doesn’t actually promise it will pay the money if the former president loses his $464 million bank fraud case on appeal. Instead, it says Trump will pay, negating the whole point of an insurance company guarantee, according to three legal and bond experts who reviewed the contract for The Daily Beast.

“This is not common… the only reason this would be done is to limit the liability to the surety,” said N. Alex Hanley, an expert in how companies appeal enormous judgments.

These two points, noted here for the first time, validate the New York attorney general’s concerns that Trump is trying to avoid a financial punishment that could be catastrophic to his riches and reputation.

“There are many questions here, and that short piece of paper gives very little comfort,” said Maria T. Vullo, who was formerly New York’s top financial regulator.

“I believe this paper isn’t worth much and there are more shenanigans behind it,” said one former regulator, who’s intimately familiar with industry norms but spoke only on condition of anonymity.

[RTH10260]

Matches the image of Teh Donald as some minor NY mobster

[Foggy]

The hearing on Earth Day is gonna be lit.

[noblepa]

Trump’s $175 Million Bond Is Even Shadier Than It Looks

https://www.thedailybeast.com/trumps-do ... n-it-looks

The little-known insurance company that rescued Donald Trump by providing a last-minute $175 million bank fraud bond isn’t just unlicensed in New York; it hasn’t even been vetted by a voluntary state entity that would verify it meets minimum “eligibility standards” to prove financial stability.

Perhaps even more troubling, the legal document from Knight Specialty Insurance Company doesn’t actually promise it will pay the money if the former president loses his $464 million bank fraud case on appeal. Instead, it says Trump will pay, negating the whole point of an insurance company guarantee, according to three legal and bond experts who reviewed the contract for The Daily Beast.

“This is not common… the only reason this would be done is to limit the liability to the surety,” said N. Alex Hanley, an expert in how companies appeal enormous judgments.

These two points, noted here for the first time, validate the New York attorney general’s concerns that Trump is trying to avoid a financial punishment that could be catastrophic to his riches and reputation.

“There are many questions here, and that short piece of paper gives very little comfort,” said Maria T. Vullo, who was formerly New York’s top financial regulator.

“I believe this paper isn’t worth much and there are more shenanigans behind it,” said one former regulator, who’s intimately familiar with industry norms but spoke only on condition of anonymity.

This strikes me as being very much like the financial statement he provided to the banks, that had a clause saying, essentially, that the statements were meaningless, and that the Trump Organization wouldn't be held liable if the bank relied on them.

In this case, Knight is posting a "bond" with a clause saying that, in the event TFG loses his appeal, Knight won't pay off. Then what is the point of the bond?

Did TFG and his buddy Hankey really think that this would fool anyone?

[Dr. Ken]

Looking more and more like a fraud on the court.

[Rolodex]

Looking more and more like a fraud on the court.

Aha! A clever legal strategy! Get the court to declare that turnip committed fraud against the court, which causes a whole new cascade of legal maneuvers, thereby delaying the payout! Those lawyers are jeeenyuhses!

[Ben-Prime]

Looking more and more like a fraud on the court.

Aha! A clever legal strategy! Get the court to declare that turnip committed fraud against the court, which causes a whole new cascade of legal maneuvers, thereby delaying the payout! Those lawyers are jeeenyuhses!

Such sooper-jeeeenyuhses that they apparently have an Acme Supplies store-brand Ultra Platinum Credit Card with which to purchase their legal supplies, such as the catapult that they hope will launch this case all the way to the Supreme Court.

[Tiredretiredlawyer]

A catapult or a trebuchet?

[RTH10260]

Catapults will only be allowed in these legal proceedings when powered by coal fired steam compression - also named Hot Air

[chancery]

https://iapps.courts.state.ny.us/nyscef ... gP2YHh4w==

This is possibly a result of the NYAG's investigation into whether the Trump Organization wrongfully withheld documents related to Weiselberg's guilty plea to a perjury charge. See the recent letter to Judge Engoron requesting leave to request information on this subject from the Monitor, former Judge Barbara Jones.

https://iapps.courts.state.ny.us/nyscef ... _PLUS_FQ==

Although why anyone thought that the same lawyers could ethically represent Trump and Weiselberg in this proceeding is a puzzlement.

[Dave from down under]

Ethics smethics…

When you are a Trump lawyer you gave up on that when you signed your soul away…

[Tiredretiredlawyer]

Catapults will only be allowed in these legal proceedings when powered by coal fired steam compression - also named Hot Air

[andersweinstein]

Trump’s $175 Million Bond Is Even Shadier Than It Looks

https://www.thedailybeast.com/trumps-do ... n-it-looks
…

In this case, Knight is posting a "bond" with a clause saying that, in the event TFG loses his appeal, Knight won't pay off. Then what is the point of the bond?

FWIW Dave Kingman, Esq., finds this pitch wide of the strike zone:

[northland10]

Catapults will only be allowed in these legal proceedings when powered by coal fired steam compression - also named Hot Air

Trump did say he was going to reopen all of the coal mines. This is how.

[Rolodex]

Maddow had a (too long but that's her) story about the company behind the bond. Turns out - surprise! - it's got a shady past.

[Dr. Ken]

I got a follow back from dave kingman. In other news there was a bit of action from Tish James

[Dr. Ken]

[raison de arizona]

Will he ever learn? Or will he die in prison for tfg?

[MsDaisy 2]

Will he ever learn? Or will he die in prison for tfg?

I still daydream about Trump's sorry ass being locked up in a prison somewhere

[Rolodex]

I think I read that AG is also filing to take some kind of action because she says they didn't received info about the perjury. That was poorly stated but IOW apparently trumpworld didn't turn over all documents and now they're asking the monitor to look specifically for info re what Weissleberg perjured himself about.

[p0rtia]

Yes, she has asked Engoron, at the upcoming hearing (April 22???) to quiz Weisselberg's attorneys about whether or not they knew W had committed perjury; whether or not they knew about this supposed document that was withheld from the trial, and whether or not they intentionally withheld it. Or something.

[chancery]

Trump Bond’s Cayman Connection ‘Stinks to High Heaven’

The company that saved Donald Trump with a $175 million bank fraud bond is playing an insurance game that has experts questioning whether New York will ever see the money.

https://www.thedailybeast.com/trump-bon ... igh-heaven?

Former industry regulators and investigators told The Daily Beast that Knight Specialty Insurance Company being financially backed by a firm based in the Cayman Islands should raise eyebrows at the New York AG’s office—particularly because companies frequently organize in the Cayman Islands not just to avoid taxes, but also to minimize visibility into its business practices, avoid more stringent U.S. regulations, and make liability harder should things go wrong.

All of those concerns could come into play if the New York Attorney General has to chase the company down for the money Trump currently owes for committing bank fraud.

“This just stinks to high heaven,” said Dave Jones, who oversaw the nation’s largest insurance market as California’s insurance commissioner for seven years until 2018.

“Taken in its totality, this dog does not hunt. Along every step of the way, this purported bond is problematic. It’s just one issue after another that calls into question whether this bond could ever possibly satisfy the judgment,” said Jones, who’s now the director of the Climate Risk Initiative at University of California Berkeley.

“The risk here is the company will not have the liquidity to pay on the bond when demanded, and the beneficiary of this bond, the New York AG, may not have a direct claim against the reinsurer,” said former New York Department of Financial Services superintendent Maria Vullo. “That the reinsurer is in the Cayman Islands compounds this issue as it is a non-U.S. jurisdiction, which makes collection very difficult.”

Earlier this week, The Daily Beast additionally revealed that KSIC hasn’t even subjected itself to a voluntary review by a quasi-state New York entity that would show it meets financial stability “eligibility standards.” But perhaps most alarming of all, the bond contract doesn’t actually promise it will pay the money if the former president loses his $464 million bank fraud case on appeal.

And yet, a closer look at the company’s corporate structure and its internal business deals raises even more questions, ones that touch on a highly technical and largely obscure corner of the insurance market called “reinsurance.”

Reinsurance is a duplicative term. It refers to the way insurance companies insure themselves, hedging their bets after taking on a ton of risk by making promises to pay policies then investing that money in stocks and bonds—knowing full well that the company would have to pay out huge sums of money someday. In effect, it becomes a simple way for insurance companies to clear liabilities off the books and free up other funds to form a “surplus,” wiggle room they can rely on when catastrophe hits and policyholders all demand to get paid or when investments underperform.

That surplus isn’t just breathing room allowing CEOs to sleep at night. It’s also what state insurance regulators look at when deciding whether or not an insurance company can keep operating legally. If the breathing room gets too tight, regulators will pull an insurer’s license for running the risk of being insolvent.

On the other hand, reinsurance can also be a way to game the market.

“Captive reinsurance” is an industry term that describes how a company can push off its liabilities by finding the most unlikely of companies to take on this ominous burden: an affiliated version of itself.

The whole arrangement can make experienced fraud investigators cringe.

“The Caymans are widely recognized as a ‘secrecy jurisdiction.’ If you called the regulator in the Caymans and asked, ‘Can you tell me if Knight reinsurance has enough to cover these claims?’ Their laws require total confidentiality. Why?” he asked.

“In my professional opinion, all you really have to know is that you don’t know. It’s not transparent and it ought to be. They have less regulation and zero transparency. That’s all I need to know,” he said.

Jones, the director of the Climate Risk Initiative at UC Berkeley, thinks that could be a challenge—and maybe even an insurmountable one. He recalled facing a similar situation when he was the top insurance regulator in California, where the state had secured a judgment against a French company, only to have experts tell his department that the fight would be long and fruitless.

“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.’ It raises a whole other level of complexity,” he said.

“It’s not clear she'll have recourse against reinsurer if the bond issuer doesn't pay,” Jones said. “One potential problem is that typically policyholders who have a claim against an insurance company don’t have a claim against the reinsurance that's being provided to the insurance company, unless there’s a cut-through provision in the reinsurance contract.”

But we don’t know that, because neither KSIC nor its parent company have explained the exact terms of their Trump deal. Questions sent to the company went unanswered Thursday.

“Even if there is a cut-through provision, there’s an issue of the practicality of enforcing that in the Caymans, and whether the reinsurer is adequately capitalized itself,” Jones said.

There's lots more in the article; we're really just pounding the rubble here. The fact that the parent isn't clearly on the hook should be fatal by itself, as should the fact that the parent hasn't consented to jurisdiction in a New York court. And even a consent to jurisdiction might not be enough if the assets themselves aren't within the jurisdiction. Tax havens frequently have laws that permit litigants to claim that they can't respond to basic discovery requests because to do so would be unlawful under the laws of the country in which they're located.

Engoron has wide discretion to decide whether or not to accept a proposed security arrangement, and when a litigant is turned down by the reputable surety bond companies, a somewhat sketchy arrangement might be the best you're going to get. But even though the lines are fuzzy, there's a difference between "somewhat sketchy" and "illusory," and we might be in illusory country here.

[Sam the Centipede]

Wouldn't an equitable and practical solution be to suggest that the insurance company put appropriate funds into the court's escrow account?

If the company does that, fine. If not, either unwilling or unable, then they were acting in bad faith.

I appreciate that that is effectively skipping the whole bond thing, which is I guess the point. But it's the best way to demonstrate the availability of promised funds.