Donald Trump managed to post a US$175 million bond on Monday while he appeals a New York judge’s ruling that he lied about his wealth to secure favourable loan terms.
In a February civil judgment, Trump was found to owe US$454 million, including interest, to the State of New York. The former president is appealing that ruling. To prevent the state from enforcing the judgment by seizing his assets, Trump was required to post a bond that would cover the judgment in the event he lost the appeal.
Trump’s lawyers argued it would be a “practical impossibility” for Trump to come up with the money, and an appellate court reduced the size of the bond to US$175 million. But Trump didn’t do it alone. The bond was underwritten by a company called Knight Specialty Insurance.
The firm is headed up by Los Angeles billionaire Don Hankey, known as the “king of subprime car loans,” according to a Forbes profile. Hankey started as a car dealer but built his fortune off high-interest auto loans for working-class people. Over the decades, his companies have run afoul of authorities for deceptive and illegal business practices.
Hankey also says he’s never met Trump, and that the decision to underwrite the bond was strictly about business, not politics.
“This is what we do,” he told NBC News. “I’d be happy to do this for a Republican or a Democrat.”
Here’s everything you need to know about the billionaire who bailed out Trump.
Who is Don Hankey?
Hankey has made much of his money through Westlake Financial Services, a firm that works with tens of thousands of car dealerships across the U.S. to provide auto loans to people with bad or no credit.
Where other lenders saw risk, Hankey saw opportunity. He is now worth around US$7.4 billion off his subprime loan empire, according to Forbes.
Breaking news from Canada and around the world
sent to your email, as it happens.
As a teen, Hankey worked as a lot boy at his father’s Ford dealership in L.A.’s Koreatown. When his father died, the family lost the dealership, but Hankey bought it back with a US$250,000 loan after graduating university.
And with the reins of the business in his hands, Hankey had big ideas, according to a profile on the businessman in the Los Angeles Business Journal.
Instead of turning away customers with subpar credit histories, Hankey began providing loans with high interest rates and tight terms. In the busy showroom of the Ford dealership, Hankey presided over a chaotic throng of salespeople negotiating new car sales and old customers angry that their cars had been repossessed.
“We had beefs going on, and at the same time people coming in, buying cars,” Hankey told the Los Angeles Business Journal. “But it all worked. And you would think that somebody buying a car would hate to see somebody else arguing about a payment, but it didn’t seem to matter.”
Westlake’s loan business has since expanded nationwide and the company has built a reputation of aggressively tracking borrowers late on their payments. Westlake was fined over US$48 million in 2015 for using illegal tactics to collect loan payments, including threatening lenders with criminal charges. The company even masked phone calls from debt collectors by instead posing as flower shops or pizza restaurants, to trick borrowers into disclosing their location and the location of their car for repossession.
In 2017, Westlake was investigated by the Department of Justice for illegally seizing at least 70 vehicles owned by U.S. military members who were protected from repossession under the Servicemembers Civil Relief Act, NBC reports. The company paid US$761,000 to settle the case.
While many other industries faltered during the pandemic, Hankey’s companies boomed. National Bureau of Economic Research data shows that 30 per cent of U.S. households used their stimulus checks to pay off debt.
Forbes’ tracking of Hankey’s wealth shows that his net worth jumped by US$2.3 billion between 2021 and 2022. The previous year, Hankey’s wealth grew by a comparatively meagre US$100 million.
Hankey has since expanded his holdings into the technology, real estate and insurance industries, though loans remain the bread-and-butter of the Hankey Group’s dealings. The conglomerate now owns US$23.4 billion in assets.
The Hankey Group also has major lines of credit with Canadian banks. With BMO, Hankey has access to US$1.02 billion, the group’s fourth largest line of credit. With RBC, the line of credit is worth US$350 million.
How are Hankey and Trump connected?
Hankey had indirect connections with Trump before his company underwrote the former president’s bond.
The billionaire is a major investor in Axos Bank, based in San Diego, which refinanced Trump Tower in 2022 for US$100 million. Hankey told the Los Angeles Times that he didn’t know about the refinancing until after the deal went through.
However, Hankey did reveal that he voted for Trump.
“I voted for Democrats in the past and I will support people who are business-friendly,” he said.
When Hankey heard that Trump was on the hook for nearly half a billion dollars in the New York judgment, he reached out to Trump’s legal team.
“We were on a conference call and discussing a bond for the approximate size of $460 million and news came on, and one of the people said, ‘We were just informed that the bond was reduced to $175 million,’” Hankey told the L.A. Times.
Throughout the course of negotiations, and even now that the deal has gone through, Hankey said he never met or spoke with Trump, but he did have a brief phone call with the former president’s son, Eric.
“He called and thanked us,” Hankey said of the exchange. By underwriting the bond, Hankey has also paused New York state’s right to collect about US$10 million in fines against Eric and his brother Donald Jr.
Hankey told the Associated Press that Trump provided cash and bonds as collateral for the appellate bond.
“This is what we do at Knight Insurance, and we’re happy to do this for anyone who needs a bond,” Hankey said.
© 2024 Motorcycle accident toronto today, Toronto Car Accident News.