Letitia James filed a ‘notice of exception to the sufficiency of the surety’ seeking more information about Knight Specialty Insurance Company
Donald Trump’s $175m bond in his New York civil fraud case has been thrown into doubt by New York Attorney General Letitia James after she filed a notice asking for evidence that the out-of-state firm that underwrote it really has the money to pay up.
Ms James’s office submitted a “notice of exception to the sufficiency of the surety” on Thursday asking for further proof that California-based Knight Specialty Insurance Company (KSIC) has the capital to proceed on the former president’s behalf.
KSIC is not regulated by New York state, which means that it is not authorised to issue surety bonds in the Empire State and therefore cannot obtain a certificate from the New York Department of Financial Services, which is customarily part of any bond package.
Idk NY’s rules on surety bonds, but the general rule in insurance is, if you can’t find coverage in the admitted market then you go to the surplus market—which KSIC is a surplus lines insurance company (and not regulated by the state). Dodd-Frank even prohibits states from denying that these companies can be regulated by the states.
Short answer: this is normal insurance procedure. If you can’t find an admitted company to cover you, then you go to the surplus/excess lines market, which is not regulated by the state.
This hinges on New York’s laws regarding surety bonds, which I have no idea about. Some coverages, of course, have to be written in the admitted market, like your car insurance.
But that’s exactly the issue. The bond company is pretending that they don’t have to follow any law/regulation because they’re out of state. While AG is objecting based upon the NY law regarding the bond.
Meaning, need to show financials. Need to have enough assets. The AG said that their assets are lower than the bond amount. While the bond should be 10% of the assets at most.
The bond company added the financials of another company that’s not involved with the bond. Pretty shady behaviour.
I am not an expert and this is not my area.
Another article this morning (I’ll link if I can find it) said that a normal bond (construction surety etc.) follows the rules you laid out. There is specific language in NY legislation with extra requirements for court bonds.
eta: https://www.cbsnews.com/news/donald-trump-175-million-civil-fraud-bond-valid-new-york/
“For court bonds, as regulated by the CPLR, the law is clear about in-state license requirement,” said Pollock, who noted that there are surety bonds used in other industries like construction that would not be subject to that rule.
Honestly the whole lawsuit sounds kind of ridiculous to me. Isn’t it up to the lender to audit the property of the one who asks for money to assure that they are able to pay it? After all, the one asking for money may (out of ignorance, or malice) overvalue their property, and they may be right, should there be someone who actually is willing to buy it for that price. The confidential documents lawsuit sounds to me like a waaaay easier and clearer win. (if only the democrats hadn’t decided to “forget” about it after similar claims were found regarding Biden)
What do Democrats have to do with the documents lawsuit? The special prosecutor is on it.
Are you suggesting that maybe we let the free-market figure his bond out without oversight?
This was a weird comment.
It feels like you are pushing the burden of finding out a person is lying to the lender, but the law says you have to tell the truth (and you sign saying the presentation is the truth) when presenting collateral. Lying about valuations is part of the root of the 2008 financial collapse, and it’s disheartening to hear people say “so what” less then a generation later. The government is fulfilling its role of oversight the way it would have been great to see in the 2000’s before the collapse.
The claims were not very similar lol
Go lie about your assets on a mortgage or other loan application and falsify some paperwork. See what happens to you. Why should Trump get to do that?
All this lawsuit is doing is making him pay back all the money he gained by lying. The profits he made from his lies and falsifications were calculated by an independent auditor and used to calculate the amount he has to pay back. New York state law says you cannot benefit financially from fraud, the profits must get pulled back.