Report finds sketchy money with Russia ties helped Trump Media stay afloat
Drew Harwell, technology reporter for The Washington Post, explains the details of new reporting in The Guardian about how a bank with Russian ties gave Trump Media millions while the company underwent a securities investigation, and how it all connects to recent guilty pleas in an insider trading investigation
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When Trump needs cash, a California bank and one of its top shareholders have come to the rescue
Story by BRIAN SLODYSKO, Associated Press • 4h • 5 min read
04/0424
FILE - Former President Donald Trump sits in the courtroom before the start of closing arguments in his civil business fraud trial at New York Supreme Court, Jan. 11, 2024, in New York. Records show over the past two years, Axos Bank and its largest individual shareholder Don Hankey, have extended more than $500 million in financing that has benefited Trump. Ethics experts say they could also grant Hankey and Axos Bank outsize sway in a future Trump administration. (AP Photo/Seth Wenig, Pool, File)
FILE - Former President Donald Trump sits in the courtroom before the start of closing arguments in his civil business fraud trial at New York Supreme Court, Jan. 11, 2024, in New York. Records show over the past two years, Axos Bank and its largest individual shareholder Don Hankey, have extended more than $500 million in financing that has benefited Trump. Ethics experts say they could also grant Hankey and Axos Bank outsize sway in a future Trump administration. (AP Photo/Seth Wenig, Pool, File)
© Provided by The Associated Press
WASHINGTON (AP) — Donald Trump left the White House facing a cash crunch and a tattered reputation after his attempts to overturn the 2020 election, threatening the viability of his business empire. Soon, though, a new source stepped forward to provide a financial lifeline when many longtime lenders refused.
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Over the past two years, Axos Bank, as well as its largest individual shareholder, California billionaire Don Hankey, have collectively extended more than $500 million in financing that has benefited Trump, records show. The cash influx has helped Trump to pay off debts and pocket a tidy profit while escaping from a lease on his money-losing former hotel in Washington.
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FILE - The Old Post Office building is seen with covered signage for Trump, May 12, 2022, in Washington. Records show over the past two years, Axos Bank, as well as its largest individual shareholder Don Hankey, have extended more than $500 million in financing that has benefited Trump, helping him to pay off debts and pocket a tidy profit while escaping from a lease on the money-losing former hotel in Washington. Ethics experts say they could also grant Hankey and Axos Bank outsize sway in a future Trump administration. (AP Photo/Gemunu Amarasinghe, File)
FILE - The Old Post Office building is seen with covered signage for Trump, May 12, 2022, in Washington. Records show over the past two years, Axos Bank, as well as its largest individual shareholder Don Hankey, have extended more than $500 million in financing that has benefited Trump, helping him to pay off debts and pocket a tidy profit while escaping from a lease on the money-losing former hotel in Washington. Ethics experts say they could also grant Hankey and Axos Bank outsize sway in a future Trump administration. (AP Photo/Gemunu Amarasinghe, File)
© Provided by The Associated Press
It also covered a $175 million down payment he made this week on an eye-popping civil fraud penalty.
Axos Bank officials as well as Hankey have said that the deals offer them a financial upside.
But as Trump again pursues the White House, ethics and legal experts question what the lenders may ask in return if there's a future Trump presidency, considering even small regulatory changes can translate into millions of dollars in earnings.
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“If the guy gets back in the White House, they've got him over a barrel,” said Richard Painter, a former ethics lawyer for President George W. Bush who later ran for Senate in Minnesota as a Democrat.
Financial statements and court records detail how both Axos Bank and Hankey have faced heightened oversight under Democrats.
The Securities and Exchange Commission investigated Axos during Barack Obama's presidency after a whistleblower filed a lawsuit accusing the bank of violating anti-money laundering rules, court records show. The investigation was closed in 2017 once Trump became president, while the whistleblower lawsuit was settled out of court.
Hankey, who made his fortune selling high-interest auto loans to those with bad credit histories, has faced similar scrutiny. In 2015, one of his companies, Westlake Services, was forced to pay $48 million in penalties and compensation after the Consumer Financial Protection Bureau — an agency created by Obama and often criticized by Trump administration officials — found that they used debt collection tactics that the bureau described as “illegal.”
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Westlake also paid $700,000 to resolve a 2017 Justice Department lawsuit, which accused the company of illegally repossessing at least 70 vehicles owned by members of the military. While monitoring Westlake's compliance with the settlement, the DOJ found the company had failed to grant service members an interest rate benefit required under law, leading to an additional $225,000 settlement in 2022, records show.
Hankey did not respond to requests for comment made directly to him, as well as to an attorney for his company. Trump's campaign also did not respond to an inquiry. Officials for Axos, a midsized California-based bank that was formerly known as Bank of the Internet, did not address the SEC investigation in a brief statement.
In its statement, Axos Bank said it faced little risk from its lending to Trump, holding a “net principal balance exposure of less than $100 million.”
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Axos CEO Gregory Garrabrants donated $4,800 to Trump’s campaign. But both the bank and Hankey have previously said that politics, or an affinity for Trump, had no bearing on their decision to lend him money.
Trump left the White House as a pariah in the business world following his efforts to overturn the 2020 election, which culminated in the Jan. 6 attack on the Capitol. He also faced looming deadlines to pay off massive loans taken out on Trump Tower as well as his Doral golf course resort in Miami.
Axos stepped up. The bank extended $225 million in loans to Trump in 2022, enabling him to pay off those two outstanding debts just as they were about to come due, records show.
When Trump was looking to exit his hotel lease of Washington's historic Old Post Office building, the company again came through, providing a $190 million loan that helped a Miami-based investor group complete the $375 million sale in 2022, according to property records.
Axos said it provided the financing to backstop the primary lender in the deal, MSD Partners.
Many hotel brokers, owners and consultants did not expect the 263-room hotel down the street from the White House to fetch such a high price. The hotel lost more than $70 million during the four years of Trump’s presidency, including in each year before pandemic shutdowns. But when the sale closed Trump's companies made as much as $100 million, the Associated Press reported at the time.
This week, the latest tranche of Axos-connected financing came through when Hankey stepped forward through one of his companies, Knight Specialty Insurance, to post a $175 million bond that Trump was required to post as he appeals a $454 million judgment in his New York civil fraud trial.
Hankey owns a roughly 5% stake in Axos Bank, making him the bank’s largest individual shareholder, according to financial filings made with the SEC.
“This is what we do at Knight Insurance, and we’re happy to do this for anyone who needs a bond,” said Hankey earlier this week after Trump made the bond. He previously told the AP that he has never met or spoken with Trump.
On Thursday, New York Attorney General Letitia James' office objected to the bond in a court filing, requesting that Knight Insurance file additional paperwork showing that the company was financially sound and had adequate collateral to cover the amount.
Hankey, who donated $80,000 to Trump and the Republican Party in 2016, maintains politics did not influence his decision to offer help. He previously said Trump offered up both cash and bonds as collateral.
“I’m chairman of the board of several companies, and we just carry on our business and we try to stay away from political issues or taking sides,” Hankey told The Washington Post.
That offers little assurance to Trump critics who closely tracked the transactional nature of his presidency.
“There are multiple layers of questions about what is Hankey’s relationship to Trump and to others in Trump’s orbit," said Norman Eisen, a former Obama “ethics czar” who is now senior fellow at the liberal-leaning Brookings Institution. “What are his interests? How might Trump favor his interests? How might others?”
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Associated Press writers Ken Sweet and Bernard Condon contributed reporting from New York.
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Billionaire says Trump Media a ‘scam,’ calls investors ‘dopes’
Truth Social parent company Trump Media is a “scam,” billionaire investor Barry Diller told CNBC in an interview Thursday.
“It’s a scam, just like everything he’s ever been involved in is some sort of con,” Diller said on CNBC’s “Squawk Box,” referring to former President Donald Trump and Trump Media & Technology Group.
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Diller also said the people investing in the company following its strong stock market debut are “dopes.”
“I mean, who would buy a company that literally. … I mean, I think, what does it have, $30 of revenue?” Diller said. “Why would you put … how could you put a value on it?”
“They’re buying it for other reasons, just like they bought theaters when there was no theater business or they bought GameStop, or whatever. That’s stupid — it’s stupid stuff,” Diller continued, referring to when Reddit users bought and held onto scores of shares in companies like GameStop and AMC during the height of the COVID-19 pandemic.
Following its first week of trading, Trump Media & Technology Group closed at $62 per share, despite losing $58 million last year, according to regulatory filings.
Trump claimed his platform was “very solid” Thursday in a social media post, despite the company’s reported losses in 2023.
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“All of the competitors to TRUTH SOCIAL, especially those in the Radical Left Democrats Party who are failing at every level, like to use their vaunted ‘disinformation machine’ to try and convince people, and it is not easy to do, that TRUTH is not such a big deal and doesn’t ‘get the word out’ as well as various others, which they know to be false,” Trump said in a Truth Social post.
The former president also said that Truth Social had more than $200 million in cash and “ZERO DEBT.”
In an emailed statement to The Hill, Trump Media & Technology Group said that “[i]t is unsurprising to see die-hard Trump haters and leftwing flacks blow a gasket now that Truth Social has become a public company that, still today, refuses to suppress political expression that contradicts the narratives they want to enforce.”
The Hill has reached out to a spokesperson for Trump’s campaign for comment.
Updated: 5:16 p.m.
For the latest news, weather, sports, and streaming video, head to The Hill.
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Why Donald Trump’s bond saga is so enraging
Opinion by James Downie •
04/06/24
Former President Donald Trump speaks after a hearing at New York Criminal Court on March 25, 2024, in New York.
Former President Donald Trump speaks after a hearing at New York Criminal Court on March 25, 2024, in New York.
© Provided by NBC News
Larry Price Jr. weighed 185 pounds in the summer of 2020, when he entered the Sebastian County, Arkansas, jail where he would die. When guards found him deceased a year later, he was alone in his cell, lying in contaminated water and his own urine and weighing 121 pounds. As the word “jail” suggests, he had not been convicted of a crime. Nor was Price, who suffered from schizophrenia and other mental illnesses, detained because of the crime he was accused of — verbally threatening police officers. No, Price died in jail because he could not afford a $100 bond for his release.
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I thought of Price again this week when news broke Thursday that attorneys for former President Donald Trump had to resubmit his $175 million bond in his civil fraud judgment in New York to address missing financial statements and other documentation. And after that resubmission, New York Attorney General Letitia James questioned whether the bond underwriter actually had the $175 million in collateral, giving Knight Specialty Insurance Co. 10 days to come up with proof. This all comes roughly two weeks after a New York appeals court reduced Trump’s bond from over $450 million to $175 million, after Trump’s lawyers argued that securing the larger amount was a “practical impossibility.”
The leniency shown Trump makes for grim reading in contrast to the fate of Price — and thousands of other Americans. A 2020 Reuters report found that between 2008 and 2019, nearly 5,000 Americans died in 500 U.S jails without ever being convicted of the charges on which they were held, in many cases because they could not afford bail. People like Kalief Browder ($3,000 bail), Sandra Bland (a $500 bond) and Erick Tavira ($20,000 bail) have died by suicide in the face of awful conditions. The system disproportionately affects low-income and Black Americans and those with mental illnesses. Unfortunately, recent modest attempts at bail reform have stalled due to fears of rising crime, even though there is no correlation between crime rates and decreased pretrial detention.
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There are plenty of excuses to explain away Trump’s more comfortable situation. His fraud case is a civil matter, not criminal. Much of his claimed wealth is tied up in real estate — and therefore difficult to post as collateral for a bond. The appellate court had absolute discretion to adjust the bond amount to reflect that fact. And bond reductions of this size are not unheard of: In 2003, for example, when the Philip Morris tobacco company faced a $12 billion bond in Illinois over a class-action lawsuit, the Illinois Supreme Court cut the bond in half. (The New York Times editorial board called the original bond “the kind of ruling that erodes the credibility of our legal system.”)
But debating whether Trump’s situation reflects the current law misses the point. The fact is that the law throws the Larry Prices of the world in jail, while Trump gets chance after chance after chance to meet his bond. Can’t afford it? Don’t worry — here’s 10 more days to find a reduced amount. Submitted the wrong paperwork? Don’t worry — just resubmit. May have improperly collateralized the bond? Don’t worry — here’s another 10 days to get the spreadsheets in order. All the while, Trump and his wealthy friends have extra time to find the funds needed to stave off his self-made crisis.
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That Trump’s bond reduction and postponement has legal precedent is precisely the problem. And it’s a problem far bigger than Trump. After the 2008 financial crisis, the federal government bailed out Wall Street, but left homeowners to twist in the winds of foreclosure, because that’s what the law allowed. In the early months of the pandemic, when the government rushed out $800 billion in Paycheck Protection Program loans, nearly two-thirds went to company owners and shareholders, not the workers whose paychecks the loans were supposed to protect. Because that’s what the law allowed.
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Ever since Trump descended an escalator like the world’s most pompous mall cop, it has often seemed like there’s no crisis he can’t escape. But the truth is that the American legal and economic system, with its biases toward the wealthy, lets him escape. When he is less able to flex his financial muscle, whether in an election or an actual courtroom, his record is mixed if not downright poor. But in many cases, he simply buys his way out of accountability (or leverages conservative media outlets’ fear of losing viewers against them). And when those bills leave him facing financial disaster, wealthy friends swoop in with reality-TV deals, media mergers and even bail bonds.
Nearly 20 years ago, Princeton University’s Martin Gilens compared the results of almost 2,000 survey questions asked between 1981 and 2002 and found “actual policy outcomes strongly reflect the preferences of the most affluent but bear virtually no relationship to the preferences of poor or middle-income Americans.” The law written by the few protects the few at the expense of the many. It should be no surprise that Trump has not only survived, but often thrived under this system. And unless we remake our laws and economy in a dramatically more democratic and egalitarian manner, there will be more Trumps — and more Prices — to come.
This article was originally published on MSNBC.com
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N.Y. AG skeptical of Donald Trump's bond posting that one legal expert calls 'financial chicanery'
Story by Joe Fisher •
04/06/24
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Former President Donald Trump speaks from the hallway outside a courtroom where he attended a hearing in his criminal case on charges stemming from hush money paid to an adult film actress in New York City on March 25. Pool Spencer Platt/UPI
Former President Donald Trump speaks from the hallway outside a courtroom where he attended a hearing in his criminal case on charges stemming from hush money paid to an adult film actress in New York City on March 25. Pool Spencer Platt/UPI
© Spencer Platt/UPI
April 5 (UPI) -- New York Attorney General Letitia James has called Donald Trump's $175 million bond posting into question, despite a corrected submission. A former assistant in the attorney general's office tells UPI the posting is deficient for a number of reasons.
James' office filed a notice of exception on Thursday after Trump's attorneys resubmitted a corrected bond. The notice challenges whether underwriter Knight Specialty Insurance is legitimately qualified to assure the bond in the civil fraud judgment against Trump.
New York Supreme Court Judge Arthur Engoron has scheduled a hearing on the bond issue for April 22.
The filing notes that Knight Specialty Insurance is not a licensed insurer in the state of New York, not meeting a key requirement to post a bond in the state.
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New York Attorney General Letitia James speaks at a press conference after a State Supreme Court decision in the civil fraud trial of former President Donald Trump on Feb. 16, in New York City. File Photo by John Angelillo/UPI by John Angelillo/UPI
New York Attorney General Letitia James speaks at a press conference after a State Supreme Court decision in the civil fraud trial of former President Donald Trump on Feb. 16, in New York City. File Photo by John Angelillo/UPI by John Angelillo/UPI
© by John Angelillo/UPI
This is not the only issue with the bond, according to Adam Pollock, managing partner of the New York law firm Pollock Cohen LLP. Pollock is a former U.S. assistant attorney general, serving in that role until 2017.
"This bond is further financial chicanery in a trial about financial chicanery," Pollock said. "This judge is going to have little patience for a flawed bond."
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Pollock told UPI that it is encoded twice in New York law that a bond must be written by a New York licensed insurer. This license is granted by the New York Department of Financial Services.
The financial statement, which was missing in the original bond filing, must also demonstrate that the insurer has at least 10 times the bond amount in surplus capital. In this case, that threshold is $1.75 billion.
Knight Specialty Insurance's statement shows $138 million in surplus capital. That is less than the $175 million bond, let alone far less than the amount required by New York law.
"The state doesn't want one insurance company writing for more insurance than it can guarantee," Pollock told UPI.
Knight Specialty Insurance also enclosed a consolidated statement of all of the related companies, stating they combine for a surplus of about $1 billion.
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The insurance company is part of a conglomerate called Hankey Group. Billionaire Don Hankey is chairman and CEO of the group.
Typically when a judgment is handed down, the defendant is expected to pay that judgment in full, Pollock explained. James allowed Trump a 30-day grace period to secure the funds to pay the $464 million judgment, but she was not required to do so.
Trump did not have to post a bond to appeal the judgment. However he did have to post a bond to be granted a stay of enforcement.
Trump and his attorneys have been critical of the size of the judgment and of James' assertion that he can work with multiple insurers to secure it in full. They noted that the interest Trump will incur is not recoverable even if he wins on appeal.
Pollock says that, while this is true, some hardship is to be expected after losing a case.
Trump appealed the judgment, arguing that it is excessive. That appeal is not expected to be decided on until the fall, Pollock said.
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"This is a big appeal. There was a two month trial so there are a lot of transcripts and factual material to wade through," Pollock said. "I won't be surprised if it takes longer than it typically does. If you look at the court calendar, Trump has to file the actual appeal by July 8. It will be argued in early September. If it's standard they will have a result by the end of October."
If Trump's appeal is ultimately lost, enforcement of the judgment will immediately come back into effect, again putting his assets and properties at risk of being seized.
"I don't expect any further grace to be forthcoming," Pollock adds.