'Witchhunt continues': Letitia James slammed after saying Trump's $175M bond insurer 'not qualified'

NEW YORK CITY, NEW YORK: New York Attorney General Letitia James has moved to block the $175 million bond posted by former President Donald Trump, aiming to secure an appeal of his staggering civil fraud judgment.

The legal battle, which has captured widespread attention, marks a pivotal moment in the ongoing saga surrounding Trump's financial dealings.

James questions validity of bond

James, the state's top law enforcement official, contends that Trump has failed to provide “sufficiently secure and ascertainable collateral backing the bond."

Her latest filing urges New York Supreme Court Justice Arthur Engoron to reject the bond and compel the posting of a replacement within seven days, Law&Crime reported.

At the heart of the dispute lies the sufficiency of the bond, with Trump's legal team and Knight Specialty Insurance Company (KSIC) vehemently defending its validity.

They assert that the $175 million bond is fully collateralized by cash held in a brokerage account, with KSIC exercising control over the funds.

However, James rebuffs these claims, arguing that the arrangement falls short of the required standards. According to James, KSIC's status as a small, unregulated insurer raises serious doubts about its ability to underwrite such a substantial bond.

She questions whether KSIC “has sufficient capacity to justify writing a $175 million bond” since “KSIC sends 100% of its retained insurance risk to affiliates in the Cayman Islands, where lax regulations allow KSIC to use this risk transfer to reduce the liabilities it carries on its books in a way that artificially bolsters its surplus — a practice New York regulators have dubbed ‘shadow insurance’ and about which they have sounded the alarm.”

Moreover, James points to past regulatory infractions and questions the integrity of KSIC's management, citing federal findings of misconduct within the company's corporate structure.

“[U]nder the regulations that govern the placement of insurance on an excess lines basis, a licensed excess lines broker may place business with an unauthorized insurer like KSIC only if it is satisfied that the insurer’s management is trustworthy and competent,” the attorney general’s response continues.

“KSIC is not qualified to act as the surety under this standard because its management has been found by federal authorities to have operated affiliated companies within KSIC’s holding company structure in violation of federal law on multiple occasions within the past several years.”

The legal showdown comes amidst Trump's efforts to appeal the $454 million civil fraud judgment issued against him earlier this year. His legal team is contesting both the verdict itself and the exorbitant amount owed, setting the stage for a protracted legal battle that shows no signs of abating.

Meanwhile, KSIC's involvement in the case has drawn unexpected attention to the Los Angeles-based Hankey Group of Companies, owned by billionaire Don Hankey. Hankey expressed surprise at the level of scrutiny accompanying the bond arrangement.

“We thought it would be an easy procedure that wouldn’t involve other legal problems and it’s not turning out that way,” he said. “We probably didn’t charge enough.”

Social media backlash

However, James's decision to challenge the bond has sparked a fierce backlash on social media, with critics accusing her of conducting a politically motivated "witch hunt."

"Hey Letitia why don’t you go lock up some of the criminals running rampant in NY," one posted on X.

"The Witch Hunt continues. All these corrupt officials will eventually get their due," another wrote.

"When will they be looking into the NYAG's funds? Rumor has it her salary doesn't add up with her bank account," someone else chimed in.

"It's rigged," a comment read.

"If you have a business in New York I would advise you to leave while you still can. They're going to do this to you and your entire family," another insisted.

As the dispute unfolds, all eyes are on Monday's scheduled hearing, where the fate of Trump's bond hangs in the balance.

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