New 'red flags' raised over Trump's bond money after link to Grand Caymans revealed
“This just stinks to high heaven."
That is the opinion of one former insurance expert when shown documentation showing that the company that is backing Donald Trump's $175 million appeal bond has backed their own bet with funds supposedly held in the secretive tax haven of the Grand Caymans.
According to a report from the Daily Beast's Jose Pagliery, the more questions are raised about the Knight Specialty Insurance Company and its ability to come up with the money should the former president lose his financial fraud appeal, the murkier things get, setting off "red flags" from industry and financial experts.
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As the report notes, "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."
At issue are worries that Trump loses his appeal and that New York Attorney General Letitia James runs into a wall trying to collect the fine by dealing with the Grand Cayman company that may give her the runaround and may not have the money on hand.
Dave Jones, who formerly oversaw California's insurance market, made the "stinks to high heaven" remark and followed up by saying, "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.”
Former New York Department of Financial Services superintendent Maria Vullo agreed and claimed the information should set off alarms.
“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,” Vullo explained. “That the reinsurer is in the Cayman Islands compounds this issue as it is a non-U.S. jurisdiction, which makes collection very difficult.”
Tom Gober, a forensic accountant who has worked with the FBI, suggested the Grand Cayman connection is a major concern.
“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 told Pagliery before adding, "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.”
“Why would you choose to send virtually all of your reinsurance to your own three companies in the Caymans? That’s like moving money from one pocket to another. The big question is: Do the Cayman affiliates have $323 million in liquid assets to honor these claims to Knight Specialty? If not, you’ve got problems,” he added.
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