NEW YORK — Former President Donald Trump and his co-defendants in his New York civil fraud case on Monday posted a bond of $175 million, following a judge's ruling that they had for years misrepresented the value of his properties. The bond is underwritten by an insurance company run by a billionaire, who got his start making high-risk, high-interest loans to car buyers with poor credit.
Don Hankey, the executive whose company provided the bond, is a little-known mogul who built his $7.4 billion fortune through car dealerships and providing subprime auto loans, according to Forbes magazine. That makes him richer than Trump, whom Forbes estimates is worth $6.4 billion, including his multibillion stake in the newly public Trump Media & Technology Group.
Hankey, who told The Associated Press he has never met nor spoken with Trump, said his Knight Speciality Insurance company provided both cash and bonds as collateral for Trump's appellate bond. That bond is now essentially a placeholder that will guarantee payment if the judgment against Trump is upheld on appeal.
"This is what we do at Knight Insurance, and we're happy to do this for anyone who needs a bond," Hankey told the wire service.
Hankey didn't immediately respond to CBS MoneyWatch's request for comment.
Who is Don Hankey?
Hankey, 80, got started in the auto industry when his father bought a stake in a Ford dealership in Los Angeles in 1958. A teenager at the time, Hankey started out washing cars during the summer, but later stepped into a salesman role, he told the Los Angeles Business Journal last year.
While Hankey was studying finance at the University of Southern California, his father died and his family lost its stake in the car dealership. But a few years after Hankey's graduation, his family repurchased the dealership with a $250,000 loan.
How did Hankey get into the car loans business?
After buying the dealership, Hankey courted buyers that other car sellers often rejected: subprime borrowers. His dealership provided the loans, unlike other car dealers which typically turn to banks to provide financing for auto purchases.
Hankey told the Los Angeles Business Journal that his showroom was often filled with people arguing over terms they believed were unfavorable.
"We had beefs going on, and at the same time people coming in, buying cars," Hankey said. "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."
What other businesses does Hankey own?
Hankey expanded beyond auto dealerships when he realized that there was demand for subprime auto loans outside of Los Angeles, according to the Los Angeles Business Journal.
He incorporated Westlake Financial Services, which Forbes said now works with more than 30,000 car dealerships across the U.S. to provide auto loans to people with poor credit histories. Westlake is now part of the Hankey Group, which also oversees other financial services companies, including Knight Insurance Group, the enterprise that provided Trump's bond.
Is Hankey a Trump supporter?
Hankey told Bloomberg News he voted for Trump, but said that his support for the real estate developer didn't play into his decision to extend the bond.
"Yes, I voted for him in the past, but this is a business deal and this is what we do," Hankey told the publication. "I have never met Donald Trump, nor talked to him on the phone."
Hankey has been a generous donor to political candidates, almost exclusively Republicans, including Donald Trump. Leading up to the 2016 presidential election, Hankey and his wife gave $80,000 to the Trump Victory Fund, with $5,400 going to the Trump campaign and the rest to the Republican National Committee, according to Open Secrets.
Axos Bank, in which Hankey is one of the biggest non-institutional investors, provided the funding to refinance Trump Tower and take out a $100 million loan in 2022, when the Trump Organization's real estate valuations were under scrutiny due to the New York fraud case, Bloomberg reported. Hankey told the publication he wasn't aware of the deal until after it was completed.
How does the $175 million bond work?
Appeal bonds are used when a defendant appeals a court ruling, which essentially freezes enforcement of the financial judgment as the legal process continues.
Insurers typically provide the bond after they have proof of collateral and charge a fee, which ranges from 1% to 2% of the bond amount, according to insurance broker NFP. That means Trump could be paying as much as $3.5 million on an annual basis for the bond guarantee from Knight Insurance.
If Trump wins his appeal of the ruling, he won't have to pay the state anything and will get his money back.
"As promised, President Trump has posted bond. He looks forward to vindicating his rights on appeal and overturning this unjust verdict," said one of Trump's lawyers, Alina Habba.
—The Associated Press and CBS News' Dan Klaidman contributed to this report.
