When information broke that former president Donald Trump had managed to submit a $175-million bond to stop an asset seizure whereas he appeals a New York judgment that he lied about his wealth, a stunning determine turned out to be his rescuer.
It was none aside from Los Angeles billionaire Don Hankey, 80, a hard-money lender who has made a fortune in financing automobile gross sales to subprime debtors — however has expanded far past that business to different companies the place there’s a positive revenue to be made.
Why does the identify Don Hankey sound acquainted?
Considered one of his firms, Hankey Capital, prolonged loans totaling greater than $100 million to developer Nile Niami a number of years in the past to finish a Bel-Air mega-mansion dubbed “The One.” The developer first marketed the 105,000-square-foot residence for $500 million however it fell out of business and two years in the past was auctioned off for simply $141 million to Richard Sahagian, founding father of L.A. fast-fashion retailer Style Nova. The case continues to be working its means by way of chapter, however Hankey stated a lot of what his firm is owed has been paid again.
Did Hankey make his fortune in actual property?
No. Hankey’s wealth has its basis in Westlake Monetary Companies, one of many high suppliers of subprime auto loans to debtors with low credit. The lender has a repute for aggressively monitoring debtors, calling them if they’re even a day late. In 2015, Westlake and a subsidiary that makes private loans backed by automotive titles have been hit with fines and refunds totaling greater than $48 million for utilizing unlawful techniques to gather on loans, corresponding to making bogus threats to file felony fees. The businesses pledged to repair their debt assortment practices. Hankey has stated the purpose is to cease loans from going unhealthy, not repossess autos, which is dear.
Hankey additionally owns North Hollywood Toyota and has lengthy diversified past making subprime automobile loans. Westlake has made loans for elective surgical procedure. Different Hankey Group firms embody Halfway Auto Group, which rents out unique and different vehicles, and Knight Specialty Insurance coverage Co., a Hankey insurer that underwrote Trump’s attraction bond. Forbes pegs his internet price at $7.4 billion.
Are there any earlier connections between Hankey and Trump?
Hankey stated he’s an investor in Axos Financial institution, a San Diego establishment that refinanced Trump Tower in 2022 for $100 million. Hankey stated that he didn’t know of the refinancing till afterward and that promoting Trump the bond was a enterprise determination, although he acknowledged he’s a Trump supporter. “I voted for Democrats previously and I’ll assist people who find themselves business-friendly,” he stated.
So how did he get entangled with Trump’s bond deal?
Trump suffered a authorized blow when a decide dominated in February that the previous president and his firm had for years exaggerated their wealth to acquire actual property loans on higher phrases — and should pay a monetary penalty of $364 million, a determine that grew to greater than $450 million with curiosity. Hankey stated that he heard how Trump’s authorized group was struggling to submit such a big bond and he reached out a couple of days earlier than it was shriveled final month.
“We have been on a convention name and discussing a bond for the approximate dimension of $460 million and information got here on, and one of many folks stated ‘We have been simply knowledgeable that the bond was diminished to $175 million,’” Hankey recalled.
How did this deal come collectively?
Hankey stated he was later contacted about acquiring a bond for the smaller sum and he agreed to supply it. “They first got here up with a listing of $140 million in [investment] bonds and stated the remaining could be in money. We stated the bonds have been acceptable to us. They have been high quality institutional bonds. On the finish of the day once they funded, they funded in all money,” he stated.
Hankey stated there was extra threat in underwriting the $460-million bond, however that might presumably have been accomplished too by way of a mix of money, bonds and actual property as collateral. “I wasn’t snug, however I’d have been glad to sit down down and attempt to work it out. There could be slightly extra threat on my finish, so perhaps there could be slightly extra value concerned,” he stated.
Hankey declined to reveal the worth of the $175-million bond, which is usually a proportion of the principal, however stated the margin on the bond “was very small” as a result of “the greenback quantity was giant and I simply don’t assume there’s any threat. Plus, we had collateral so we gave him a very good fee.”
How was Hankey in a position to put the deal collectively so quick?
Hankey is taken into account a hard-money lender, which generally fees a steep rate of interest and requires collateral that may cowl a mortgage ought to it go unhealthy. They’re often lenders of final resort or when a borrower wants cash quick. Hankey Capital, the entity that lent to Niami, states on its web site that it’ll lend as a lot as $300 million and may shut a mortgage in as few as 5 days.
Hankey stated the attraction bond deal got here collectively in simply in a couple of days. “We needed to get loads of paperwork to signal however they got here up with the money straight away and we’ve liquidity, so it was only a matter of placing the paperwork collectively,” he stated.
Has Hankey ever offered such a mortgage earlier than?
Hankey stated he has not beforehand underwriten an attraction bond, however his insurance coverage enterprise has dealt with area of interest bonds corresponding to for mining firms that want to make sure they’ll carry out environmental reclamation work after mining exercise stops.
What occurs if Donald Trump loses his attraction?
Hankey stated that if Trump can not pay the judgment, the courtroom will money the bond in and his firm may have “a day or two” to provide you with cash, which is sitting in an escrow account at a serious brokerage. “The collateral is money. There shouldn’t be any threat, however you by no means know with this stuff,” he stated.
Has he spoken to Trump concerning the bond deal?
Hankey stated he has by no means spoken to the previous president, however he did communicate to his son Eric Tuesday morning. “He referred to as and thanked us,” Hankey stated. The bond additionally places on maintain about $10 million in fines towards Eric Trump and his brother Donald Trump Jr., in addition to former Trump Group Chief Monetary Officer Allen Weisselberg, who’re additionally defendants, in line with the Related Press.