When news emerged that former President Donald Trump had managed to post a $175 million bond to prevent an asset seizure while appealing a ruling in New York that he lied about his wealth, it turned out to be a surprise figure who saved him.
He was none other than 80-year-old Los Angeles billionaire Don Hankey, a hard money lender who made a fortune financing car sales for borrowers with subprime mortgages — but expanded beyond that industry into other businesses where a profit could be made. Of course. .
Why does the name Don Hankey sound familiar?
One of his companies, Hankey Capital, provided loans totaling more than $100 million to developer Niall Niamey several years ago to complete a massive Bel Air mansion he called “The One.” The developer initially marketed the 105,000-square-foot home for $500 million, but it went bankrupt, and two years ago it was auctioned off for just $141 million to Richard Sahagian, founder of Los Angeles fast-fashion retailer Fashion Nova. The case is still in bankruptcy, but Hanke said much of the money owed to his company has been paid.
Did Hankey make his fortune in real estate?
No, Hankey's fortune rests with Westlake Financial Services, one of the largest providers of subprime car loans to borrowers with bad credit. The lender has a reputation for aggressively tracking borrowers, and contacting them if they are even a day late. In 2015, Westlake and a subsidiary that offers personal loans backed by auto titles were hit with fines and refunds totaling more than $48 million for using illegal loan collection tactics, such as making false threats to bring criminal charges. The companies pledged to reform their debt collection practices. The goal is to prevent loans from going bankrupt, not to repossess cars, which is expensive, Hanke said.
Hankey also owns North Hollywood Toyota and has long diversified beyond providing subprime car loans. Westlake provided loans for elective surgeries. Other Hankey Group companies include Midway Auto Group, which leases exotic cars and other vehicles, and Knight Specialty Insurance, the Hankey insurance company that underwrote Trump's appeal bonds. Forbes estimates his net worth at $7.4 billion.
Are there any previous contacts between Hankey and Trump?
Hanke said he is an investor in Axos Bank, a San Diego institution that refinanced Trump Tower in 2022 for $100 million. Hanke said he was not aware of the refinancing until afterward and that selling the bonds to Trump was a business decision, although he admitted he is a Trump supporter. “I have voted Democratic in the past and will support people who favor business,” he said.
So how did he participate in the Trump bond deal?
Trump suffered a legal blow when a judge ruled last February that the former president and his company had overstated their wealth over the years to obtain mortgages with better terms, and they must pay a fine of $364 million, a figure that rose to more than $364 million. $450 million with interest. Hanke said he had heard how Trump's legal team was struggling to post such large bonds, and he reached out to him just days before they were downsized last month.
“We were on a conference call and discussing the approximate bond size of $460 million, and word came up, and someone said, ‘We've just been informed that the bond has been reduced to $175 million,'” Hankey recalls.
How was this deal reached?
Hankey said he was later approached about obtaining bond for the smaller amount and agreed to post it. “They first came up with a $140 million list [investment] Bonds said the rest would be cash. We said the bond was acceptable to us. They were high-quality institutional connections. Ultimately, when they financed, they financed entirely in cash.
There was greater risk in underwriting the $460 million in bonds, but that might also have been possible to supplement with a combination of cash, bonds and real estate as collateral, Hankey said. “I wasn't comfortable, but I would have been happy to sit down and try to solve the problem. There would be more risk on my part, so maybe a little bit more of a price tag.”
Hanke declined to disclose the price of the $175 million bond, which is usually a percentage of the principal amount, but said the margin on the bond “was very small” because “the dollar amount was large and I don’t think there was any risk. In addition, we had Warranties So we gave him a good price.
How did Hankey close the deal so quickly?
Hankey is a hard money lender, which usually charges a steep interest rate and requires collateral that can cover the loan if it goes bankrupt. They are usually lenders of last resort or when the borrower needs money quickly. Hankey Capital, the entity that lent to Niamey, stated on its website that it would lend up to $300 million and could close the loan in less than five days.
The appeal bond deal came in just a few days, Hankey said. “We had to get a lot of documents to sign, but they came up with the money straight away and we had cash, so it was just a matter of getting the papers together,” he said.
Has Hankey made such a loan before?
Hankey said he had never before issued appeal bonds, but his insurance company handled specialty bonds such as mining companies that need to ensure they will undertake environmental reclamation work after mining activity ceases.
What happens if Donald Trump loses his appeal?
Hanke said that if Trump cannot pay the judgment, the court will post the bond and his company will have “a day or two” to obtain the money, which is in an escrow account with a major brokerage firm. “The collateral is cash. There shouldn't be any risk, but you never know these things.”
Did he talk to Trump about the bond deal?
Hanke said he never spoke with the former president, but he spoke with his son Eric on Tuesday morning. “He called us and thanked us,” Hankey said. Bonds also attaches nearly $10 million in fines against Eric Trump and his brother Donald Trump Jr., as well as former Trump Organization CFO Allen Weisselberg, who are also defendants, according to the Associated Press.
