The individual backing the $175 million bond for Trump is a billionaire who specializes in subprime car loans and has faced regulatory scrutiny in the past.
Providing a routine appeal bond of $175 million for Donald Trump, which other insurers declined, is a task that Don Hankey, a California financier and the Chairman of the Hankey Group of Companies, has familiarity with. Hankey has accumulated wealth by offering loans to borrowers that are typically avoided by other financial firms.
While Hankey’s involvement in assisting Trump has brought him into the spotlight, some of his companies have recently undergone scrutiny from several regulatory bodies, including the U.S. Justice Department, the Consumer Financial Protection Bureau, and the California Department of Insurance. Public records reveal that Hankey’s companies have faced regulatory action on four occasions since 2015.
A notable instance occurred in 2017 when the Department of Justice filed a complaint against Westlake Financial, Hankey’s well-known subprime auto lender. With a network of 50,000 car dealerships and $3 billion in managed assets, Westlake Financial markets itself as “The Yes! Yes! Lender.”
According to the complaint, Westlake and its subsidiary Wilshire Commercial Capital illegally repossessed at least 70 vehicles owned by military service members who were protected under the Servicemembers Civil Relief Act. The companies settled the allegations and paid $761,000. Five years later, the Justice Department filed another complaint against Westlake, accusing it of failing to provide service members with interest rate benefits they were entitled to under the law. The matter was resolved with a settlement payment of $225,000.
“Amidst the tremendous sacrifices made by service members, it is our duty to protect their rights and ensure they have complete access to the significant benefits guaranteed by the law,” stated Martin Estrada, U.S. Attorney for the Central District of California, upon the settlement.
Hankey, whose net worth is estimated at $7.4 billion by Forbes, oversees companies that possess $23 billion in assets and employ over 3,000 individuals, according to the company’s website. His financial entities, totaling eight, include Westlake, Knight Insurance Group (which provided the appeal bond for Trump), a commercial real estate investment firm, and a fleet financing provider for rental car companies. Additionally, he holds a significant stake in Axos Financial, a San Diego-based company that refinanced certain Trump loans in 2022 after other banks refused to do so.
The appeal bond provided by Hankey’s Knight Specialty Insurance prevents the New York Attorney General from collecting on the $464 million judgment she obtained against Trump and his co-defendants in a civil fraud case, while Trump appeals it. The judge overseeing the matter determined that the defendants had engaged in persistent fraud over several years. Hankey has not responded to a request for comment.According to consumer complaints filed with the federal Consumer Financial Protection Bureau, some customers of Hankey have expressed dissatisfaction with his company’s practices. Records from the past year compiled by the agency show that customer allegations against Westlake, a Hankey company, occur almost daily. These allegations include improper vehicle repossession, charges on loans that customers did not sign up for, and failure to provide accurate loan balance and payment histories to credit reporting agencies. These inaccuracies can greatly hinder consumers’ ability to obtain other loans, lease residences, or secure jobs.
Complaint records indicate that Westlake employees repeatedly contact customers who fall behind on their auto loans. Just last month, a borrower from Florida wrote, “Even when I have a payment arrangement, they will still call up to 6 times a day, 7 days a week.”
In addition, Hankey companies have faced regulatory actions from both the CFPB and the California Department of Insurance. In a consent decree filed in 2015 by the CFPB against Westlake and its affiliate Wilshire, evidence was revealed that Westlake and Wilshire pressured borrowers through illegal debt collection practices. The consent order stated that approximately 176,000 customers were affected.
According to the CFPB, Westlake and Wilshire made changes to loan terms without informing borrowers, resulting in additional interest being accrued on the loans. The companies also allegedly deceived customers by manipulating caller IDs and pretending to be employees from flower shops or pizzerias in order to extract information about their locations or vehicles for repossession purposes. In some cases, Westlake’s collection agents led borrowers to believe that their vehicles would be released upon payment of a certain sum, often less than the full amount owed. However, once these payments were made, Westlake did not release the vehicles, as discovered by the CFPB.
While Westlake and Wilshire did not admit or deny the findings, they paid $44 million to affected customers and a $4.25 million penalty.
In 2015, KnightBrook Insurance, another Hankey company, was cited by the California Department of Insurance for various violations in its handling of customer claims. During a one-year period, the department reviewed 127 automobile and collateral protection claims handled by KnightBrook and identified 45 violations of the state insurance code. These violations included the omission of fees in the total loss settlements provided to customers, insufficiently comprehensive, equitable, and unbiased investigation of claims, non-payment of salvage certificate fees, and failure to remunerate reasonable towing charges.
According to the report, KnightBrook has acknowledged the state’s conclusions and plans to implement corrective measures in relevant jurisdictions.
News Source:NBCNews.com