Michael Schvartsman Prepares to Plead … with Trump Org’s Sometime Lawyer Alan Futerfas
Days after the merger between Truth Social and Digital World Acquisition Corporation went through, the new company, Trump Media and Technology Group, released its 8K. It described that it’s not sure Truth Social will make it a year.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Account Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” as stated above, the Company has until September 8, 2024 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company has incurred and expects to incur significant costs in pursuit of its acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
It further described that it is hemorrhaging cash. Josh Marshall did a thread on it and concluded the company is basically worthless. (Update: Now he has done a full post on it.)
TMTG tanked on the news.
As that was happening, something curious was happening in the case of Michael Schvartsman.
He was charged last summer with insider trading in conjunction with the merger between DWAC and Truth Social. In February, DOJ supserseded his indictment, adding a money laundering charge for laundering the proceeds of his insider trading to buy a yacht he has since renamed Provocateur.
As part of the pretrial motions, lawyers revealed that a Russian porn investor, Anton Postolnikov, had also participated in the insider trading.
A Russian-American businessman based in Miami is suspected of making nearly $23 million from alleged insider trading involving former President Donald Trump’s media company, according to federal court records.
The businessman, Anton Postolnikov, is the owner of a Caribbean bank that caters to the porn industry and also reportedly loaned $8 million to Trump’s media company. Postolnikov, who owns a few residences on exclusive Fisher Island in Miami, is the nephew of a former high-ranking Russian government official who at one time was a staffer for Russian President Vladimir Putin, according to media reports.
[snip]
One of Troiano’s affidavits includes an e-mail Garelick sent Postolnikov on June 24, 2021, about four months before the merger was announced.
“Anton, Good times last night! Following up on that Trump Media Group SPAC we mentioned. The deal is going to finalize this week. Please let us know if you are interested in investing. . . .,” Garelick wrote in the message, which was also copied to Michael Shvartsman.
In March, the judge in the case, Lewis Liman, rejected the motions to dismiss of Schvartsman and his co-defendants.
Today, Schvartsman and his brother, Gerald, docketed plans to change their plea on Wednesday.
Normally, that’d just be an interesting coincidence with Trump’s crashing social media empire.
Except for one detail. Also today, Schvartsman added a lawyer to his defense team: Alan Futerfas.
Futerfas has long done work for Trump Organization and was closely involved on Don Jr’s representation during the Mueller investigation.
Yep, TMTG down $13/share today and now lower than its opening public share price from last Tuesday. Let’s see if it ever goes up again…
Institutional shares of DJT are 5%, Short interest is a surprisingly low 3%.
The income, daily user numbers, cash flow and losses were known to anybody who listened to Bloomberg Radio before the public trade.
Daily trades have been around 13 million shares. After the 8K was released, 90 million shares traded, then things settled down to as before. The stock is moving slightly down after hours.
It will be interesting to see whether it gyrates wildly for a while, like a meme stock, or just fizzles out. The low short interest suggests to me (and to some professional market watchers) that the 95% ‘other’ owners are True Believers (or Truth Believers) who will ride the stock down to zero without a fuss.
Did you know you can buy an uncirculated $2 bill with trump’s mug shot overprinted on Jefferson’s face for just $19.95?
Is it possible that the shorts are anxious about the true believers getting spun up to go all GameStop on them?
There is no current ability to short the stock. You can sell it, but not short it.
Fidelity reports short interest at 3.03%.
I double-checked, and a note in very small print says that short interest was ‘as of March 15.’ Dunno whether the recent change means it can no longer be shorted.
“DJT stock has quickly attracted the attention of short sellers due to its oversized valuation. For the nine months ended Sept. 30, revenue tallied in at just $3.37 million compared to Trump Media’s current market capitalization of about $7.5 billion.
At the same time, short sellers haven’t been so lucky given the popularity and novelty of the company. According to S3 Partners, DJT is the most shorted SPAC in the U.S. based on its cost to borrow (CTB) fee of 157.57% as of yesterday, March 26. That compares with the average CTB fee for a stock of 0.6%.”
https://investorplace.com/2024/03/trump-media-pop-is-giving-djt-stock-short-sellers-a-run-for-their-money/
Reporting has said that the problem with shorting this stock is that there are few shareholders willing to sell at a reasonable price, to allow the short seller to buy the stock needed to cover their short sale. It’s uneconomic. That there isn’t enough liquidity is probably one thing saving this stock from tanking faster and farther.
I would not bet against the richest man in Pennsylvania.
“Philadelphia area billionaire Jeffrey Yass’ firm was the largest institutional shareholder as of December in the company that has merged with Truth Social, former President Donald Trump’s social media company.
While the firm is a trading company that serves as a market maker for many well-known stocks, it could signal a link between one of the most powerful GOP megadonors in the nation with the presumptive Republican nominee. ..”
There are too many Trumpian zealots to short this stock.
This is definitely one market that can stay irrational longer than you can stay solvent.
I love how lawyers write SEC disclosures with Hemingwayesque descriptions that the sky is falling.
Once upon a time, no one would have imagined taking a company public, if its survival depended on doing an unknown deal, for an unknown amount, with an unknown third party, within six months – and that the consequence of failing to so would be liquidating the company within less than a year. Major deals can take that long to pull off even after you’ve struck a deal in principle.
There’s no such thing as “investing” in this company. There’s nothing to invest in: no business or business plan; no resources; no staff, apparently, who would make that bet-the-company deal within six months.
It exists on paper for the purpose of manipulating its stock and giving the impression that Donald Trump might be worth as much as he’s claimed for years. It’s a throwback to the days of manipulating 19th century railroad shares: no locomotives, no cars, no right-of-way, no track, no passengers. Just stock.
I haven’t seen anyone make this point, but it strikes me that the IPO functions as much as an opportunity to make a campaign contribution by another name as it does as a traditional investment. Moreover, such “investments” have far fewer restrictions than campaign contributions – among them, being open to foreigners.
It’s true that he can’t sell his shares in time to provide the liquidity he currently needs, but I suppose it’s possible he’ll try to use them as collateral for a bond/loan.
This would be a risky loan because it would be difficult to properly margin this volatile stock. The sale of the collateral would send the stock into a downward spiral.
Ruthie, That has been my understanding all along: that buying these stocks is nothing more or less than making a disguised campaign contribution. My only question has been where such contributions go–not to the RNC, of course, but to the campaign or to Trump’s legal debts?
I’m assuming the latter. And my underlying question is what happens to his campaign over the next seven months as he raids its coffers for personal reasons while his donors (the small ones, at least) slow down their gifts?
A parallel situation exists today with respect to the bonding outfit that covered his NY fraud appeal bond. The CEO of that company admitted that he did it as a Trump supporter. If Trump loses the appeal, this will be the equivalent of the largest single candidate donation in history (if the bond holder doesn’t attach Trump’s property, which he may well not do because it would put him at odds with his political “champion.”
https://www.bloomberg.com/news/articles/2024-04-02/trump-175-million-bond-arranged-by-billionaire-supporter-s-firm
I gather they do a change of plea hearing because they got superceding indictments then and need to reflect a changed list of charges, and not because they are pleading guilty?
No. That’s an arraignment. A change of plea is almost always not guilty to guilty.
I’m having a hard time figuring out how the SEC approved this stock going public. Josh Marshall’s analysis of the 8K mandatory annual filing says, for example, that the company is bleeding cash, has not and may never disclose how many customers use its service, or how fast that number is growing or declining. No monthly or daily user numbers, no revenue per user data, and so on. Wall Street must be laughing its collective ass off over the rubes.
I’m trying to understand that myself.
It’s really just an opportunity to defraud a bunch of rubes.
What’s the downside of defrauding the rubes?
Stock manipulators make money off them.
“I’m going to fail in six months and go out of business, if some heffalump; another nonexistent creature, like a rube billionaire; or a foreign gubmint or oligarch doesn’t appear out of nowhere to keep me afloat.” All while saying you have no prospects of finding one, or even that you’re trying to find one.
Even if that risk is disclosed, it’s so far out of the ordinary that it’s not a circumstance people assume might be possible for a new IPO, whose stock trading is overseen by the SEC.
The SEC has a fetish about not going into the merits of an offering. They’re in the business of ensuring accurate information for the market, not protecting investors from their own stupidity. This approach doesn’t work well for meme stocks.
In this case, the SEC’s hands off approach looks like a marine insurance company not bothering to ask whether the boat-as-built will float. People will sell to it, insure it, book it and board it, assuming that it does.
The 8k form is used to disclose mandatory important or key events, whenever they happen. The 10k and 10q forms are mandatory annual and quarterly filings.
How can a company launch an IPO, and then within days file this sort of 8k, as if it were information not known at the time of issuance? It smells of fraud.
Thanks for raising this point, I’ve been thinking the same all day. It’s shocking how close on the heels of the IPO this information came out. It smacks of fraud. Which to be fair, is the Trump business model.
The 8K was required because the merger was a “major event”.
As I understand it, the “merger” is the avenue through which an existing shell company acquires a business that it and the merged entity’s principals can take public.
The fact of the merger, while being a triggering event for the shell company’s disclosure requirements, doesn’t explain why the risks disclosed in the 8k were not disclosed as part of the public offering.
I realize now that it was a merger with a shell company that was already publicly listed.
A SPAC takes itself public and sits on its cash, while it waits for a customer to come along that has a business it wants to take public, Using the SPAC avoids the people with the deal having to independently take themselves public. That’s time-consuming, expensive work they would be unfamiliar with.
Those behind the SPAC are playing a financial game: they won’t generally know anything about the business they acquire.
Thanks bmaz, I’ll admit that all of this is outside of my area of expertise, but I had assumed companies were vetted in some way before going public. Seems to me that if they are not, that invites fraud.
The SPAC had nothing inside its shell, but since is publicly traded must make a disclose pretty much immediately. And hopefully do it cleanly. That is hard for potential scammers.
Lol, I wanted to reply Phred…
Thanks again, bmaz, to both replies ; )
Is a “major event” kin to a “uniquely situated defendant”?
The 8k was probably triggered by the going concern opinion by the auditors.
That was my impression. All of the basic facts that demonstrate its questionable going concern value were almost certainly in the IPO. People invested anyway.
But auditors are required by GAAP to make this statement based on the company’s finances, and an auditor making that assessment is clearly an 8k event. With regard to the timing, I would suspect that they got the IPO out before an audit report was set to issue which they suspected might make that assessment.
The IPO may still be fraudulent anyway as management has its own duty to assess going concern value. It may not be enough to just publish the gory figures without comment. Some security specialist re disclosures need to weigh in on that.
This wasn’t an IPO.
Stan Choe of the AP described the ins and outs of this financial transaction like this:
DWAC was already a publicly traded company, and TMTG was a privately held company. DWAC merged with TMTG, and changed their name and ticket symbol to signal the new company’s identity. (OK, you and I both know they did it to pacify Trump’s ego, but let’s be a little charitable tonight.)
Once this happened, the selling took off, first going up and then it came crashing down today — with more crashing on the after-hours market.
At LGM, they linked to a tweet with a snapshot of the top line financials from 2023 and 2022. After you get past the revenue lines, three lines of expenses jumped out at me (with the numbers in thousands):
Loss from operations: (15,967.4) in 2023 and (23,247.3) in 2022
Interest expenses: (39,429.1) in 2023 and (2,038.7) in 2022
Change in fair value of derivative liabilities: (2,791.6) in 2023 and 75,809.9 in 2022
Interest expenses jumped, and cost the company more than they lost in operations. At the same time, the FV of derivative liabilities fell off a cliff.
I’d love to know what the loans were for that created such expenses last year, and who made the loans to them. Similarly, I’d love to know who the counterparties on those derivatives are/were.
And — just a guess here — DOJ probably would like to know these things too.
It seems to have the fragrance of soap powder about it.
Russia, Russia, Russia?
LOL. So true. It sure seems like it is being reported like an IPO. I missed this rather key detail.
It’s also why fraudsters like to merge into publicly traded shell companies, and why the SEC does what it can to prevent shell entities from going public.
Thanks for that correction. Silly mistake on my part.
re renaming it “DJT”, what more proof do you need that his brand is worth “beelyons”?
So much good stuff in this thread! Thanks to all who posted.
Not a finance person, but didn’t the IPO technically occur a couple of years ago when the SPACs stock went on the market. I thought the whole point of a SPAC was to enable a “vanilla” IPO followed later by a disclosure-free merger where only the SPAC’s shareholders are supposedly at risk. In other words, a work-around specifically designed to evade disclosure.
Yes, except there is still a duty to immediately disclose because the initial SPAC that was filling its shell was already publicly traded.
I first encountered SPACs in the late 1980s as a young commercial lender. A SPAC sponsor would skirt the SEC filing requirements by acquiring a company whose registration was active but the company was doing little or no business. The company’s stock price would trade for pennies or fractions of pennies so millions of shares could be purchase for less than the cost of floating an IPO. So for $100K a devious person could have 10 million or more shares of a moribund company. Then the pump starts.
The SEC appears to have recognized the potential for wrong doing which why they require disclosures like in this 8K which is very complicated. The people who approached me ended up in jail and written about in books.
It was known. By me, for example, because Bloomberg Radio, which I listen to for a few minutes a day while taking my grandchildren to school, has been talking about it all week.
Maybe not the exact figures in the 8K but very close.
There’s little the SEC will not do, unless there is a large public scandal involved, to aid in the creation of and the inflation of assets.
Historically rules for going public were enforced by the respective exchanges with the NYSE being the strictest. There have always been stocks like this. They would have been listed on the Vancouver Exchange or the Pink Sheets. NYSE regulatory part joined with NASD’s regulatory part to form FINRA.
Is this historical stringency the reason why DJT isn’t listed on NYSE? Trump has claimed “the top person” there wanted it “badly” and made it seem like he chose to stay “out of New York” (also the NASDAC location). He also referred to that top person as “he,” when she’s female.
I assume NYSE wanted nothing to do with this.
Requirements:
“Global Market Capitalization $500,000,000
Revenues (most recent 12-month period) $100,000,000
Aggregate Cash Flow for last 3 years $25,000,000 (all 3 years must be positive)” plus many more.
They have lowered their requirements. They did not allow companies with more than one class of stock like The New York Times, The Washington Post, Viacom, etc. all traded on the American because family members owned super voting shares. Dow Jones was the exception. As far as NASDAQ that is technically not an exchange and actually not in New York. Their computers are in Trumbull CT. Susquehanna Trading is in PA. This is Jeff Yass’ firm. I don’t know but I would assume that they make a market in DJT. Making a market means that they agree to buy the shares at one price and sell at another. Presumably if you had a Bloomberg terminal or Reuters, or of course, a NASDAQ terminal you could see which market maker had the narrowest spread.
It is listed on the NASDAQ. And for the some reason the DJT ticker abbreviation doesn’t come up with daily market results when queried in Google. You have to use “NASDAQ:TMTG” in Google to get that. (TMTG stands for Trump Media Technology Group).
Wall Street is permitting it. Maybe they see a whole new racket. The smart ones are probably already building their strategies on portfolio management and growth in a kleptocracy. If Josh had any game, which he doesn’t, wanting to keep things working, he could reach out to Barack and Michelle to put out Hope Social together and take it public. No excuses not to with that user base and revenues, and there’s no need to disclose traffic or anything, so let the Good Acid Techbros, the sexy rich, Soros, and Streisand push Hope Social to a stratospheric valuation. Surely there are enough of them not tapped out yet preventing fascism who would want to get in on the ground floor for a sure bet. Josh would be rich, and we’d have somewhere for news besides the Skinner Box Elon is building. As an individual investor I would try get in early and win the election if I could get my house back in fair condition. Everyone would know Biden won, because Truth Social would suck, while Hope Social would rock! I might even return to TPM with my son’s school ID with such a strong market signal. Failure for Truth Social investors compared to the fantastic gains for Hope Social investors would prove to the world that Democrats are sexier.
Those savvy MAGA-vestors must have misheard what the multiple Bible-owning grifter was saying. I am pretty sure he meant,
“Make America PREY Again!”
Hmmm…think I remember an old science fiction short story (Damon Knight?) called To Serve Man.
That was a Twilight Zone episode.
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Yes, and a Twilight Zone episode (“. . .Based on Damon Knight’s 1950 short story of the same title. . .”)
So is Futerfass getting them to plead guilty and flip or is this just a sign that Trump is getting them a lawyer to make sure they don’t? Sorry if you covered this already
Think a minute about what you just asked. Alan Futerfas is a long-time Trump associate and lawyer. He is not the one trying to get others to flip on Trump, just the opposite.
Right- so aren’t they changing plea from Not Guilty? Why do they need Futerass to change plea – he could have just made an appearance. Or did they already plead guilt?
The only thing on the docket is a hearing, which is where a defendant would announce a change in his plea.
As EW says upthread, the normal change is from Not Guilty to Guilty. Defendants normally want to pair that with announcing some sort of agreement about a reduced charge or cooperation agreement. But with Futerfas joining the legal team, WTF knows.
That idea points to the question of just what could these defendants cooperate on that would satisfy the government yet still keep Defendant-1 out of more legal danger? I don’t see an answer that fits those constraints.
Ah, but there is another docket entry that suggest something else.
That hearing would have been on Friday morning. On Monday, three other docket entries are made. First, Futerfas enters a notice of attorney appearance. This is followed by parallel entries about the Change of Plea hearings for Michael and Gerald.
Could it be that at Friday’s scheduling hearing, M&G indicated that they were thinking of changing plea, and the judge said “OK, then have the paperwork filed over the weekend and we’ll set the change of plea hearing once that comes in.” Word gets back to Trump, and he immediately moves to add a new lawyer to the legal team, perhaps in hopes of getting M&G not to change their pleas after all.
I defer to people who file actual motions for a living to judge whether what I am saying makes any kind of sense. It sure looks to me like something happened at that scheduling hearing last Friday which led to all this movement today.
I guess this Wednesday’s hearings will be very interesting.
It may be that at the hearing Liman said fish or cut bait and, having had their motions denied, the Schvartzmen are pleading.
This is in SDNY, where they won’t accept half cooperation deals.
They are pleading, and to assuage Trump’s fears, Futerfas enters the legal team. I can see why Trump would want this, but how do they convince Michael to add him to the team? Is is simply “We’re paying the bills here, and we want someone of our choice at the table”?
Well stated counselor!
Thank you for this update EW!
It seems like every Trump transaction is like playing Six Degrees of Kevin Bacon RU version. My apologies to Kevin Bacon.
Another SMDH moment.
Could the whole thing just be a “contribution laundering” scheme? “I’m going to throw 13 million into this worthless company because that will buy me influence when Trump gets back into the White House, and nobody will be able to accuse me of it”?
Like the old trick of buying a politician’s house for twice the listed price.
As in, “it wasn’t a campaign contribution, I blew $200M on the stock”?
Oh, like the time Trump sold a Florida property to a Russian oligarch for multiples of its market value? That old trick? https://www.seattletimes.com/nation-world/why-did-a-russian-pay-95m-to-buy-trumps-palm-beach-mansion/
That’s kind of what I was thinking in my comment above.
I commented above before reading this, but I think this may be what’s happening. As I noted, there are less restrictions on stock ownership than campaign contributions. Plus, maybe he could try to use the stock value as a guarantee for a bond (I know nothing about this world, just speculating) or loan, thereby solving his liquidity crisis..
The brothers may know how the money laundering works, and that could be relevant to the Truth Social stock play. Is Futerfas involved so that he can get his hands on the discovery and control the defendants’ confessions?
I really have no idea, but that sounds like a realistic possibility.
Knight Specialty Insurance Company issues Trump $175 million appeals bond. Fittingly, on April Fools Day.
Knight Specialty is part of the Knight Insurance business, which is principally involved in property and casualty insurance. Knight is part of Westlake Financial Services, which is part of the Hankey Group. It is headquartered in L.A. The CEO of these various, privately-held entities appears to be Don Hankey. Amit Shah is presidents of Knight Specialty, its VP of Risk is Jason Zhao. It has 61 employees, the Hankey Group about 3500.
Forbes describes Hankey, 80, as the “little-known king of sub-prime car loans.” But he runs a multi-billion dollar business and is reputedly worth $5.5 billion. As with all things Trump, we don’t know what this bond cost or the assets were that he used to secure it. Following the money continues to be a good rule of thumb.
https://www.npr.org/2024/04/01/1242170709/trump-bond-gag-order
https://www.forbes.com/profile/don-hankey/
Not the first time that an entity associated with Hankey has come to Trump’s rescue in an hour of need
Hankey is associated with Axos Bank which were involved in the Trump Tower refinancing
https://www.rollingstone.com/politics/politics-news/axos-bank-trump-tower-donald-trump-1320670/
From that March 2022 Rolling Stone article:
Which raises the question, who’s behind Axos – besides Don Hankey, it’s largest non-institutional shareholder – and what do they expect from Trump in return?
I always wonder if those that oversee banks are doing their best to protect the public. The recent Silicon Valley and First Republic Bank failures are the most recent example of my on-going concern.
The Comptroller of The Currency is the primary federal regulator for Axos Bank and CFPB is the secondary federal regulator. Were I the person in charge of overseeing Axos Bank at the COC, I would be camped out in Axos’s financial offices looking at all its loan documentation and triple insuring, no pun intended here considering Knight Insurance, their valuation processes were squeaky clean, especially given public, legal Trump valuation issues. That is if I actually were concerned about the public.
According to Forbes “Trump’s collateral to secure the loans was a combination of cash and investment-grade bonds, according to Don Hankey, the chairman of Knight Insurance.”
So “damage” to him is still not enough.
And are overseers of banks doing their best to protect the public?
Re-Manafort, “Former Bank Executive Sentenced to Year in Prison on Bribery Conviction Tied to Paul Manafort Loans; Stephen Calk sought Trump administration job while bank loans were pending” was finally imprisoned after appeals. He tried to give Manafort loans, overriding the bank’s board, even though Manafort didn’t qualify.
Doesn’t say where Trump got $175 million in cash and “investment grade bonds.” From an existing portfolio? Borrowed? Hankey wouldn’t care, so long as Trump had valid title to it. But the odds are good he’ll need it.
Judge Engoron’s independent monitor will know exactly where Trump got it. By now, so should Engoron.
What I’m confused by, is that according to Google, Knight Specialty is not licensed/chartered/whatever the correct term is, to work in NYC or DC, so how are they providing this bond ?
The court can dispense with or modify the requirement
NY C.V. P. Sec. 2502, addresses the qualifications of sureties and the New York appeal bond form, to wit;
(a) Surety; form of affidavit.
Unless the court orders otherwise, surety shall be:
1.) an insurance company authorized to execute the undertaking within the state:
AND, (d) d) Acknowledgment. The undertaking shall be acknowledged in the form required to entitle a deed to be recorded
[ a Notary Acknowledgment]
https://codes.findlaw.com/ny/civil-practice-law-and-rules/cvp-sect-2502/
However Knights Speciality Insurance do not appear to be certified anywhere in the United States to transact surety business
Ie they do not appear on this list.
https://fiscal.treasury.gov/surety-bonds/list-certified-companies.html
I imagine that there are various ways in which their willingness to back an undertaking for the sum required of Trump could be effectuated – eg by contract with a licensed/authorized/certified insurance company to cover the loss, or some other way.
As always, the devil is in the details. What pro quo was given for the quid, knowing that the properties are either hocked to the limit or under some other de facto management? Would these details be something that Barbara Jones could get her hands on?
“Described as “returns obsessed,” Hankey operates with strict rules for all his businesses: achieve a 30% pretax return on equity and 20% revenue growth annually. ”
https://labusinessjournal.com/special-editions/wealthiest-angelenos/wealthiest-2023/7-don-hankey-2/
I doubt he’ll get it here even if Defendant-1 wanted to pay him off. If this appeal fails there really won’t be anything left to pay Hankey, especially considering how TMTG has been cratering on the market. It’ll be a dime stock or de-listed by May at this rate.
Yeah indeed.
But the hard nosed loan shark has some fairly certain and worthwhile advantage to himself in mind.
To the questions about Hankey motive, an MSNBC legal commenter on Morning Joe today noted that:
1 – because the 2 Trump properties most likely used as collaterol for the bond
2 – might face liquidation were Trump to default
3 – are already partially owned by Hankey (as the largest shareholder of the lender/refinancer of the mortgages on these 2 properties),
4 – by posting the bond, Hankey thereby prevents ‘fire sale’ at reduced prices to reimburse for his loss, and
5 – simply takes ownership of the properties, if Trump defaults,
6 – at a property valuation not negatively affected by any fire sale.
It was a NY lawyer who commented, but since I didn’t brush off my Secured Transactions notes from law school before summarizing her comments, nor dug into the nitty gritty of the disgorgement details, I have nothing to affirm this is how things would go in this case, based on how heavily leveraged those properties are and the AG’s first-right (?) to the properties. I also cannot vouch for the facts listed in her statements, but do believe they are consistent with commenter observations above.
If one of Hankey’s businesses had first liens on those two Trump properties (which ones?), then yes, it would make sense to put second liens on them to secure the bond, if the creditor had to foreclose in order to get repaid.
But the lienholder doesn’t just take the property. A lien gives the holder priority in repayment from any sale of the collateral. Anything left after repayment goes to general creditors or to the debtor.
Based on pubic information, Trump has enough assets to pay his known debts and these judgments, without cash from DJT. He would probably still have independent means even after all that. But he would be nowhere near a billionaire.
That assumes Trump can continue to milk the rubes to pay his legal bills, which are several million a week. They will go up if his cases go to trial.
Here is the bond document courtesy of Forbes
https://www.documentcloud.org/documents/24528561-donald-trump-175-million-bond-new-york-civil-fraud-knight-insurance
Specifically states:
“Knight Speciality Insurance Company, meeting the requirements to transact business and issue this undertaking in the State of New York…”
Well well, that statement turned out to be “optimistic”
Judge Merchan expands reach of gag order to include family members of covered individuals, which now includes Merchan’s daughter.
https://www.npr.org/2024/04/01/1242170709/trump-bond-gag-order
And adds the possibility of a fine (not much) or actual jail time for contempt.
Here’s the order:
https://s3.documentcloud.org/documents/24528530/4-1-24-merchan-order-expanding-trump-gag-order.pdf
[Hmm, I accidentally posted this as a top-level comment when I meant to reply to EoH’s top-level comment. I deleted my comment but then I couldn’t repost it in the proper place (dupe filter). Apologies ! Feel free to delete this bit]
————————————————
Before the gag order was amended, prosecutors filed this Supplemental Filing:
https://s3.documentcloud.org/documents/24527771/ny-v-trump-da-gag-supplemental-20240401.pdf
They were pretty blunt—here’s the first 2 sentences:
The last sentence of Merchan’s order does indeed warn Defendant that “any violation of this order will” result in sanctions. Not “may” result, but “will” result. IANAL but that sentence has a real “this is your final warning” vibe.
We may be about to find out
1) 5 hours ago Trump ‘Truthed’ what amounts to a whining acknowledgement of the order.
2) 3 hours ago Trump ‘Truthed’ a 6 min 28 s clip of Fox News discussion with Turley of latest legal developments, including the gag. Trump also pinned this ‘Truth’.
4:22 Brian Kilmeade begins to discuss the gag order and at 4:41 launches an attack on Merchan’s daughter and includes the debunked theory of her posting pictures of Trump behind bars (albeit slightly qualifies it by say ‘there is some dispute’ )
And the clip ends with the female Co-host concluding by disparagingly referring to another station asserting the gag order was “About false claims Trump made about the Judge’s daughter” at which all the co-hosts threw up their hands in disapproval of the other station.
3) By reposting this Trump is making a statement which violates b.(3) of the latest order.
His defense will be that he didn’t say it, he just reposted someone else saying it. It’s the old Fox News “people are saying…” intro to, often, a blatant lie or hit piece.
While F&F are not proscribed by the gag order from uttering xyz on their platform,
Trump is proscribed from uttering xyz or causing xyz to be uttered on his.
Trump does not successfully evade the proscription on him, by the sham device of quoting others saying xyz, causing xyz to be disseminated by his platform to his audience from his own post.
“ By reposting this Trump is making a statement which violates b.(3) of the latest order.”
I sure hope you are correct and Judge Marchan proceeds accordingly.
Trump is well past the “fuck around” phase and someone needs to bring the hammer down on him. The judge should revoke his bail and order that he have no access to electronic devices until trial and sentencing are over.
[edit: Larry Flynt got 60 days for contempt after spitting at and shouting obscenities at a judge in his courtroom. But Trump’s behavior seems in some ways even worse.]
Lol, Trump is never going to get remanded.
I doubt the judge will even make the gag order part of the conditions of release.
Hi Marcy. Great post. The string and pictures all over the walls over there are probably getting pretty complicated. Anyway, you turned over a rock and and then another rock and found more Russians. I couldn’t figure the roles of some of the characters as I was reading, but usually I’ve seen somebody before in a post, or you’ll introduce them, so this is a reader response or editorial type comment. “Who the heck is Garelick?” Somebody here will probably kindly point out I should just click the f#cking links, but that is was what happened to me. Usually I just think I missed something important before. Maybe something like from this UPI story 29 Jun 2023 by way of an intro would help earlier in the text. I hope this comment makes sense.
“Michael Shvartsman, Gerald Shvartsman and Bruce Garelick allegedly netted more than $22 million in illicit profits from trading shares of Digital World Acquisition Corp. before it announced plans to merge with Donald Trump’s Truth Social.”
Anyway, it might help to give us the three characters early. As it is I think it’s hard to attribute the significance of what Garelick is saying without already knowing he is an alleged co-conspirator with Shvartsman. Maybe this is useful.
Weird, but I had thought the same, and I clicked on the links. I could use even a couple more sentences of background, in addition to your suggestion.
I’m greatful, at least, there’s not another Zeigler or Weiss/Wise to get me really mixed up!
Who the heck is Zeigler?
(I’ll look it up)
Ziegler possibly? There’s more than one too… ref https://www.emptywheel.net/?s=ziegler
I typed in “Garelick Postolnikov” into my current search engine (DuckDuckGo) and got plenty of references.
https://www.washingtonpost.com/technology/2024/02/03/trump-social-dwac-investigation/
https://www.newsweek.com/donald-trump-russia-scandal-anton-postolnikov-1863947
etc.
I’ll have spotty internet access today, so I want to get these links posted now:
https://bsky.app/profile/danir.bsky.social/post/3kp5iq7bf5s2q
Apr 2, 2024 at 7:47 AM
Links to NYT, from 3/27/24
How Trump Moved Money to Pay $100 Million in Legal Bills
From Wendy Siegelman:
https://bsky.app/profile/wendysiegelman.bsky.social/post/3kp3yy3a5ik2r
Apr 1, 2024 at 5:33 PM
The CNN business page for DJT asserts the company has 3 employees. Not a financial guy but assume three might be the legal minimum and doesn’t reflect the number of people who actually work there. Or???
A fly-by-night operation like DJT, Trump is also a cheap shit, more likely hires contract workers or services than it does employees.
White Knight’s $175M pledge gets Trump singing… “My baby does the Hanky Panky”
https://youtu.be/hWT_fI2O1xM
This Hankey sounds really hinky.
Wed aft update. trump $175M bonding rejected by NYS court, not sure if it’s just paperwork or something more interesting. Shantzman bros pled guilty to inaider trading with the trump stock. Putin,Alex Smirnov (Moscow) Alex Smirnov FBI, Postolnikov. Stock swindling, money laundering, massive fraud, lying about Hunter Biden to advance GOP interests, espionage all woven together in a lifeline between Putin & trump. Putin gets immediate return on investment with GOP sabotage of Biden foreign policy support for Ukraine. Putin owns trump and trump owns GOP, our democracy is at risk in ways it’s never been before.
Looks like Marcy was right: the Brothers Schvartzman pleaded guilty (Daily Beast).
ref https://www.thedailybeast.com/brothers-michael-and-gerald-shvartsman-plead-guilty-in-trump-media-insider-trading-scheme
Dr Wheeler, does this add anything to your coverage?
Exclusive: Trump Media saved in 2022 by Russian-American under criminal investigation
https://www.theguardian.com/us-news/2024/apr/03/trump-media-es-family-trust-2022-loans
ps markdown syntax doesn’t work for links [text](link). Am I doing it wrong?
pps congrats on your blue tick
I also notice that Kai Park was added as an attorney for this crew.
He was on the list of potential special masters for the Cohen case. The slot that was assigned to Barbara Jones, iirc.
Alan Futerfas was representing trump org at that point.
Small world.