A Trump and his money.

How a California billionaire known for auto loans provided Trump’s bond
Don Hankey, who made a fortune offering high-interest auto loans to customers with poor credit, said providing the $175 million bond to Trump is a good business deal
By Michael Kranish
and
Jonathan O'Connell
April 2, 2024 at 7:06 p.m. EDT


As former president Donald Trump struggled last month to post a bond for more than $450 million to keep authorities from seizing his properties, California billionaire Don Hankey and his wife, Debbi, started discussing a solution: Hankey’s business could cover it.

Hankey, a Trump supporter who made a fortune providing high-interest auto loans to customers with poor credit, soon reached out to Trump’s team to negotiate a deal that would allow Trump to stay the penalty while he appealed a massive New York civil fraud judgment. But when a court reduced the bond to $175 million last week and Trump said he had the cash to post it himself, the matter seemed moot, Hankey told The Washington Post.

Then, to his surprise, the Trump team last week revived the talks and asked Hankey if he would back the new amount. Hankey promptly agreed. He said that his company is charging Trump a “modest fee,” which he declined to disclose, and that the arrangement allowed Trump to hold onto his money, adding, “At least he’s getting interest on his collateral.”

With the bond, which Trump posted Monday, Hankey appears to have facilitated a final step in Trump’s narrow escape from a cash crunch that a few weeks ago had the New York attorney general vowing to come after his assets and experts wondering if he would have to file for bankruptcy as he faced more than half a billion dollars in penalties from two civil cases, with only weeks to find the money.



The financial boost for the presumed GOP nominee has thrust Hankey into the midst of a presidential campaign, bringing a new national profile to a colorful 80-year-old worth $7.4 billion, according to Forbes, who worked his way from car salesman to major player in the car loan industry and owner of Xanadu, formerly Olivia Newton-John’s Malibu estate. If Trump is elected, their relationship could come under new scrutiny if the government is involved in matters affecting Hankey’s business.

Hankey said the bond, which was provided by one of his companies, a subsidiary of Knight Insurance, was a good business deal, not a political statement.

“I’m chairman of the board of several companies, and we just carry on our business and we try to stay away from political issues or taking sides,” said Hankey, who said he has been a Trump supporter “and I will support him in the future, but I wouldn’t consider myself a major supporter.” He said that while many of his contributions have gone to Republicans, he has also donated to Democrats.

Hankey also said he provided the bond to Trump in part because he agreed with the former president’s defense in the New York civil case, in which he was convicted of committing fraud by overvaluing his assets and getting loans at lower rates than otherwise would have been available. Trump argued that even if the property values were overstated, it was a common practice and that the loans were repaid in full.

Hankey said that one of his businesses, Westlake Financial Services, provides loans to 1.5 million customers and that “quite often, when credit statements or financial statements are submitted to us, the values are exaggerated on some of the assets. … I would say it probably happens on 75 percent of our applications.”

The Trump campaign did not respond to a request for comment, referring instead to a post by the former president on his social network, Truth Social, in which he said, “I had to pay New York State in order to appeal a corrupt decision by a biased, crooked and highly overturned judge.”

Hankey is also the largest individual, non-institutional shareholder of Axos Bank, a little-known online company that in 2022 provided $225 million in crucial loans to keep Trump’s businesses afloat after many of his longtime lenders cut ties in the aftermath of the Jan. 6, 2021, attack on the U.S. Capitol. Hankey said he was unaware of the Axos loans until after they were provided to the Trump Organization. Axos’s president and chief executive previously told The Post he approved the loans because they were profitable for his bank, not for political reasons.

While not as well-known nationally as some other billionaires who support Trump, Hankey is a prominent figure in California, where his best-known business has revolved around providing high-interest auto loans to customers with poor credit. Remembering how he once had to turn away such customers when he was a car salesman, he said, he established a business that provided loans to higher-risk customers at higher rates.


A 2015 article in Forbes magazine described Hankey calculating how he might provide a hypothetical customer with a low credit score a loan at 23.99 percent. The article said that his company at the time had 336,000 outstanding car loans from 23,000 auto dealerships, and that his company repossessed 250 cars per day because of problems with repayment.

While the business provided financing to many customers who couldn’t get it elsewhere, the U.S. Consumer Financial Protection Bureau found that it sometimes went too far.

The agency on Oct. 1, 2015, announced that it had ordered Westlake Financial Services and another company, Wilshire Consumer Credit, to provide $44.1 million in relief to customers and to pay a civil penalty of $4.25 million for what the agency called “illegal debt collection tactics.” The news release did not name Hankey, and he was not accused of wrongdoing. Hankey said in the interview that the companies relied on an “electronic program” and that he didn’t think they did anything wrong.

In the bank case, brought by New York Attorney General Letitia James (D), state Supreme Court Justice Arthur Engoron ruled in February that Trump, several of his companies, his two elder sons and former executives were civilly liable for fraud by lying about the true value of his assets to obtain better rates.

Attorneys for the Trump Organization and family have argued that the company was engaged in normal business practices and that the judge’s financial penalty was wildly excessive and ought to be waived or reduced.

After Engoron’s ruling, Trump moved to appeal — but first needed to either post a bond of more than $450 million to stay the financial penalty, or pay it. Weeks later, Trump’s attorneys told the court that he couldn’t do so after approaching 30 surety companies.

But the Hankeys had already begun discussing a potential deal. Hankey said his wife, Debbi, first suggested providing the bond, and then contacted a friend who knew the campaign and connected them with Hankey.

A round of negotiations soon commenced, but last week, an appeals court panel in New York ruled that Trump needed to post only $175 million to appeal.

“We thought our negotiations were finished,” Hankey said. “And we were thanked by the Trump Organization.”

But Trump’s company soon reached out again. “They called back and asked us if we would put up the bond for $175 million,” he said.

It took only a few days to complete the new deal.

By posting the $175 million bond Monday, Trump appeared — at least for now — to escape from a financial jam that weeks ago appeared so untenable that experts wondered if he would file for corporate bankruptcy.

Instead, he has gained stays in the two most daunting civil cases against him without having to forfeit any of his assets or sell any of his properties. Nor did he have to touch stock he has in his social media company, Trump Media & Technology Group Corp., a stake that was still valued at around $4 billion Tuesday afternoon despite the stock price’s recent slide.
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Nonetheless, depending on how the appeals process plays out, Trump still may face substantial judgments in the bank case as well as in an unrelated defamation case, in which an insurance company posted a $91 million bond.

By using the bonds and the appeals process, Trump has given himself additional chances to argue his position in court, in front of different judges, and — perhaps most important — gained more time to pay any penalties that are ultimately levied upon him.

Robert E. Malchman, a longtime New York lawyer who has been following the bank case, said that the appellate court’s decision to reduce the bond amount had given Trump a lifeline and that James will probably now have to press her case well after the election through the appeals process.

Trump still may face the full penalties, Malchman said, even if he returns to the White House.


“He can be president of the United States again, but that’s not going to affect his civil judgments,” he said.

He said Trump remains under the purview of a court monitor, former judge Barbara S. Jones, who must approve major financial transactions by the Trump Organization. And he can no longer use the money he has provided as collateral for the bond for other purposes, which could strap him financially. “That’s $175 million that you can’t use for anything else,” Malchman said.

Hankey said he has never spoken to Trump. But after the bond deal was made public, he heard from one of Trump’s sons, who effectively runs the company.

“I talked to Eric Trump this morning,” Hankey said. “He called and thanked us for posting the bond.”

Razzan Nakhlawi contributed to this report.

Exclusive: Trump Media saved in 2022 by Russian-American under criminal investigation

Trump’s social media company went public relying partly on loans from trust managed by person of interest to prosecutors
Hugo Lowell
Wed 3 Apr 2024 06.00 EDT
Last modified on Wed 3 Apr 2024 15.08 EDT

Donald Trump’s social media company Trump Media managed to go public last week only after it had been kept afloat in 2022 by emergency loans provided in part by a Russian-American businessman under scrutiny in a federal insider-trading and money-laundering investigation.

The former US president stands to gain billions of dollars – his stake is currently valued at about $4bn – from the merger between Trump Media and Technology Group and the blank-check company Digital World Acquisition Corporation, which took the parent company of Truth Social public.

But Trump Media almost did not make it to the merger after regulators opened a securities investigation into the merger in 2021 and caused the company to burn through cash at an extraordinary rate as it waited to get the green light for its stock market debut.

The situation led Trump Media to take emergency loans, including from an entity called ES Family Trust, which opened an account with Paxum Bank, a small bank registered on the Caribbean island of Dominica that is best known for providing financial services to the porn industry.

Through leaked documents, the Guardian has learned that ES Family Trust operated like a shell company for a Russian-American businessman named Anton Postolnikov, who co-owns Paxum Bank and has been a subject of a years-long joint federal criminal investigation by the FBI and the Department of Homeland Security (DHS) into the Trump Media merger.

The existence of the trust has previously been reported by the Guardian and the Washington Post. However, who controlled the account, how the trust was connected to Paxum Bank, and how the money had been funneled through the trust to Trump Media was unknown.

The new details about the trust are drawn from documents including: Paxum Bank records showing Postolnikov having access to the trust’s account, the papers that created the trust showing as its settlor a lawyer in St Petersburg, Russia, and three years of the trust’s financial transactions.

The concern surrounding the loans to Trump Media is that ES Family Trust may have been used to complete a transaction that Paxum itself could not.

Paxum Bank does not offer loans in the US as it lacks a US banking license and is not regulated by the FDIC. Postolnikov appears to have used the trust to loan money to help save Trump Media – and the Truth Social platform – because his bank itself could not furnish the loan.

Postolnikov, the nephew of Aleksandr Smirnov, an ally of the Russian president, Vladimir Putin, has not been charged with a crime. In response to an email to Postolnikov seeking comment, a lawyer in Dominica representing Paxum Bank warned of legal action for reporting the contents of the leaked documents.

There is also no indication that Trump or Trump Media had any idea about the nature of the loans beyond that they were opaque, nor has the company or its executives been accused of wrongdoing. A spokesperson for Trump Media did not respond to a request for comment.

After this story was published, a lawyer representing Trump Media said in a statement: “The Guardian continues to propagate its false narrative that TMTG has these fake connections to Russia. It is a hoax. Litigation will continue on this point and we are confident that The Guardian will ultimately be held responsible for its defamation and this story should be retracted.”

But Postolnikov has been under increasing scrutiny in the criminal investigation into the Trump Media merger. Most recently, he has been listed on search warrant affidavits alongside several associates – one of whom was indicted last month for money laundering on top of earlier insider-trading charges.

Postolnikov and the trust

In late 2021, Trump Media was facing financial trouble after the original planned merger with Digital World was delayed indefinitely when the Securities and Exchange Commission opened an investigation into the merger, Trump Media’s since-ousted co-founder-turned-whistleblower Will Wilkerson recounted in an interview.

Part of the problem was that Trump Media struggled to get financing because traditional banks were reluctant to lend millions to Trump’s social media company in the wake of the January 6 Capitol attack, Wilkerson said.

Trump Media eventually found some lenders, including ES Family Trust, but the sequence of events was curious.

ES Family Trust was established on 18 May 2021, its creation papers show. Postolnikov’s “user” access to the account was “verified” on 30 November 2021 by a Paxum Bank manager in Dominica. The trust was funded for the first time on 2 December 2021.

Trump Media then received the loans from ES Family Trust: $2m on 23 December 2021, and $6m on 17 February 2022.

The loans came in the form of convertible promissory notes, meaning ES Family Trust would gain a major stake in Trump Media because it was offering the money in exchange for Trump Media agreeing to convert the loan principal into “shares of Company Stock”.

Oddly, the notes were never signed. But the investment in Trump Media proved to be huge: while precise figures can only be known by Trump Media, ES Family Trust’s stake in Trump Media is worth between $20m and $40m even after the sharp decline of the company’s share price in the wake of a poor earnings report.

The ES Family Trust account also appears to have benefited Postolnikov personally. As the criminal investigation into the Trump Media deal intensified towards the end of last year, the trust recorded several transfers to Postolnikov with the subject line “Partial Loan Return”.

In total, the documents showed that the trust transferred $4.8m to Postolnikov’s account, although $3m was inexplicably “reversed”.

(On 17 July 2023, Postolnikov received $300,000. On 17 October 2023, Postolnikov received $1.5m, before it was reversed the next day; later the same day, Postolnikov again received $1.5m, which was also reversed. On 19 October 2023, Postolnikov received the $1.5m for a third and final time.)

The reason for the trust’s creation remains unknown. Aside from the money that went to Trump Media, the trust’s statements show the trust has directly invested money with only two other companies: $10.8m to Eleven Ventures LLC, a venture capital firm, and $1m to Wedbush Securities, a wealth management firm.

The current status of ES Family Trust is also unknown. The trust’s address is listed as a residential home in Hollywood, Florida. But, according to the property website Redfin, the six-bedroom home appears to have been sold in December 2023.

The creation papers also contained something notable: a declaration that, if the original trustee – a Paxum employee named Angel Pacheco – stepped down from the role, his successor would be a certain individual named Michael Shvartsman.

Sprawling money-laundering investigation

Last month, federal prosecutors charged Michael Shvartsman, a close associate of Postolnikov, with money laundering in a superseding indictment after previously charging him and two others in July with insider-trading Digital World shares. Shvartsman and his co-defendants pleaded not guilty.

At least part of the evidence against Shvartsman came from a confidential informant for the DHS, court filings show: in one March 2023 meeting with the informant and an associate, Shvartsman mentioned a friend who owned a bank in Dominica and made bridge loans to Trump Media.

“[Shvartsman] stated that a friend of his owns a bank in the island of Dominica and would be able to provide banking services to Russian and Ukraine Nationals if the [confidential informant] had other clients in need of that service,” the DHS report said.

“[Shvartsman’s associate] told the [confidential informant] that he does not think the SEC would be able to go after [Shvartsman] for his part in the investment but mentioned that [Shvartsman] essentially provided ‘bridge financing’ for the firm behind the Truth Social media platform,” it said.

The unredacted parts of the DHS report do not specify whether the “friend” was Postolnikov and what the “bridge financing” referred to – but the report left open the possibility that Shvartsman also had a role with the trust.

A lawyer for Shvartsman declined to comment on his client’s relationship with Postolnikov. A spokesperson for the US attorney’s office for the southern district of New York also declined to comment.

It is unclear whether federal prosecutors are aware that Trump Media was propped up by Postolnikov via ES Family Trust. At the same time, the money-laundering investigation surrounding the Trump Media merger and the scrutiny on Postolnikov appears to have ballooned in recent months.

The investigation into potential money laundering appears to have started after Wilkerson’s lawyers Phil Brewster, Stephen Bell and Patrick Mincey alerted the US attorney’s office in the southern district of New York to the ES Family Trust loans in October 2022.

Months later, in June 2023, the FBI expanded its investigation to work jointly with the Department of Homeland Security’s El Dorado taskforce, which specializes in money laundering, and its Illicit Proceeds and Foreign Corruption group, which targets corrupt foreign officials who use US entities to launder illicit funds.