The New York attorney general’s office on Thursday took exception to a $175 million bond that Donald J. Trump recently posted in his civil fraud case, questioning the qualifications of the California company that provided it.
The dispute stems from a $454 million judgment Mr. Trump is facing in the case, which the attorney general’s office brought against the former president and his family business.
Mr. Trump was obligated to obtain the bond as a financial guarantee while he appeals the penalty — or else open himself up to the possibility that the attorney general, Letitia James, would collect the judgment. Without a bond in place, Ms. James could have frozen his bank accounts and begun trying to seize some of his New York properties.
Mr. Trump appeared to stave off this calamity on Monday when he posted the $175 million bond. Although he was originally required to secure a guarantee for the full $454 million judgment, an appeals court granted him a break, allowing him to post the smaller bond.
The company providing the bond — which is a legal document, not an actual transfer of money — essentially promises New York’s court system that it would cover $175 million of the judgment against Mr. Trump if he loses his appeal and fails to pay.
Now, however, Ms. James is raising questions about the company that provided the guarantee to Mr. Trump, Knight Specialty Insurance Company, owned by Don Hankey, a billionaire who made his fortune with subprime loans.
In a court filing on Thursday, Ms. James noted that Knight was not registered to issue appeal bonds in New York, and so she demanded that the company or Mr. Trump’s lawyers file paperwork to “justify” the bond within 10 days. Ms. James is seeking to clarify whether Knight, which had never posted a similar court bond before aiding Mr. Trump, is financially capable of fulfilling its obligation to pay the $175 million if Mr. Trump defaults.
Mr. Hankey and Amit Shah, the chief executive of Knight Insurance Group, the parent company of Knight Specialty Insurance Company, did not immediately return requests for comment. Mr. Shah told CBS News that Knight had issued the bond through Excess Line Association of New York, a nonprofit created by New York State that serves as facilitator between brokers and regulators.
In an interview on Wednesday, Mr. Hankey said he had made contact with representatives of Mr. Trump after a New York judge in February imposed a $454 million judgment in the former president’s civil fraud case and offered to help him post bond. Mr. Hankey said his motivation was not politics but business.
Knight Insurance Group is one of eight companies under the Hankey Group, all based in Southern California. Mr. Hankey earned a reputation as a provider of risky and lucrative loans, specifically collateral-based debt that can be arranged more quickly than conventional loans and requires borrowers to pledge valuable assets.
His companies are known for relentlessly calling people who miss payments by a day, and repossessing vehicles from delinquent borrowers, according to news accounts and regulators.
