Wait. Only a few days ago he declared he had less than 100k on his bank account and now he forks out 250m? It's hard to believe anything else he said.
No, he (or one or more other people on his behalf) secured a $250m bond. Bail bonds generally cost significantly less than the amount of bail; in many states with a maximum or exact amount set by law. In New York, the maximum is 10% up to $3000, 8% for $3000-$10000, 6% for the amount over $10000. At $250M bail, the bond is a hair over $15M.
I highly doubt anyone paid $25 million that they aren't expecting to get back.
The point is to show you, your family, and associates have skin in the game and think you will show up at court
When push comes to shove, morals aren't easy to come by. Especially not when put up against some downtime with the family.
If you use a bondsman, you lose the 10% no matter what. If you use a bondsman and skip town, you're out 10%, and they're out the other 90%. Hence why bondsmen employ bounty hunters.
You can think of bondsmen as essentially very specialized financial institutions. They provide loans to people. If you have a $5000 bond, you can pay a bondsman $500 to front the other $4500 for you. If you make it to court, they get their $4500 back and it's all good. If you don't make it to court, they are incentivized to find you to make sure you make it to court. They are usually not pleased to do this.
You are not required to use a bail bondsman to post bail.
There is no $250M loan. Should he fail to appear, he and each of his sureties (his parents) can be pursued by the court for whatever remains of the balance of the $250M bail amount.
There is no actual $250M that changes hands until then (or, realistically, after.)
The actual order: https://www.courtlistener.com/docket/66631291/14/united-stat...
There’s no way his parents are forking over their home to a bails bondsmen. There’s also no bail bond man who has $250m.
In most states, 10% is closer the legal maximum than the minimum premium for a bail bond (it is often exactly the the legal maximum, but in NY the maximum for large bail amounts is much lower, asymptotically approaching 6%.)
A loan was taken out for 250M with 4M collateral.
Once he makes it to court, that $250 million is paid back. The only thing the parents lose would be the interest payments on the loan from now until the court date.
Probably a judge doesn't care where it comes from and the bail bond people see the risk the way you do but it is a bit weird how a person suspected of crime at this level is allowed to await their day in court in freedom while others are immediately jailed because they didn't steal enough...
Next, they aren't using a bondsman. I doubt any bondsman has $250 million to dedicate to this for any length of time.
And they are allowed to wait "in freedom" because bail was posted on their behalf. Those are the rules of the system.
The only asset pledged is their Palo Alto house, their ownership of which I believe predates any alleged fraud of SBFs.
It doesn't cone from anywhere, its a promise to pay (with a very streamlined enforcement process), not a transfer of funds.
> and the bail bond people see the risk the way you do but it is
There are no “bail bonds people” here, unless you mean his parents and the other two sureties.
> it is a bit weird how a person suspected of crime at this level is allowed to await their day in court in freedom while others are immediately jailed because they didn't steal enough...
Money bail is a problematic system, sure, but it also doesn't work the way you seem to think it does.
- Pledge $250M in exchange for $4M collateral and $X in interest (?) - Near certain outcome of SBF showing up into court, unless some 4-D chess plan has already been contrived to have him and parents flee (what career do they flee to? Each of them?) - Collect risk-free interest
In the case that this trade blows up, you then call Talib Nassem and tell him you have another anecdote of underpricing tail risk and he'll write about it in his next book on the folly of underestimating black swan events.
Nice. Reminds me of how some folks recently borrowed $1B with crappy illiquid collateral. Round and round we go!
Have you ever met a law professor?
It’s not a question of corruptability, it’s a question of competence
edit: i.e., it is far more likely to be a 25M home than a 250M home, because I've never heard of a 250M home.
Bond is actually whatever arrangement you make that the court accepts as surety in place of depositing the full bail amount as cash. Most commonly, this is paying a premium to a registered bond agent (who usually also does not pay the full bail up front), sometimes, its having other persons aa sureties who are liable for the bail if you don’t appear, or pledging other property as a guarantee, or, as in SBF's case, both, where his parents home is pledged and his parents are liable sureties.
“Put up” is not “give up”; it is to offer as collateral, that is, they got a loan secured by a lien on the home.