I read the same two things in the article and scratched my head. I mean, I assume the entire $250 million mentioned didn't have to come from the home, the way its written it could be a modest home. None the less, it makes me very curious what the actual value of the home is estimated at and where he materialized that much in assets supposedly out of nowhere.
I'm surprised anybody would be willing to risk $246 M for a known fraudster. And I highly doubt their home will still be their home when this is all over.
His parents now have a very good incentive to make sure he makes it to court.
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.
I don't see them having that kind of money. They've been on the receiving end of the loot, it's essentially being allowed to leverage stolen money in order to finance the bail.
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...
While it is likely true that they are likely leveraging assets acquired through his fraud to post bail, legally, we have to give them the benefit of the doubt. The only way I can think of that they wouldn't be allowed is if the assets themselves were evidence in the crimes. And there's also the murky bit where the house itself wasn't fraudulently purchased, so if SBF is found guilty and he must pay back all the money, if they were able to come up with the money through other means, they could keep the house.
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.
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.
I suppose this is equivalent to writing an option for a very unlikely downside event.
- 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.
Do you know this for a fact? I'm having trouble believing a bank would agree to loan the parents $250 million with only a 4 million dollar house as collateral. Even if the parents equity was 100% of the appraised value that's only $4 million. What ability do they have to pay the rest back? They're not paying that back on Stanford faculty salaries. Further the parents themselves might very well be implicated in this whole mess. I'm trying to imagine a loan office who would be willing to green light such a loan given all the above.