Accounting Firm Cuts Ties With Trump, Says Financial Statements Are Unreliable
The accounting firm that prepared former President Donald Trump’s annual financial statements says the documents, used to secure lucrative loans and burnish Trump’s image as a wealthy businessman, “should no longer be relied upon” after New York’s attorney general said they regularly misstated the value of assets.
In a letter to the Trump Organization’s lawyer Feb. 9, Mazars USA LLP advised the company to inform anyone who had gotten the documents not to use them when assessing the financial health of the company and the former president. The firm also said it was cutting ties with Trump.
Mazars’ letter, made public in a court filing Monday, came just weeks after New York Attorney General Letitia James said her investigators uncovered evidence that Trump and his company used “fraudulent or misleading” valuations of its golf clubs, skyscrapers and other properties to get loans and tax benefits.
“While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you to no longer rely upon those financial statements is appropriate,” Mazars General Counsel William J. Kelly wrote to his Trump Organization counterpart, Alan Garten.
Kelly said Mazars performed its work on Trump’s financial statements “in accordance with professional standards” but that it could no longer stand by the documents in light of James’ findings and its own investigation.
Mazars’ conclusions applied to Trump’s financial statements for 2011 to 2020, Kelly said. Another accounting firm handled Trump’s 2021 financial statement, according to court filings.
Kelly also informed Garten that Mazars could no longer work with Trump because of a conflict of interest and urged him to find another tax preparer, distancing the firm from its highest-profile client and work that’s at the heart of the civil and criminal investigations.
The Trump Organization said in a statement it was “disappointed that Mazars has chosen to part ways,” but took Kelly’s letter as a positive — noting that the firm hadn’t found material discrepancies in Trump’s financial statements.
The letter “confirms that after conducting a subsequent review of all prior statements of financial condition, Mazars’ work was performed in accordance with all applicable accounting standards and principles and that such statements of financial condition do not contain any material discrepancies,” the Trump Organization said. “This confirmation effectively renders the investigations by the DA and AG moot.”
James’ office included a copy of the letter in a court filing as she seeks to enforce a subpoena to have Trump and his two eldest children testify under oath in her civil investigation into his business practices. The Manhattan district attorney’s office is running a parallel criminal investigation.
A state court judge, Arthur Engoron, is scheduled to hear arguments in the subpoena dispute on Thursday.
The attorney general, a Democrat, has not taken any legal action against Trump, a Republican, but she contends that her nearly three-year investigation has turned up enough evidence of wrongdoing to demand that Trump and his oldest children, Donald Jr. and Ivanka, answer questions under oath.
In fighting the subpoenas, Trump’s lawyers have argued that any testimony they give in her civil investigation could be used against them in a parallel criminal investigation being overseen by the Manhattan district attorney’s office.
Trump has given his Statement of Financial Condition — a yearly snapshot of his holdings _—to banks to secure hundreds of millions of dollars worth of loans on properties such as a Wall Street office building and a Florida golf course, and to financial magazines to justify his place on the list of the richest people in the world.
In a court filing last month, James’ office detailed several instances in which Trump misstated the value of assets on financial statements given to banks.
Deutsche Bank accepted Trump’s financial statements without objection in a deal for $300 million in loans for three of his properties and, in internal memoranda, emphasized Trump’s reported financial strength as a factor in lending to him, James’ office said.
Another bank said it received financial statements in 2014 stating Trump had a net worth of $5.8 billion and liquidity of $302 million. A bank official involved in that deal told James’ office that if he were aware of misstatements on Trump’s statement of financial condition, he would have killed the deal.
James’ investigation and the Manhattan DA’s probe are at least partly related to allegations by Trump’s former personal lawyer, Michael Cohen, that Trump had a history of misrepresenting the value of assets — inflating them in some cases and minimizing them in others to gain favorable loan terms and tax benefits.
Cohen gave copies of three of Trump’s financial statements to the House Committee on Oversight and Reform during his testimony in 2019. Cohen said the statements, from 2011, 2012 and 2013, were ones Trump gave to his main lender, Deutsche Bank, to inquire about a loan to buy the NFL’s Buffalo Bills and to Forbes magazine to substantiate his claim to a place on its list of the world’s wealthiest people.
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