New York attorney general lifts lid on Trump Organization numbers game


Real estate firm Cushman & Wakefield assessed the Trump Organization’s interest in 40 Wall Street, an aging Manhattan office tower, in 2010 and concluded it was worth $200 million. When Donald Trump listed the building in a statement on its financial health the same year, the value was very different – ​​$601 million.

These conflicting assessments are at the heart of twin investigations by the New York Attorney General and the Manhattan District Attorney into the former US president and his family business, the Trump Organization.

This week, Letitia James, the attorney general, said she had uncovered “significant evidence” of fraud by the Trumps after she submitted a 160-page court filing on Tuesday evening that provided unusually detailed insight into the investigation. of three years.

“So far in our investigation, we have uncovered significant evidence that suggests that Donald J Trump and the Trump Organization falsely and fraudulently valued multiple assets and misrepresented those values ​​to financial institutions for economic gain,” it said. she said Wednesday, citing 40 Wall Street, among other examples.

By inflating the value of those assets, the Trumps could improve their creditworthiness and obtain financing more easily, she alleged. In other cases, they would have understated assessments to reduce taxes.

The Trump Organization called his claims “baseless” and reiterated its accusation that James – a Democrat – was leading a partisan witch hunt.

Among other revelations, the filing revealed that Eric Trump, one of the former president’s sons, and Allen Weisselberg, longtime chief financial officer of the Trump Organization, each invoked their Fifth Amendment rights against the self-incrimination more than 500 times during prosecutors’ interrogations during the investigation.

The court filing relating to 40 Wall Street and other properties appears to shed light on the asset valuation approach of a billionaire developer riding a wave of debt © Angela Weiss/AFP via Getty Images

It remains unclear what will happen to the investigation, which was launched in March 2019. James, who is trying to compel the former president and his two other adult children, Donald Jr and Ivanka, to testify under oath, admitted on Wednesday that she had not decided to file a complaint against them or against the company. Some lawyers questioned whether this would be justified.

But this week’s court filing offered a window into what appears to be an extreme approach to asset valuation taken by a billionaire property developer riding a wave of debt while struggling to prop up his reported net worth.

“I hope you will be impressed!” Trump wrote in a 2011 memo accompanying his financial statement that was cited in the filing. It was sent to Richard Byrne, then managing director of Deutsche Bank Securities, who became one of its main lenders.

The efforts, as detailed by James, went from the blatant to the absurd. Trump, for example, valued his penthouse apartment in Trump Plaza at $327 million in 2015 and 2016. That was a $200 million overstatement, “more or less,” according to Weisselberg’s testimony. The figure was arrived at by claiming the triplex was 30,000 square feet, although the actual size was 10,996 square feet. (In 2017, according to Trump’s financials, the apartment was back to full size).

On another occasion, he encouraged employees to assign a “zip code bonus” to certain parcels of property at his Los Angeles country club because they were in a more upscale neighborhood than others. They were not.

According to James, the Trump Organization inflated the value of its Westchester country club by claiming new members paid $150,000 or more in initiation fees. Many paid no fees in 2011, while the following year the Trump Organization devised a plan to recruit 75 members by waiving fees entirely.

Donald Trump's Golf Club in Westchester

Donald Trump’s golf club in Westchester. New York’s attorney general says the value of the country club has been inflated © Mary Altaffer/AP

At another Westchester property, Seven Springs, the Trump Organization told Cushman it would build and sell 24 luxury homes on a former estate, though it violates local zoning and environmental rules. Trump bought the property for $7.5 million in 1995. Five years later, the Royal Bank of Pennsylvania appraised its “as is” development value at $25 million. In 2009, Trump pegged it at $251 million, despite little assurance that the company’s plans would be realized. They were not.

The dossier offered insight into Trump’s work practices. While it is well known that the former president does not use email or a computer, he regularly communicated with employees via Post-it notes, according to the testimony of Alan Garten, a lawyer for the Trump Organization. The attorney general reiterated her request for those handwritten notes and others, which she claimed the company was withholding.

The filing also touched on the potentially crucial question of Trump’s role in creating his financial statements. Jeffrey McConney, the Trump Organization’s financial controller, told authorities, according to the filing, that he would prepare numerous financial statements and submit them to Weisselberg for finalization.

“Allen Weisselberg, I believe, went over it with Mr. Trump,” McConney said — though he acknowledged he was not present at those meetings. Prosecutors have tried for months to overthrow Weisselberg, whom they charged in 2021 with tax evasion, so far to no avail. He pleaded not guilty to the charges.

Among the many episodes recounted in the file, those surrounding 40 Wall Street are particularly intriguing, in particular because of the sheer magnitude of the differences.

According to James, Capital One, which held a $160 million mortgage on Trump’s share of the property, became concerned following the 2008 financial crisis about the building’s cash flow. Its leaders held meetings with Trump and Weisselberg in 2009 and eventually agreed to modify the loan. This led to the Cushman valuation of $200 million for 2010 and similar values ​​for successive years.

Capital One, according to James, harbored “great skepticism” as the Trumps demanded ever-larger valuations for the property. The situation came to a head in January 2015 when Weisselberg approached the bank and asked it to waive a $5 million principal payment due in November.

In a letter, Weisselberg touted the building as “one of the great post-2008 success stories” and cited a $550 million valuation from Trump’s June 2014 financial statements. “That would put your loan at a loan of 30 % on value,” he said.

But Capital One’s own analysis from October 2014 valued the property at $257 million, putting the loan-to-value ratio at 62%. He spurned Weisselberg, who then turned to Ladder Capital, where his son, Jack, worked as a director. The company moved to refinance the property based on Trump’s numbers.

Ladder hired the same Cushman auditors to reassess 40 Wall Street. This time, in 2015, they valued Trump’s stake at $540 million. Those findings, prosecutors said, “did not reflect a good faith assessment of value” and appeared to be based on “patently incorrect facts and aggressive assumptions.”

In a statement, Cushman said he disputed the attorney general’s “mischaracterizations,” adding, “The referenced Cushman & Wakefield assessments were undertaken and completed in good faith based on the material information made available.”

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