New York Attorney General: We Found ‘Significant Evidence’ of Trump Organization Fraud

·7 min read
Reuters
Reuters

New York Attorney General Letitia James asked a court late Tuesday night to compel Donald Trump, Donald Trump Jr., and Ivanka Trump to testify under oath, saying that her office’s investigation into the Trump Organization had uncovered “significant evidence” of fraud.

James said in a tweet, “We have uncovered significant evidence indicating that the Trump Organization used fraudulent and misleading asset valuations on multiple properties to obtain economic benefits, including loans, insurance coverage, and tax deductions for years.”

“Donald J. Trump, Ivanka Trump, and Donald Trump Jr… assert that they may have ignored lawfully issued subpoenas for sworn testimony because of what they contend is ‘an unprecedented and unconstitutional maneuver’ by the Office of the Attorney General (OAG)” the motion states. “But subpoenas to current and former top company officials—such as those at issue here—are routine in complex financial investigations and are amply warranted here.”

The court documents notes that for over a year—and since Eric Trump testified in August 2020—the AG’s office has found significant evidence indicating that the Trump Organization used intentionally wrong property valuations “to obtain a host of economic benefits, including loans, insurance coverage, and tax deductions.”

Eric Trump invoked the Fifth Amendment “repeatedly” to avoid testifying as to the valuations of multiple Trump Organization properties, according to the memo.

Prosecutors note that while their office has not reached a final decision as to whether this evidence warrants any legal action, their grounds “for conducting the investigation are beyond reproach.”

Trump Family Starts Airing Dirty Laundry to Fight Off Subpoenas

“This game must end,” the AG’s office says in its court filing, which asks that a judge force Trump and his two adult children to testify, as well as compel the company to turn over key missing documents.

In a Wednesday statement, the Trump Organization denied the allegations, accusing James of “misleading the public” with her probe into the former president’s businesses.

“She defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule. Three years later she is now faced with the stark reality that she has no case,” the statement said. “So, in response to Trump suing her and filing multiple ethical complaints, and on the heels of her failed governor's race, she has no choice but to mislead the public yet again by misrepresenting the facts and ignoring her own inflammatory comments. Her allegations are baseless and will be vigorously defended.”

The filing states that the investigation into the Trump Organization began in March 2019, when Trump’s former lawyer Michael Cohen testified before Congress. During his testimony, Cohen said Trump’s annual financial states inflated the values of the former president’s assets in order to obtain favorable loans and insurance coverage—while also deflating the value of some of his other assets to lower real estate taxes owed.

“OAG has methodically investigated those allegations; indeed, the Trump Organization has already provided substantial documentary and testimonial discovery in response to subpoenas issued by OAG in connection with its civil investigation, without ever challenging OAG’s good faith,” the motion states.

For more than two years, the Trump Organization was aware of the attorney general’s investigation into the alleged misconduct and insisted its executives were cooperating, according to the filing. In reality, the motion states, the organization dragged its heels and only recently began to hand over many of the documents that were ordered via subpoena in December 2019.

The memo details numerous schemes to allegedly inflate the value of Trump’s assets, including one in which the former president valued his own apartment in Trump Tower at $327 million, “based on the apartment having 30,000 square feet of space multiplied by a certain price per square foot.” But in 2017, the apartment shrank for the first time to its actual size of just over 10,000 square feet and its valuation shrank commensurately to $116.8 million.

Asked about this, Trump Organization CFO Allen Weisselberg conceded that this amounted to a $200 million overstatement, “give or take.”

The court filing offers details on the Trump Organization’s allegedly misleading and false statements about the value of at least six properties, including the Trump golf clubs in Scotland and Westchester, and several of the company’s iconic buildings, including Trump Park Avenue and 40 Wall Street.

The AG’s office argues that the Trump Organization misrepresented the value of all these properties to the IRS, lenders, and other insurers with financial statements that were “inflated as part of a pattern to suggest that Mr. Trump’s net worth was higher than it otherwise would have appeared.”

In addition to the former president’s alleged misdeeds, the filing also paints a better picture into the previously opaque roles his two adult children play in the company. For example, Ivanka Trump was renting an apartment at Trump Park Avenue as if it were valued at $8.5 million, the memo notes. In Trump’s financial statements, however, the apartment was worth $25 million.

Ivanka “was a key player” in many of the company’s transactions and “was able to ask for an access to financial summaries and projections covering properties or businesses in the Trump Organization portfolio,” according to the memo, and also was a point person in its relationship with Deutsche Bank.

Trump’s Tax Leak Hints at Potential Fraud Investigations

Donald Trump Jr., who joined the family firm in 2001, was likewise crucial to the organization’s financial makeup.

“Moreover, evidence obtained by OAG confirms that Donald Trump, Jr. was involved with certain Trump Organization properties that are valued on Mr. Trump’s Statement of Financial Condition, including 40 Wall Street, and was consulted in connection with the matters on the Statements of Financial Condition,” the memo states.

The attorney general’s office claims it has received more than 5 million pages of evidence from the company that show Trump lied about the most banal things: the amount of cash available for a deal, the use of so-called “outside professionals” to evaluate the value of assets, and even the actual size of the Trump Tower penthouse. In some instances, investigators say, they found that the Trump Organization inflated the value of a property simply because it had his name on it—even though the financial documents explicitly indicated that wasn’t allowed.

But when investigators tried to get a hold of Trump’s handwritten documents—like Post-it Notes—that would show his involvement in the allegedly shady valuations, the AG’s office alleges that the company simply wouldn’t turn them over.

The filing says that the Trump Organization’s top lawyer, Alan Garten, maintained that the boss just was not involved that closely—even though company controller Jeffrey McConney told investigators in a sworn deposition that Trump would normally sit down to review asset values with chief financial officer Allen Weisselberg.

In the past, a source with direct knowledge of the company’s inner workings has told The Daily Beast that the Trump Organization had an annual ritual in which Trump and Weisselberg would review company finances in private and fill in the blanks as they saw fit. (Weisselberg and the company were indicted last summer on tax fraud charges in the parallel criminal investigation that’s being run by the Manhattan district attorney with the AG’s help.)

In a footnote within the court filing, the AG’s office also revealed that the Trump Organization’s reluctance to cooperate was so severe that the company was forced to hire an outside firm to oversee the search for electronic records. Back in September, a New York state judge had warned the company that it would have to turn over documents and top lieutenants would have to testify.

The filing asks a judge to compel Donald Trump and the Trump Organization to turn over all documents within 14 days, and to have Donald, Donald Jr. and Ivanka summoned to testify within 21 days.

Read more at The Daily Beast.

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