Numerous unintended consequences in NYAG's case against the Trump Organization
The numerous lawsuits brought against former President Donald Trump over the years have taught us that they rarely succeed, if at all. But those close to him frequently pay the price.
Letitia James, the attorney general of New York, filed a 214-page complaint against Donald Trump and his real estate company on Wednesday, accusing them of overvaluing their assets for more than a decade in order to obtain at least $250 million in improper financial benefits from banks and insurers. This is the most recent instance.
Trump is accused in the case of undervaluing his property in order to avoid paying his fair share of taxes. The lawsuit only outlines civil claims; James forwarded her findings to the Internal Revenue Service (IRS) and the Southern District of New York's U.S. Attorney's Office for potential criminal prosecution.
James stated in a press release that between 2011 and 2021, "Mr. Trump and the Trump Organization knowingly and intentionally created more than 200 false and misleading valuations of assets on his annual statements of financial condition to defraud financial institutions."
Trump, for his part, persisted in referring to James's legal pursuit of him as a "witch hunt" and asserted that the allegations were made for political reasons. He will respond in the same manner he usually does: stall, beguile, and, if cornered, pay a fine. James' lawsuit will probably be turned into fundraising gold by the former president using his expertly polished feeling of resentment. He is unbeatable. Or he refuses to acknowledge it.
You know who frequently bears the brunt of Trump's transgressions? His supporters and allies. Allen Weisselberg, the longtime CFO of the Trump Organization, admitted guilt to 15 charges in August for failing to pay taxes on benefits he received while working there. He was one of many Trump employees who were charged with crimes.
James' complaint targets many firms, including well-known financial institutions like Deutsche Bank, Capital One, and Zurich North American, that it claims allowed Trump's alleged fraud. Trump is also charged with deceiving the accounting company Mazars for financial statements spanning ten years.
Mazars, Deutsche Bank, and others appear to have accepted the financial records that Trump submitted throughout the lawsuit at face value without making any significant attempt to determine whether the presumptions and calculations that supported them were valid.
According to Mazars, it used the financial data that Trump gave them to compile the reports that accompanied each declaration of financial situation. The complaint claimed that Mazars did not "audit or review the statements to verify the accuracy or completeness of the information provided by Mr. Trump or the Trump Organization" in the boilerplate text that accompanied those compilations. Mazars "confirmed that their clients were responsible for preparing the statements in accordance with generally accepted accounting principles in the United States," instead.
In one instance mentioned in the complaint, a bank's independent and qualified assessor estimated the value of the Trump Organization property at 40 Wall Street at $220 million in 2012. However, 40 Wall Street was valued at $527 million in the Trump Organization's statement of financial condition for the same year. The complaint claimed that this inflating of asset worth occurred with several properties over a period of years.
The Trump Organization was no longer represented by Mazars earlier this year, and Mazars stated that the financial statements for the years ending in 2011 through 20 "should no longer be relied upon."
Numerous banks, including Deutsche Bank, offered favourable loan terms in exchange for the same financial statements again. For the Trump Chicago hotel, which he acquired through the bank's commercial real estate business, Trump had just one loan with Deutsche Bank in 2011 for $140 million. He would start getting loans from the bank's private asset management section in 2012.
According to the complaint, loans were underwritten by Trump's personal guarantee rather than on the basis of objective evaluations of a specific property's value, enabling him to get more favourable financing terms. Trump used the financial records of his company to get loans at reduced rates by personally guaranteeing a number of them.
With $340 million in outstanding loans in May 2022, Deutsche Bank will eventually overtake all other lenders as the only largest lender to the Trump Organization, according to the complaint.
The New York Office of the Attorney General would not alert the bank of the false statements until subpoenas issued as part of the investigation in 2020. The Trump Organization was questioned by Deutsche Bank but declined to respond, according to the complaint.
According to the complaint, "Deutsche Bank decided, given the Trump Organization’s failure even to answer simple questions concerning the statements, to exit its relationship with the company." By May 2022, the Trump Organization had paid back $295 million of the loan, according to the complaint.
Despite the fact that Mazars and Deutsche Bank are the only parties named in James' case, they should be criticized for spending so much time complicit in his alleged deception. A weak defense is claiming to have been misled. Where was the investigation into any of Trump's claims?
Along with additional injunctions, the complaint demands that Trump pay back $250 million, permanently prevent him and his adult children from holding officer positions at any New York-based companies, and subject the Trump Organization to a five-year compliance monitorship.
By fLEXI tEAM