A New York judge ruled on Thursday that Donald Trump, Donald Trump, Jr., and Ivanka Trump must answer questions under oath about the finances and accounting practices of the Trump Organization.The ruling was a victory for New York Attorney General Letitia James, whose office issued subpoenas to the three Trumps in December and January as part of its civil investigation of the former President’s finances. Judge Arthur Engoron dismissed arguments made by lawyers for the Trumps in a court hearing on Thursday to block the depositions and ordered the former President and his two children to submit to questioning within twenty-one days.

The court ruling came roughly a week after Trump’s longtime accounting firm, Mazars U.S.A. L.L.P., sent a letter to the Trump Organization, stating that nearly a decade of financial statements it prepared for Trump “should not be relied on.” Naturally, there is now a great deal of speculation about where the investigations into Trump’s businesses are heading. In addition to James’s civil probe, her office is working on a criminal probe with the Manhattan District Attorney, Alvin Bragg, which yielded an indictment of the Trump Organization’s chief financial officer, Allen Weisselberg, on charges of tax fraud last summer.

From 2011 to 2020, Mazars prepared Trump’s tax returns and provided an annual “Statement of Financial Condition for Donald J. Trump,” which listed each of the Trump Organization’s assets and estimated their value. In 2019, Michael Cohen, Trump’s former fixer—who had been convicted, the previous year, of counts including tax evasion and campaign-finance violations—testified before Congress. During his appearance, he released a partial copy of a June, 2011, Mazars statement that estimated the value of the Trump assets at nearly $4.6 billion, and his net worth at nearly $4.3 billion, far higher than outside estimates at the time. In its recent letter, Mazar said that it decided to disavow the statements from 2011 to 2020 “based, in part, upon the filings made by the New York Attorney General . . . our own investigation, and information received from internal and external sources.”

Recent court filings and news reports indicate that both sets of prosecutors are now examining whether Trump and his associates defrauded lenders and insurance companies by exaggerating the value of Trump properties on loan applications and other legal documents. Last month, James’s office said in a court filing that it was investigating whether Trump and the Trump Organization “misstated the value of Mr. Trump’s assets on annual financial statements, tax submissions, and other documents and made other material misrepresentations provided to third parties in order to secure loans and insurance coverage and obtain other economic and tax benefits.” It also stated that the attorney general’s office “intends to make a final determination about who is responsible for those misstatements and omissions.”

Unless they appeal Thursday’s ruling, all three Trumps face the prospect of answering detailed questions from James’s investigators regarding their knowledge of various financial documents that her office has zeroed in on, and what role they may have played in preparing them. Among the transactions mentioned in last month’s filing were three involving a combined three hundred million dollars of loans that Deutsche Bank issued to Trump subsidiaries. They included one that developed the Trump International Hotel, in Washington, D.C., and another that developed the Trump National Doral golf resort, in Miami. In “evaluating whether to extend or maintain credit, Deutsche Bank accepted Mr. Trump’s personal guaranty and Mr. Trump’s Statements of Financial Condition, and the valuations listed thereon were incorporated into internal bank memoranda,” the filing read.

While James’s office has been tussling with Trump’s lawyers in court, Bragg’s office has been less open about how its investigation is progressing. But the Times, which has been following developments closely, reported that the criminal prosecutors have also “zeroed in on financial documents that [Trump] used to obtain loans and boast about his wealth,” and “have questioned one of Mr. Trump’s accountants before a grand jury as part of their examination of the financial statements.”

How far does the about-face by Mazars help the government’s case? “Due in part to our decision regarding the financial statements, as well as the totality of the circumstances, we have also reached the point such that there is a non-waivable conflict of interest with the Trump Organization,” the accounting firm said in its letter. “As a result, we are not able to provide any new work product to the Trump Organization.” The term “non-waivable conflict of interest” suggests that Mazars is now concentrating on saving its own skin rather than Trump’s. If prosecutors did press charges and go to trial, they would almost certainly call some employees of Mazars as witnesses. And those witnesses would surely emphasize that, in preparing the statements, they relied on financial information provided by the Trump Organizations in the form of a spreadsheet.

This detail is contained in last month’s court filing by James’s office, which also showed just how exaggerated some of Trump’s claims were. For most of the period covered by the financial statements, Trump’s primary residence was his penthouse at Trump Tower. “The supporting data for Mr. Trump’s 2015 financial statement reported the value of Mr. Trump’s triplex apartment as $327 million, based on the apartment having 30,000 square feet of space multiplied by a certain price per square foot,” the filing said. In fact, Trump’s apartment is 10,996 square feet. Another Trump building is 40 Wall Street. In 2011 or 2012, Allen Weisselberg ordered an appraisal of the property, which assessed its worth as about two hundred million dollars. “During the same period,” the filing stated, “Mr. Trump presented a value for 40 Wall Street on his Statements of Financial Condition of $601.8 million in 2010, $524.7 million in 2011, $527.2 million in 2012, and $530.7 million in 2013.”

No surprise there. But did any of this amount to criminal behavior that can be proved beyond reasonable doubt in a court of law? In a lengthy report about the Trump case that the Brookings Institution published last year, four senior lawyers, including Norman Eisen, a leading Trump critic who worked in the Obama Administration, said that prosecutors could conceivably charge Trump with falsification of business records, tax fraud, insurance fraud, scheme to defraud, or being part of a corrupt enterprise. However, the report also outlined possible defenses that Trump could make: he might claim that he wasn’t responsible for a particular financial statement or loan application, or that he had no criminal intent to defraud anyone. He could also argue that the inflated asset valuations were not “material”—meaning that they didn’t significantly influence the decision-making of any counterparty, such as a bank or insurance company.

In its letter to the Trump Organization last week, Mazars said that, while its statements about Trump’s financial condition could no longer be relied on, “we have not concluded that the various financial statements, as a whole, contain material discrepancies.” The Trump Organization, in its public response to the letter, seized on this language and claimed it “effectively renders the investigations by the DA and AG moot.” Trump himself issued a lengthy statement depicting the New York investigations as political hit jobs, and claiming Mazars’s “decision to withdraw was clearly a result of the AG’s and DA’s vicious intimidation tactics.”



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