Accountants break with Trumps
Can no longer back financial statements, says Mazars USA
NEW YORK — Donald Trump’s longtime accounting firm abruptly cut ties with his family business last week amid criminal and civil investigations into whether he illegally inflated the value of his assets, court documents filed Monday show.
In a letter to the Trump Organization on Wednesday, the accounting firm notified the company of its decision and disclosed that it could no longer stand behind annual financial statements it prepared for the former president. The firm, Mazars USA, compiled the statements based on information that Trump and his company provided.
The letter instructed the Trump Organization to essentially retract the documents, known as statements of financial condition, from 2011 to 2020. In the letter, Mazars noted that the firm had not “as a whole” found material discrepancies between the information the business provided and the actual value of Trump’s assets. But given what it called “the totality of circumstances,” the letter directed the Trump Organization to notify anyone who received the statements that they should no longer rely on them.
The statements, which Trump used to secure loans, are at the center of the two law enforcement investigations into him and his company. The Manhattan district attorney’s office and the office of New York Attorney General Letitia James have been investigating whether Trump used the statements to defraud his lenders into providing him the best possible loan terms.
The Trump Organization declined to comment.
The revelations appeared in the new court documents filed by James’ office, which is seeking to question Trump and two of his adult children under oath.
Trump’s lawyers had asked a judge to prohibit the questioning, and in response, James’ office argued in court papers last month that the company had engaged in “fraudulent or misleading” practices.
Her filing Monday — which marked her latest attempt to press ahead with questioning Trump as well as Donald Trump Jr. and Ivanka Trump — included a copy of the Mazars letter, signed by the accounting firm’s general counsel.
The brief letter could bolster James’ investigation, which has focused partly on the statements and whether they overvalued Trump’s various hotels, golf clubs and other properties.
Mazars said it concluded that the statements were no longer reliable based in part on the attorney general’s earlier filings, its own investigations and information the accountants received from “internal and external sources.” The letter added that Mazars
“performed its work in accordance with professional standards.”
Because James’ investigation is civil, she cannot file criminal charges. But she could sue Trump and his company to seek financial penalties, and could try to shut down certain aspects of his business in New York.
A spokesperson for James declined to comment beyond the filing.
In a statement, the accounting firm said that “under our standards of professional ethics, we cannot comment on any client services or relationships.”
It is unclear whether Mazars’ break with the Trumps will have any bearing on the district attorney’s criminal investigation into Trump. The firm has been cooperating with that investigation, and Trump’s main accountant at Mazars has already testified before a grand jury.
Alvin Bragg, a spokesperson for the district attorney, declined to comment.
Both investigations still face obstacles. Although the statements may contain exaggerated estimates of Trump’s property values, those same documents also include a number of disclaimers, including acknowledgments that Trump’s accountants had neither audited nor authenticated his claims.
Another disclaimer notes that Mazars did “not express an opinion or provide any assurance about” the statements, a common caveat in statements of financial condition. The firm also disclosed that, while compiling the information for Trump, it had “become aware of departures from accounting principles generally accepted in the United States of America.”
Trump’s lawyers would probably argue that his lenders — sophisticated financial institutions such as Deutsche Bank — would not have relied on the statements when providing him loans.
Still, in her court filing last month, James highlighted potential misleading statements about the value of at least six Trump properties, including golf clubs in Westchester County, N.Y., and Scotland, as well as Trump’s penthouse home in Trump Tower.
According to that filing, Trump claimed that the triplex apartment spanned 30,000 square feet, giving it a value of $327 million. In truth, the apartment is 10,996 square feet.
Trump’s long-serving chief financial officer, Allen Weisselberg, later acknowledged to investigators that the company had overvalued the apartment by “give or take” $200 million.
James has argued that the Trump Organization misstated the value of the properties to lenders, insurers and the IRS. Many of the statements, she argued in the filing last month, were “generally inflated as part of a pattern to suggest that Trump’s net worth was higher than it otherwise would have appeared.”