Thursday, November 30, 2023

Donald Trump’s lawyers are targeting outside accountants who prepare his financial statements

Donald Trump is blaming his accountants. The same is true of the two children he entrusted to manage his company. Now, as they strengthen their defense in the civil fraud trial that threatens the former president’s real estate empire, so do his lawyers.

Trump’s lawyers spent Tuesday digging through the paper of outside accounting firm Mazars USA LLP in preparing the financial statements at the heart of the case against New York Attorney General Letitia James, raising the ire of experts who testimony from a former federal financial regulator.

Jason Flemmons, who testified as an accounting expert, questioned some of the firm’s practices and raised doubts about earlier testimony from Donald Bender, the retired Mazars partner who spent years working with Trump’s financial statement.

Bender, the first witness called by state attorneys, testified on Oct. 3 that he asked a Trump Organization executive for a look at all of the company’s assets — not just those used for financial transactions. statement – and that he was surprised to learn years later that others had not been denied.

Flemmons, a former deputy chief accountant at the US Securities and Exchange Commission, said Bender’s claim was “not professionally credible” because such due diligence was not required under professional accounting standards.

The compilation of financial statements involves a “much lighter touch” than more rigorous accounting procedures, such as audits, and requests for evaluations “can be very rare” and “completely inconsistent” with the requirement, Flemmons testified.

When preparing financial statements, also known as compilations, accountants only need documentation used to determine the value of assets, such as Trump’s skyscrapers, golf courses and other properties.

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In Trump’s case, Flemmons said, his company determined the numbers and met the requirements by providing justification for them and explaining the instances where it used different criteria to determine a value, which is allowed. Flemmons, who will return to the stand Wednesday, was not asked to address the state’s specific claims that Trump executives used various methods — sometimes misclassifying assets — to get the maximum amount. .

“There is no obligation or expectation on the part of Mazars or any accountant performing compilation services” to request valuations that are not fundamental to the amounts of the statements, said Flemmons, now a senior managing director at Ankura Consulting. Group.

A message seeking comment was left for Mazars. The company cut ties with Trump last year and said its financial statements “should no longer be relied upon” after James raised concerns about their accuracy.

Flemmons testified on the second day of the defense case as Trump’s lawyers sought to refute the state’s claims that the 2024 Republican front-runner, his company and top executives manipulated the value of his assets to he may be richer and his possessions more successful than they really are.

James, a Democrat, accused Trump, his company and top executives of overstating his wealth by billions of dollars in financial statements by inflating property values. Documents are given to banks, insurers and others to get loans and make deals. James is seeking more than $300 million in what he says are ill-gotten gains, and he wants the defendants banned from doing business in New York.

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Before the trial, Judge Arthur Engoron ruled that Trump and other defendants committed fraud by overstating his net worth and the amount of assets in his financial statements. The judge imposed a penalty that could strip Trump of some marquee properties, though an appeals court has kept them under his control for now.

Trump has denied wrongdoing. On the stand Tuesday, Flemmons echoed Trump’s long-standing assertion that omissions in financial statements insulate him from liability for discrepancies or misstatements.

“It’s effectively telling the user to be careful,” Flemmons confirmed.

Trump argues that, if anything, his financial statements understate how much his assets are worth. On the stand last week, he reiterated his belief that his Mar-a-Lago estate in Florida is worth up to $1.5 billion, more than double the highest amount listed for it in his financial statements.

Trump’s lawyers ran with the claim Tuesday, arguing that it didn’t matter if he overstated some of his assets because he understated others.

They questioned that idea while questioning another expert, real estate developer and Trump friend Steven Witkoff, who claimed that Trump’s Doral, Florida, golf resort was undervalued in his financial statements.

“Is it your position that if a statement of financial position lists two assets and I decide that one is overvalued by $300 million and the other is undervalued by $300 million it balances out and nothing misrepresentation, fraud, whatever you want to call it?” Engoron asked.

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He criticized the argument, saying “It seems ridiculous to me,” and shut it down.

Witkoff, who is hosting a fundraiser for Trump next month, testified that developers value their properties based on their potential — like building condominiums on a golf course or building a tower in office apartments – than they are now.

Donald Trump Jr., an executive vice president of the Trump Organization, testified on Nov.

“As a trustee, I have an obligation to listen to the experts — who have expertise in these matters,” Trump Jr. said.

His brother, Eric, echoed that sentiment, testifying on Nov. 3 that he trusted “one of the largest accounting firms in the country” for assurance that the financial statements were accurate.

Donald Trump, testifying on November 6, said he paid Mazars millions of dollars for its services and said he gave McConney and Weisselberg “total authority” to work with the firm and provide it with even what is needed to make his financial statements.

“If the accounting firm is not happy, they come back and they say, we need this, we need that,” Trump testified. “They’re very pushy about that. They’re very insistent on that. But they make statements every year, so obviously they’re satisfied.

Nation World News Desk
Nation World News Desk
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