New York (AP) — The accounting ﬁrm that prepared former President Donald Trump’s annual ﬁnancial statements says the documents, used to secure lucrative loans and burnish Trump’s image as a wealthy businessman, “should no longer be relied upon” after New York’s attorney general said they regularly misstated the value of assets.
In a letter to the Trump Organization’s lawyer Feb. 9, Mazars USA LLP advised the company to inform anyone who had gotten the documents not to use them when assessing the ﬁnancial health of the company and the ex-president. The ﬁrm also said it was cutting ties with Trump, its highest-proﬁle client.
Mazars’ letter, made public in a court ﬁling Monday, came just weeks after New York Attorney General Letitia James said her civil investigation uncovered evidence that Trump and his company used “fraudulent or misleading” valuations of its golf clubs, skyscrapers and other properties to get loans and tax beneﬁts.
“While we have not concluded that the various ﬁnancial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you to no longer rely upon those ﬁnancial statements is appropriate,” Mazars General Counsel William J. Kelly wrote to his Trump Organization counterpart, Alan Garten.
Kelly told Garten that Mazars could no longer work with Trump because of a conflict of interest and urged him to ﬁnd another tax preparer. Kelly said several Trump-related tax returns still needed to be ﬁnished, including those of the former president and ﬁrst lady.
The Trump Organization said in a statement it was “disappointed that Mazars has chosen to part ways,” but took Kelly’s letter as a positive because the accounting ﬁrm hadn’t found material discrepancies in Trump’s ﬁnancial statements.
The letter “conﬁrms that after conducting a subsequent review of all prior statements of ﬁnancial condition, Mazars’ work was performed in accordance with all applicable accounting standards and principles and that such statements of ﬁnancial condition do not contain any material discrepancies,” the Trump Organization said. “This conﬁrmation effectively renders the investigations by the DA and AG moot.”
Kelly said Mazars performed its work on Trump’s ﬁnancial statements “in accordance with professional standards” but that it could no longer stand by the documents in light of James’ ﬁndings and its own investigation. Kelly said Mazars’ conclusions applied to Trump’s 2011-2020 ﬁnancial statements. Another ﬁrm handled Trump’s 2021 ﬁnancial statement.
James’ ofﬁce included a copy of Kelly’s letter in a court ﬁling as she seeks to enforce a subpoena to have Trump and his two eldest children, Donald Jr. and Ivanka, testify under oath. A state court judge, Arthur Engoron, is scheduled to hear arguments Thursday in the subpoena dispute.
James, a Democrat, said Monday that given the evidence, “there should be no doubt that this is a lawful investigation and that we have legitimate reason” to question Trump, a Republican, and his children, both of whom have been Trump Organization executives. Trump’s lawyers have argued that any testimony they give could be used against them in a parallel criminal investigation being overseen by the Manhattan district attorney’s ofﬁce — a probe that led to tax fraud charges last year against the Trump Organization and Allen Weisselberg, its longtime chief ﬁnancial ofﬁcer.
Trump has given his Statement of Financial Condition — a yearly snapshot of his holdings — to banks to secure hundreds of millions of dollars’ worth of loans on properties such as a Wall Street ofﬁce building and a Florida golf course, and to ﬁnancial magazines to justify his place among the world’s billionaires.
In a court ﬁling last month, James’ ofﬁce detailed several instances in which Trump misstated the value of assets on ﬁnancial statements given to banks.
Deutsche Bank accepted Trump’s ﬁnancial statements without objection in a deal for $300 million in loans for three of his properties and, in internal memoranda, emphasized Trump’s reported ﬁnancial strength as a factor in lending to him, James’ ofﬁce said.
Another bank said it received ﬁnancial statements in 2014 stating Trump had a net worth of $5.8 billion and liquidity of $302 million. A bank ofﬁcial involved in that deal told James’ ofﬁce that if he were aware of misstatements on Trump’s statement of ﬁnancial condition, he would have killed the deal.
James ofﬁce said its investigation started after Trump’s former personal lawyer, Michael Cohen, told Congress in 2019 that Trump had a history of misrepresenting the value of assets to gain favorable loan terms and tax beneﬁts.
Cohen gave copies of three of Trump’s ﬁnancial statements to the House Committee on Oversight and Reform. Cohen said Trump gave the statements to Deutsche Bank to inquire about a loan to buy the NFL’s Buffalo Bills and to Forbes magazine to substantiate his claim to a spot on its list of the world’s wealthiest people.