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Testimonies in Fraud Trial Indicate that Trump’s Penthouse Valuation Elevated by Millions Through Celebrity Factor, Say Executives

by Chloe Baker
6 comments
Trump civil fraud trial

In a recent trial hearing, corporate leaders from Donald Trump’s business empire admitted that they inflated the estimated value of his Trump Tower penthouse by $20 million, attributing part of this to Trump’s celebrity status. This was according to Thursday’s testimony by former Trump Organization controller, Jeffrey McConney, who provided insights into the calculations that are pivotal to Trump’s ongoing civil business fraud trial in New York.

An additional $100 million increase in the penthouse’s estimated value originated from a solitary email correspondence with a real estate broker. This broker had neither conducted an official appraisal nor personally inspected the tri-level property. Moreover, the broker was misled to believe that the property was three times larger than it actually was.

The lawsuit, spearheaded by New York Attorney General Letitia James, accuses the former U.S. president and his senior executives of fraudulent activities, alleging that they artificially inflated his net worth to mislead lenders among others. Trump, for his part, vehemently denies any unlawful conduct.

During a pretrial deposition, Trump argued that his financial documents were not intended to be considered as strictly accurate valuations but rather as an assemblage of his properties. He stated that numbers included in these documents were, at times, mere approximations.

However, correspondence presented in court indicates that the financial documents in question were crucial to some of Trump’s loan transactions. McConney confirmed this by presenting letters to a bank in which he enclosed Trump’s financial statements for the years 2015 and 2016 as mandatory for a loan pertaining to his Seven Springs estate located north of New York City.

To determine the value of the penthouse, Trump’s corporate team selectively searched through real estate listings, focusing solely on the highest-priced comparable apartments, McConney testified. When queried about the abrupt $100 million increase in 2012, McConney cited an email from real estate agent Kevin Sneddon, who had given a rapid estimate based on the asking price of a similar property in another Trump-owned building in Manhattan. This property eventually sold for only 40% of its asking price.

In the subsequent year, McConney added an extra $20 million to the penthouse’s estimated value, elevating it to $200 million. This adjustment, he revealed, was partly predicated on the advice of a Trump real estate executive, who believed that the celebrity allure of the apartment justified a higher valuation.

Furthermore, McConney acknowledged that he personally calculated an additional $227 million increase in the value of Trump’s Wall Street office building, instead of relying on formal bank appraisals. Such inflated valuations were incorporated into Trump’s financial statements, which were then distributed to banks, insurers, and other stakeholders. Attorney General James labels these actions as “consistent and recurrent fraud.”

Trump retorts that the lawsuit is a political maneuver by James, a Democrat, aimed at undermining his potential 2024 presidential bid. Trump, a leader in the Republican field, opted not to attend Thursday’s court session, although he was present for the preceding three days.

Presiding Judge Arthur Engoron refuted McConney’s claim that no “correct method” exists for determining property valuations. He argued that the appropriate procedure for such calculations is commonly understood, even by high school students.

In addition to the civil case, Trump faces a multitude of criminal charges, to which he has entered pleas of not guilty. These charges include conspiracy to subvert the results of the 2020 election, illegal retention of classified documents, and fraudulent business record-keeping linked to hush money payments.

Court documents filed late Wednesday by Trump’s legal team sought to dismiss the hush money case, deeming the prosecution a politically driven assemblage of legally flawed charges. Federal prosecutors are expected to counter this argument, as both sides await further legal developments.

To maintain compliance with the court’s earlier ruling, Judge Engoron has ordered both parties to submit names of possible receivers by October 26 and has instructed the defendants to notify a court-appointed monitor of any efforts to form new entities for the purpose of holding or acquiring assets.

The trial continues, with James’ legal team seeking $250 million in penalties and a prohibition on Trump conducting business in New York State.

Frequently Asked Questions (FAQs) about Trump civil fraud trial

What is the central issue of the civil fraud trial against Donald Trump?

The trial focuses on allegations that Donald Trump and his top executives artificially inflated the value of his assets, including his Trump Tower penthouse, in order to deceive lenders and other stakeholders. Trump denies any wrongdoing.

Who is leading the lawsuit against Donald Trump?

The lawsuit is led by New York Attorney General Letitia James. She is seeking $250 million in penalties and aims to prohibit Trump from conducting business in New York State.

On what basis were the asset valuations inflated according to the testimonies?

Testimonies indicate that the valuations were inflated partly due to Donald Trump’s celebrity status. In one instance, an additional $100 million was added to an asset’s estimated value based solely on an email from a real estate broker who had not conducted a formal appraisal.

What was Trump’s response during pretrial testimony regarding the inflated asset valuations?

In pretrial testimony, Donald Trump claimed that the financial documents in question were not meant to be taken as strictly accurate valuations. He described them more as a “compilation of properties” and said that some numbers were approximations or “guesstimates.”

How did Trump’s executives determine the inflated values of the assets?

According to Jeffrey McConney, former Trump Organization controller, Trump’s team looked through real estate listings focusing only on the highest-priced similar apartments to determine the penthouse value. In some cases, values were inflated based on suggestions from Trump real estate executives or emails from real estate brokers.

Who is Jeffrey McConney and what role did he play in the trial?

Jeffrey McConney is a former controller for the Trump Organization. During his testimony, he provided detailed insights into the calculations central to the case and admitted that some of the inflated valuations were done based on his own calculations.

What penalties could Donald Trump face if found guilty?

If found guilty, Donald Trump could face penalties totaling $250 million and may be banned from doing business in New York State.

More about Trump civil fraud trial

  • New York Attorney General Letitia James’ Official Statement on the Lawsuit
  • Overview of Donald Trump’s Civil Fraud Trial
  • Guide to Asset Valuation Methods and Legalities
  • Background on Jeffrey McConney’s Role in the Trump Organization
  • Understanding New York’s Civil Fraud Laws
  • Timeline of Donald Trump’s Legal Battles

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6 comments

RealEstateExpert October 6, 2023 - 4:04 am

If they really used highest listing prices for comparable properties, thats just shady. Anybody in real estate knows you don’t do that.

Reply
PoliticsFan October 6, 2023 - 6:55 am

The back and forth between Trump’s lawyers and the prosecutor is intense. But honestly, this should’ve been expected given his track record.

Reply
SarahQ October 6, 2023 - 7:25 am

Trump denying wrongdoing, color me surprised. Seems like this is gonna be a long trial.

Reply
FinanceGuru101 October 6, 2023 - 6:51 pm

The part about basing valuation on asking prices instead of sale prices? That’s just basic finance gone wrong. seriously.

Reply
JohnSmith45 October 6, 2023 - 8:40 pm

Wow, this trial is a circus. Can’t believe they based valuation on an email and celebrity status. Whats next?

Reply
EmilyH October 6, 2023 - 11:11 pm

This whole thing feels like an episode of a reality TV show. Only it’s real life, with real consequences for Trump. Crazy.

Reply

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