Trump’s Legal Team Focuses on Role of External Accountants in Financial Statements

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In the ongoing civil fraud trial against Donald Trump’s real estate operations, his attorneys, along with his two sons who oversee his business, are shifting focus towards the external accountants responsible for preparing the company’s financial statements. This move aligns with Trump’s strategy of attributing responsibility to these accountants.

Tuesday saw Trump’s legal representatives delve into the involvement of the accounting firm Mazars USA LLP. They scrutinized the firm’s role in creating the financial statements at the core of the lawsuit filed by New York Attorney General Letitia James, with expert testimony underscoring this blame shift.

Accounting expert Jason Flemmons, formerly a senior figure at the U.S. Securities and Exchange Commission, raised questions about Mazars’ methodologies. He cast doubt on previous statements by Donald Bender, a now-retired Mazars partner who long handled Trump’s financial documents. Bender, having testified on October 3, had expressed his surprise upon discovering that not all company property appraisals had been disclosed to him.

Flemmons contested Bender’s assertion of needing all appraisals for financial statements, labeling it as professionally improbable. He explained that compiling these statements, unlike conducting full audits, doesn’t necessitate such extensive data gathering. Accountants typically rely on provided documentation to value assets like Trump’s properties, and in this case, Flemmons noted, the Trump Organization met these criteria by supplying adequate justifications and explanations for their valuation methods.

Flemmons, set to return to court Wednesday, has yet to comment on the state’s specific accusations that Trump’s team used various tactics, including misclassifying properties, to inflate values artificially. He emphasized that accountants like Mazars aren’t obligated to seek appraisals beyond those forming the basis of statement values.

Mazars, having severed ties with Trump and advised against relying on his financial statements after James raised accuracy concerns, has not commented on these developments.

As Trump’s lawyers progress with their defense, they aim to challenge the state’s allegations against the Republican leader, his company, and senior executives. These allegations, put forth by James, a Democrat, accuse Trump and his team of grossly exaggerating his wealth through inflated property valuations on financial statements used for securing loans and making deals. The state is seeking over $300 million, deemed as improperly acquired gains, and aims to prohibit the defendants from conducting business in New York.

Prior to the trial, Judge Arthur Engoron had determined that Trump and co-defendants committed fraud by overstating his net worth and asset values on these statements. While an appeals court currently maintains Trump’s control over certain properties, Engoron’s ruling could lead to significant asset loss.

Trump, maintaining his innocence, argues that the financial statements, in reality, undervalue his properties. He insists that disclaimers on these documents absolve him of liability for any inaccuracies or misstatements. Trump’s legal team further contends that potential undervaluation of certain assets could offset any overvaluation, a notion quickly dismissed by Engoron as implausible.

Witness testimonies, including those from Trump Jr. and Eric Trump, highlighted their reliance on Mazars and the former finance chief Allen Weisselberg for accurate financial statements. Trump himself attested to granting complete authority to McConney and Weisselberg for coordinating with Mazars, insisting that the firm’s satisfaction with the provided information was evident in their annual statements.

For further details and updates, follow Michael Sisak at x.com/mikesisak and submit confidential tips via https://www.ap.org/tips.

Frequently Asked Questions (FAQs) about Trump’s legal defense

More about Trump’s legal defense

• Trump Civil Fraud Trial Details
• Jason Flemmons’ Testimony Insights
• Letitia James’ Lawsuit Against Trump
• Judge Arthur Engoron’s Pre-Trial Ruling
• Analysis of Trump’s Financial Statement Arguments