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

by Gabriel Martinez
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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

What is the focus of Donald Trump’s legal defense in the current civil fraud trial?

In the civil fraud trial, Donald Trump’s legal defense is primarily focusing on the role of external accountants, specifically Mazars USA LLP, in preparing the financial statements that are central to the case. This approach includes questioning the practices of the accounting firm and highlighting the responsibilities and actions of the accountants in handling Trump’s financial documents.

Who is Jason Flemmons, and what was his testimony about in the trial?

Jason Flemmons, a former deputy chief accountant at the U.S. Securities and Exchange Commission, testified as an accounting expert in the trial. He questioned some of the practices of Mazars USA LLP and expressed skepticism about the need for comprehensive appraisals in the preparation of financial statements, as claimed by Donald Bender, a retired Mazars partner.

What are the allegations against Donald Trump and his company in the lawsuit filed by New York Attorney General Letitia James?

New York Attorney General Letitia James alleges that Donald Trump, his company, and top executives exaggerated Trump’s wealth by billions of dollars in financial statements by inflating property values. These documents were used to secure loans and make deals. The lawsuit seeks over $300 million in what are considered ill-gotten gains and aims to ban the defendants from conducting business in New York.

What was the prior ruling by Judge Arthur Engoron regarding Trump’s financial statements?

Before the trial, Judge Arthur Engoron ruled that Donald Trump and other defendants committed fraud by exaggerating his net worth and the value of assets on his financial statements. The judge’s ruling could potentially strip Trump of some key properties, although an appeals court is temporarily maintaining his control over them.

What is Trump’s argument regarding the financial statements and their values?

Donald Trump has argued that the financial statements, which are under scrutiny, actually undervalue his properties. He contends that disclaimers on these documents protect him from liability for any discrepancies or misstatements. His legal team further suggests that even if some assets were overvalued, others were undervalued, potentially balancing out any inaccuracies.

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

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