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Trump’s Loan Approvals Contingent on Financial Statements, Bank Official Testifies

by Ethan Kim
10 comments
Trump's financial statements

Former President Donald Trump secured loans worth hundreds of millions based on financial statements, now considered fraudulent by a court, as shared by a retired bank officer during Trump’s New York civil fraud trial on Wednesday.

Nicholas Haigh, who previously served as Deutsche Bank’s risk management officer, attested that Trump’s “financial condition statements” were pivotal in greenlighting a loan of $125 million in 2011 for a golf resort in Doral, Florida, and a $107 million loan in 2012 for his hotel and condominium tower in Chicago.

The bank, while not conducting comprehensive property valuations, did sometimes significantly reduce the values Trump attributed to assets such as Trump Tower and his golf courses. Haigh mentioned these adjustments were often referred to as “sanity checks.”

These adjusted values were instrumental in granting Trump more favorable loan terms and interest rates, said Haigh, who supervised the bank’s private wealth management risk division from 2008 to 2018.

Last month, a court ruling determined that Trump and his enterprise, the Trump Organization, consistently misrepresented the value of his assets on financial disclosures provided to banks, insurers, and others for transactions and loan acquisitions.

The Trump Organization’s chief financial officer, Allen Weisselberg, conceded in a testimony that these financial disclosures weren’t always precise. However, Trump rebuts these accusations, underscoring the disclaimers on said documents, which he argues alerted lenders to conduct independent verifications. He equated these disclaimers to a “buyer beware” stipulation and maintained that his affiliated banks profited from their engagements and hold no grievances.

Haigh’s testimony is part of New York Attorney General Letitia James’ fraud case against Trump, his company, and senior executives. This marks the inaugural instance of a bank representative speaking in court about the influence Trump’s financial statements had on his loan procurement.

For the loans in question, Deutsche Bank mandated Trump to guarantee them and offer the Doral resort and the Chicago skyscraper as collateral. Without a robust financial commitment from Trump, the loans would not have been sanctioned, according to Haigh. He also mentioned that, during his review, the documents depicted Trump as a prosperous entrepreneur with substantial investments in golf courses and other real estate endeavors, characterized by high cash inflow and minimal debt. The bank also collaborated with Trump Organization officials to assess the data, and the bank’s representatives corroborated his cash reserves using bank and brokerage documents.

Yet, discrepancies were evident. Trump’s 2011 financial declaration claimed his net worth to be $4.3 billion. However, when seeking the Doral loan, Deutsche Bank’s internal analysis estimated it to be approximately $2.4 billion. The bank significantly adjusted the worth Trump assigned to potential projects, citing, for instance, the challenges in appraising undeveloped land.

When inquired about the bank’s capability to amend cash reserves, Haigh replied that lending officers might have partly depended on details supplied by Trump’s team.

To protect the bank against potential market downturns, a loan stipulation demanded Trump, as the guarantor, to sustain a minimum net worth of $2.5 billion, excluding any value accrued from his fame.

Trump, who is a prominent contender in the upcoming Republican election, attended the trial’s initial three days and is slated to testify later.

Last month, prior to the trial, Judge Arthur Engoron ruled that Trump, Weisselberg, and other co-defendants had carried out fraudulent activities for years, inflating Trump’s assets and net worth in his financial statements. As a repercussion, Engoron directed a court-appointed receiver to oversee certain Trump companies, which might impact the future management of iconic properties such as Trump Tower. An appeals court has, however, temporarily halted this part of Engoron’s verdict.

The ongoing civil trial delves into claims of conspiracy, insurance fraud, and falsification of business records. Attorney General James, a member of the Democratic Party, is demanding $250 million in fines and seeks to prohibit Trump from conducting business in New York.

Frequently Asked Questions (FAQs) about Trump’s financial statements

What is the nature of the trial in which Trump is involved?

The trial is a civil fraud case in New York where Trump, his company, and top executives are accused of consistently misrepresenting the value of his assets on financial disclosures provided to banks, insurers, and others.

Who testified about the “sanity checks” on Trump’s financial statements?

Nicholas Haigh, a former Deutsche Bank risk management officer, testified about the bank’s practice of performing “sanity checks” on the values Trump attributed to his assets.

Did the bank rely solely on Trump’s financial statements to grant loans?

No. While Trump’s “statements of financial condition” were pivotal for loan approvals, the bank also collaborated with Trump Organization officials to assess the data, and bank representatives corroborated his cash reserves using bank and brokerage documents.

What were the implications of the court’s ruling last month on Trump and his organization?

The court ruled that Trump and the Trump Organization had committed years of fraud by exaggerating the value of assets. As a result, certain Trump companies might come under the oversight of a court-appointed receiver, potentially impacting the management of iconic properties like Trump Tower.

What are the charges in the ongoing civil trial?

The charges include allegations of conspiracy, insurance fraud, and falsifying business records. Attorney General Letitia James seeks $250 million in fines and aims to prohibit Trump from conducting business in New York.

More about Trump’s financial statements

  • Deutsche Bank and Trump’s Relationship
  • Understanding Civil Fraud Cases
  • Trump Organization’s Financial Disclosures
  • Letitia James’ Legal Actions Against Trump
  • The Role of Financial Statements in Loan Approvals

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10 comments

LucyE October 12, 2023 - 12:15 am

Trump and controversy – name a more iconic duo. But seriously, if true this is a big deal. Don’t think itll affect his base though. they seem loyal no matter what.

Reply
Liam_P October 12, 2023 - 3:28 am

so basically the bank did some checks but maybe not enough? the whole thing’s confusing.

Reply
TaraD October 12, 2023 - 8:15 am

deutsche bank and trump…sounds like a match made in heaven or maybe hell?

Reply
Jess_thinks October 12, 2023 - 1:00 pm

wait, I thought banks always do thorough checks before handing out loans. How did this slip?

Reply
GarryLine October 12, 2023 - 1:13 pm

If these allegations are true its a huge blow for trump and his empire. maybe its just politics as usual though.

Reply
Nina_Writes October 12, 2023 - 1:50 pm

read somewhere that his assets are always in the news. not sure whats true anymore.

Reply
MikeR October 12, 2023 - 1:51 pm

kinda surprising that such a big name like Trump would have these issues. Isn’t he supposed to be a billionaire?

Reply
Pete_22 October 12, 2023 - 3:30 pm

wasn’t expecting this honestly but then again nothing shocks me anymore. Politics and business always messy.

Reply
SamT October 12, 2023 - 6:35 pm

this trial is gonna be big, watching closely to see how it pans out. also, why banks dont do their homework properly?

Reply
FionaO October 12, 2023 - 9:54 pm

why is everything around trump so controversial? every week its something new.

Reply

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