Trump fraud trial could reveal how much he exaggerated property values

A few years later, expert appraisers told Trump his 70-story office building at 40 Wall Street in Manhattan, steps from the New York Stock Exchange, was worth $260 million. But Trump soon claimed in financial documents that it was worth nearly $530 million, more than doubling its stated value.

In 2018, while Trump was president, his company cited a seasoned New York valuation expert to claim in its financial statements that Niketown, a luxury retail store adjoining Manhattan’s Trump Tower that has since closed, was worth $445 million. The expert later told investigators he’d provided no such input and that Trump’s process to arrive at the figure didn’t “make any sense.”

Those details are drawn from thousands of pages of court documents prepared by New York Attorney General Letitia James as evidence in the civil fraud case she has filed against Trump. The documents show how accounting, banking and real estate experts repeatedly informed Trump how much his properties and businesses were really worth. But over and over again, the documents reveal that Trump, his adult sons and top executives allegedly ignored or sidelined those experts, exchanging their figures for numbers from another source: Trump’s own intuition.

Over more than four decades as a developer, Trump — now the leading candidate for the 2024 Republican presidential nomination — has routinely exaggerated how much he and his assets are worth, while minimizing or omitting liabilities and debts. These boasts were central to the reputation he cultivated as a real estate mogul.

The trial against Trump’s business that on Tuesday entered its second week threatens to reveal the internal workings of Trump’s business in never-before-seen detail. James, an elected Democrat, and her team arrived at trial — after having reviewed millions of pages of documents about him and his company — armed with a trove of legal ammunition that will be detailed in court in coming weeks.

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Trump is separately facing four upcoming criminal trials: one with federal charges in D.C. and another with state charges in Georgia for allegedly trying to block the 2020 election results, one with federal charges in Florida for allegedly possessing classified documents after leaving office and obstructing government efforts to get them back; and one with state charges in New York for allegedly falsifying business records in connection to a hush money payment in 2016. He has denied all wrongdoing and called the James case “a pure witch hunt with the purpose of interfering with the elections of the United States of America.”

In the ongoing civil case, his lawyers have said the Trump Organization’s practices were not illegal.

Trump attorney Christopher Kise told the judge last week that “there was no nefarious intent” in putting company statements together, and subsequently there “was no illegality, there was no fraud, there are no victims.”

James’s office has been investigating Trump’s business for more than four and a half years, using a team of lawyers and forensic accountants to acquire documents through subpoenas to his company, banks, insurers and business partners, many of which would otherwise have remained confidential.

By the time the lawsuit was filed, the attorney general’s team had interviewed 65 witnesses, including his adult children and nearly all of his closest business confidants.

That includes individuals with knowledge of intimate details of his business who managed to remain out of the limelight during Trump’s presidency, but who were compelled to provide lengthy depositions for the first time in the case and are now prepared to testify against him and his company during the coming weeks and months.

The case is expected to feature Trump’s own testimony. Attorneys on the case will also point to a deposition Trump sat for after initially avoiding questions by invoking his Fifth Amendment right not to answer questions for fear of self-incrimination more than 400 times, using it for every question.

“Appraisers are right and wrong. Everybody knows that,” he said during an April session with James’s office, according to a transcript of the deposition filed with the court. He then defended making estimates based on gut instincts.

“You use common sense. You use some other things. You know, people come up with numbers. Sometimes they’re right. Sometimes they’re wrong,” he said.

At issue in the trial that opened last week in New York Supreme Court in Manhattan are allegations that the Trump Organization and some of its executives issued fraudulent annual statements for a decade beginning in 2011 that included real estate values which were sharply different from what Trump reported.

“The defendants knew that the statements were false,” Kevin Wallace, a lawyer in the New York state attorney general’s office, argued in his opening statement on Oct. 2. “They then used them to obtain and maintain benefits they were not entitled to.”

Timothy O’Brien, a journalist who has chronicled Trump and his career for decades, said the attorney general’s case touches on what may be the former president’s biggest insecurity and that it appears to be the first time his practices for valuing his business have been examined in a courtroom.

“His self-worth is completely tied up in money and a pecking order that he associates with wealth,” O’Brien said. “He spent the better part of his 77 years lobbying the media and banks — and anyone else who wanted to listen — to consider him far, far wealthier than he is because that’s what he associates with success.”

Justice Arthur Engoron has already found that the company broadly committed fraud, ordering the cancellation of Trump business certificates as punishment. An appellate court has temporarily blocked the order from taking effect.

Engoron will determine at the end of a trial that could last nearly three months whether specific illegal acts were employed to advance the fraud. If he finds in James’s favor, he could order the repayment of $250 million in allegedly ill-gotten gains and make it nearly impossible for Trump to do business in the state.

The vivid courtroom display threatens to undermine the persona that Trump aggressively crafted throughout his career — one that carried him to stardom on “The Apprentice” and to the White House in 2016 — and may help explain why the case has appeared to particularly enrage the former president.

Trump personally attended the first several days of the trial, turning what is otherwise an orderly process into a spectacle by offering tirades to the media each time he stepped in and out of a private room in the courthouse where he and his team were assigned to wait between courtroom sessions. He repeatedly blasted the proceedings on social media.

The defense has said Trump’s valuations were the result of his keen sense for development potential and the value of his own brand, an argument similar to one he has made for decades when challenged about the size of his business.

He has pressed journalists to publish his estimates, at one point pretending to be a fake company spokesman named “John Barron” to push Forbes to raise its estimate of his net worth as part of the magazine’s regular rankings of wealthy individuals.

In 2006, he filed a lawsuit against author O’Brien, claiming the journalist defamed him by asserting in a book that Trump was worth only $250 million. In that case, Trump was caught by O’Brien’s attorneys falsely representing his wealth 30 times before the judge dismissed the case, according to a deposition.

In a 2007 deposition, Donald Trump had to face up to a his own falsehoods and exaggerations. And he did. Sort of.

When Trump was first required to file a government disclosure form during his campaign, in 2015, he issued a statement saying his net worth was “in excess of TEN BILLION DOLLARS.” His own financial statement, relying on several disproven figures, showed a net worth of $4 billion less.

A Forbes journalist asked him that year why he cared so much — why had he gone to such great lengths to inflate his wealth? “It was good for financing,” Trump said.

Therein lies the crux of James’s case: that Trump used his inflated financial statements to obtain preferential treatment from banks and insurers, conduct that she argues violates state law due to its “capacity or tendency to deceive, or creates an atmosphere conducive to fraud.”

Trump and his attorneys counter that no lender lost money because of the figures Trump included on his financial statements. In depositions, Deutsche Bank employees testified that the bank recorded millions of dollars in profits as a result of loans to the Trump Organization.

The parade of witnesses that will reveal new details about how Trump’s company operates began as the trial opened last week.

Former Trump Organization controller Jeffrey McConney testified that he and longtime Trump Organization finance executive Allen Weisselberg repeatedly reached steeply inflated values for company assets using illusory methods.

One instance involves McConney’s testimony Friday about the valuations of a dozen Trump Park Avenue condominiums. The Trump Organization valued the condos at $50 million in 2011 and 2012 and nearly $136 million in 2020, even though company executives knew they were rent-stabilized, meaning they could not be sold as regular condos, according to trial evidence. During the depths of the country’s financial crisis in 2010, they had even been appraised for as low as $750,000 in total, and in an appraisal a decade later, for $84.5 million— still far below what the Trump Organization claimed the properties were worth, documents show.

Asked on the stand if he and Weisselberg discussed misrepresenting the value of the rent-regulated New York apartments, McConney responded: “I believe so, yes.”

McConney played a central role in gathering information about the company’s assets and compiling them in spreadsheets named “Jeff’s supporting data,” according to a deposition McConney gave to James’s team in early 2020. McConney and Weisselberg, his then-boss, are defendants in the case. Both no longer work at the company.

Longtime Trump accountant Donald Bender testified that he compiled Trump’s annual statements of net worth without verifying the figures. Bender worked for Mazars USA, the accounting firm that handled Trump’s business and personal tax returns until 2022, when the firm announced that it could no longer stand behind the statements and cut ties with Trump.

Bender testified that he received the numbers from McConney and Weisselberg, who took the witness stand on Tuesday. Bender testified he did not violate generally accepted accounting practices, but often did not ask for appraisal information from the company to back up their figures.

The financial statements compiled by Bender all came with a cover letter warning that the values contained in the report were not verified. The defense has pointed to that warning as proof that banks and insurance firms didn’t rely on the figures.

In his deposition, Trump said the letter included a “worthless clause” — a line that he said was intended to notify recipients that they needed to do their own analysis.

“I have a clause in there that says, don’t believe the statement, go out and do your own work,” he said.

Other insider details about the company are likely to emerge in coming weeks, including new information about how Trump misdescribed his own famed Trump Tower apartment.

When the Chubb insurance agency sent an appraiser to determine the value of Trump’s triplex apartment in 2010, he was not allowed to see the primary bedroom because he was told “Mrs. Trump was sleeping,” according to James’s complaint.

Seven years later, Forbes — citing real estate records — published a story titled “Donald Trump Has Been Lying About the Size of His Penthouse.” Trump subsequently dropped the value of the unit from $327 million in 2016 to $116.8 million in 2017.

In his April deposition, Trump was asked directly by an attorney for James how big his apartment was. “I don’t know … I would think it would be 12 or 13,000-square-feet,” Trump said. He said he agreed with the 2017 reduction in value, but ducked questions about why the unit was misvalued in the first place and how the reevaluation came about, details that could come out at trial.

Information about how Trump valued other key properties in his real estate empire — his 40 Wall Street office building, his Park Avenue condos and a minority stake he owns in another office tower — are likely to be revealed as well.

A transcript of Trump’s April deposition shows that he said he valued 40 Wall Street at more than double a bank-commissioned estimate, which James’s team found in the company’s files, because “bank appraisals are always low.”

He also said he boosted the value because he was considering replacing the offices with a more valuable luxury condominium tower. But he did not deduct the costs that would be involved in that kind of transition, like getting zoning approvals or erecting a colossal residential project.

James’s court filings showed the company often provided business partners with only hard copies of Trump’s financial statements instead of electronic versions. Some insurers weren’t given copies of his statements at all and instead were asked to sit in a room and read Trump’s copies. The practices, she argued, were intended to make it harder for other companies to question the Trump Organization’s figures.

When asked about who prepared his financial statements, Trump said in his deposition: “For the most part my people did this. They would give me a statement. I would certainly look at it. But I had not a lot to do with it.”

But in court filings, James has revealed who her investigators believe has been in charge of preparing the documents since Trump became president: A “junior employee, only a few years out of college and with no professional accounting training.”