Donald Trump blamed his accountants. The two sons to whom he entrusted the management of his company did the same. Now, as they prepare their defense in the civil fraud trial that threatens the former president's real estate empire, his lawyers do too.
Trump's lawyers spent Tuesday investigating the role of outside accounting firm Mazars USA LLP in preparing financial statements at the center of New York Attorney General Letitia James' lawsuit, adding to the blame with expert testimony from a former federal financial regulator.
Jason Flemmons, testifying as an accounting expert, questioned some of the firm's practices and raised questions about earlier testimony from Donald Bender, the retired Mazars partner who spent years working on Trump's financial statements.
Bender, the first witness called by state attorneys, testified on Oct. 3 that he had asked a Trump Organization executive for all the company's property appraisals, not just those used for financial statements, and that he was surprised when He found out years later. that some had not been delivered.
Flemmons, a former deputy chief accountant at the U.S. Securities and Exchange Commission, said Bender's claim "was not professionally plausible" because such diligence is not required under professional accounting standards..
Compiling financial statements involves a “much lighter touch” than stricter accounting practices such as audits, and requiring appraisals “would be highly unusual” and “completely inconsistent” with what is required, Flemmons testified.
When preparing financial statements, also known as compilations, accountants only need the documentation used to determine the value of assets, such as Trump's skyscrapers, golf courses and other properties.
In Trump's case, Flemmons said, his company determined the numbers and met the requirements by providing justification and explaining cases in which it used different standards to determine a value, which is allowed. Flemmons, who will return to the stand Wednesday, has not been asked to address the state's specific claims that Trump executives used a variety of methods, sometimes misclassifying properties, to obtain the highest values.
"There would be no obligation or expectation on the part of Mazars or any accountant providing compilation services" to request appraisals that were not used to arrive at values," said Flemmons, now a senior managing director at Ankura, a Washington firm. D.C. , consulting company.
A message was left with Mazars seeking comment. The firm cut ties with Trump last year and said “his financial statements should no longer be trusted” after James raised concerns about their accuracy.
Flemmons testified on the second day of the defense case as Trump's lawyers try to refute the state's claims that the 2024 Republican front-runner, his company and his top executives manipulated the value of his assets to make him appear richer and his properties more successful than they actually were.
James, a Democrat, alleges that Trump, his company and top executives They exaggerated their wealth into billions of dollars in financial statements by inflating property values. The documents were given to banks, insurers and others to obtain loans and close deals. James is seeking more than $300 million in what she claims were ill-gotten gains, and wants the defendants to be banned from doing business in New York.
Before the trial, Judge Arthur Engoron ruled that Trump and other defendants committed fraud by overstating their net worth and the value of their assets in their financial statements. The judge imposed a punishment that could strip Trump of some prominent properties, although an appeals court keeps them under his control for now.
Trump has denied wrongdoing. On the stand Tuesday, Flemmons echoed Trump's long-standing claim that disclaimers in financial statements exempted him from liability for discrepancies or misstatements.
"It's effectively saying user beware," Flemmons testified.
Trump has argued that, if anything, his financial statements understated the value of his properties. On the stand last week, he reiterated his belief that his Mar-a-Lago property in Florida is worth up to $1.5 billion, more than double the highest value listed on his financial statements.
Trump's lawyers defended that claim Tuesday, arguing that it didn't matter if he overvalued some of his properties because he significantly undervalued others.
They made the argument while questioning another expert, real estate developer and Trump friend Steven Witkoff, who claimed that Trump's golf resort in Doral, Florida, had been severely undervalued in its financial statements.
“Is it your position that if one property is overvalued by $300 million and another property is undervalued by $300 million, they balance out and there is no misstatement or fraud?” Engoron asked, criticizing the argument as “ridiculous” and shutting it down.
Witkoff, who will host a fundraiser for Trump in Florida next month, testified that developers value their properties based on their potential (such as building condos on a golf course or converting an office tower into apartments) rather than their Actual state.
Donald Trump Jr., executive vice president of the Trump Organization, testified on Nov. 1 that he approved statements as administrator of his father's trust but had left the job to outside accountants and the company's then-chief financial officer, Allen Weisselberg.
“As a trustee, I have an obligation to listen to those who are experts, who have experience in these things,” Trump Jr. said.
His brother, Eric, echoed that sentiment, testifying on Nov. 3 that he trusted “one of the largest accounting firms in the country” to make sure the financial statements were accurate.
Donald Trump, testifying on Nov. 6, said he paid Mazars millions of dollars for its services and said he gave McConney and Weisselberg “full authority” to work with the firm and give it everything it needed to prepare its financial statements. .
“If the accounting firm wasn't happy, they would come back and say, we need this, we need that,” Trump testified. They were very insistent on that. Very insistent on that. But in each of those years they made statements, so they were obviously satisfied.”