Donald Trump inflated his net worth by as much as $2.2 billion in one year, lawyers for the New York attorney general’s office alleged as part of their civil fraud lawsuit against the former president, his adult sons and the Trump Organization.
Over a 10-year period, the attorney general’s office said that when it corrects the Trump financial statements for alleged misvaluations it “reduces Mr. Trump’s net worth by between 17-39% in each year, or between $812 million to $2.2 billion, depending on the year.” The $2.2 billion disparity came in 2014, the state said.
The new allegations were made in a partial summary judgment motion made public Wednesday by New York Attorney General Letitia James, a Democrat.
“Based on the undisputed evidence, no trial is required for the court to determine that defendants presented grossly and materially inflated asset values in the (statements of financial condition) and then used those SFCs repeatedly in business transactions to defraud banks and insurers,” the attorney general’s office wrote. “Notwithstanding defendants’ horde of 13 experts, at the end of the day, this is a documents case, and the documents leave no shred of doubt that Mr. Trump’s SFCs do not even remotely reflect the ‘estimated current value’ of his assets as they would trade between well-informed market participants.”
In a newly released deposition from the case, Trump testified that he had “very little, if any” involvement in putting the financial depositions together.
Trump’s lawyers responded with a court filing arguing that the case should be dismissed, asserting that the Trump Organization’s financial statements were not misleading.
The attorney general’s office said their valuation and accounting experts determined that “Mr. Trump’s net worth in any year between 2011 and 2021 would be no more than $2.6 billion, rather than the stated net worth of up to $6.1 billion, and likely considerably less if his properties were actually valued in full blown professional appraisals.”
James’ office is asking the judge to find that Trump and others made false or misleading financial statements from 2011-2021 and benefited from inflating his assets by receiving favorable loan terms and insurance rates.
The judge is not expected to rule on the motions until just before the trial.
Trump says financial statements were not misleading
Trump and others have denied any wrongdoing. Trump’s lawyers said in a court filing that the Trump Organization’s financial statements were not misleading and it never missed a loan payment, arguing the judge should dismiss the attorney general’s fraud lawsuit since no parties were harmed.
“The [statements of financial condition] at issue were simply not misleading. Therefore, the Defendants are entitled to summary judgment as a matter of law,” Trump’s attorneys wrote. “The undisputed record further establishes his companies timely paid hundreds of millions of dollars in interest to their lenders and never defaulted on a loan or even been late on a loan payment during the entire 15+ year time period the NYAG has sought to scrutinize in this action.”
Trump lawyers argued that there was no intent to defraud lenders or insurers and the statements contained caveats explaining that they were unaudited and departed from Generally Accepted Accounting Principles.
To buttress their argument, Trump’s lawyers point to deposition testimony from Rosemary Vrablic, the former head of private wealth management at Deutsche Bank, which has loaned the Trump Organization hundreds of millions of dollars over the years. In the deposition Vrablic testified “to the best of her knowledge” Trump didn’t submit materially misleading statements to the lender. The bank made over $75 million in interest on the loans, according to Trump’s filing. Another lender, Ladder Capital, made $40 million in interest, the filing said.
David Miller, a former executive at Erie Insurance, testified that insurer Zurich “didn’t rely on asset valuations at all,” according to the Trump filing.
Trump deposition released
Trump said the Trump Organization financial statements had a “worthless clause” in them warning lenders and others that they shouldn’t be relied on and that he had “very little, if any” involvement in putting them together, according to the newly released deposition in the civil fraud lawsuit.
Trump appeared across the table from James in April and answered questioned posed by her top attorneys for nearly seven hours. During the deposition, Trump was asked about the valuations given to his apartment at Trump Tower, Mar-a-Lago and other properties and golf courses – valuations James has alleged were fraudulently inflated to enrich the Trumps by gaining lower rates on loans and insurance.
The deposition has not been made public until now as part of legal challenges to the lawsuit, which is set to go to trial in October.
Under oath, Trump distanced himself from preparing the financial statements, saying the Trump Organization’s former chief financial officer, Allen Weisselberg, “primarily” prepared the numbers included in the financial statements, along with others working under him.
“I think he just uses good faith. I just – you know, you’d see a property and, I think, he looked at comparables perhaps. But I never went into it very much. I paid much less credence to this than you would even think,” Trump testified.
When asked about his involvement by state attorneys, Trump said he minimized his role.
“Not much. They had the numbers. I’d see it mostly after it was completed that, you know, he gave me a rundown or give me in some cases like the statement, maybe an outline in some cases,” Trump said. “Don’t forget you’re talking about a lot of different statements over a lot of different years. From – I would say from 2015 on, because I started campaigning in 2015, as you know. I would say I had very little, if any, involvement. I just didn’t have very much involvement.”
Trump put the onus on the hired accountants, who, he said, provided information they needed and were hired to make sure everything was “good.”
Assets described with ‘certain verbiage’
According to the attorney general’s brief filed Wednesday, Trump secured favorable terms through Deutsche Bank’s private wealth management division by personally guaranteeing multi-million-dollar loans awarded to the Trump Organization for well-known Trump properties in Washington, DC, Florida and Chicago.
Deutsche Bank awarded the loans and maintained them based on the former president’s allegedly inflated statements of financial condition, the attorney general’s office claimed.
The Trump Organization pivoted to the private wealth management division from its commercial real estate division in 2011 when Trump’s son-in-law Jared Kushner introduced Donald Trump Jr. to Vbralic, the division’s managing director, according to the filing.
The Trump Organization refinanced its 40 Wall Street property with Allen Weisselberg’s son, Jack, through his employer, Ladder Capital, in 2015. Weisselberg facilitated the negotiations that ultimately led to a loan deal guaranteed personally by Trump, who reported to Ladder his 2014 net worth was nearly $5.8 billion, according to the filing. According to the attorney general’s office, Trump’s net worth was actually $2.2 billion less, approximately 38%.
When asked whether it would be “surprising” for her to see “an adjustment of the reported net worth,” Vbrablic said, “Again, I don’t know what goes into it.”
During his deposition, Allen Weisselberg testified that he was being paid $2 million over a two-year period that began in January, according to a separation agreement with the Trump Organization. He declined to qualify his exit from the company as a resignation or termination, saying, ” I had so much going on in my mind at that time.”
Weisselberg did not suggest Donald Trump crossed any lines in connection to the allegations against the company in the suit.
“There could have been an occasion where he put a mark next to a number with a question mark … that wouldn’t be unusual to question it and give him an answer,” he said. “And from that point forward, we would either show him how we got to that number and why we felt it was appropriate or he may have had a better – other information that we weren’t aware of that we may have used instead.”
Weisselberg said that he “didn’t delve into the numbers” on the statements of financial condition, which he claimed was another employee’s responsibility.
“My role was not to gather numbers, gather data, go out to third-party experts. I did none of those things,” he said in his May deposition.
Before a statement of financial condition was released, Weisselberg said he would give it to Trump to review.
“I’d walk into him and tell him, you know, we had the draft statement. And, usually, he was on the phone doing a million things. He didn’t have time to sit down and spend hours reviewing it,” he said. “I would give it to him and most times I would leave it on his desk and then he would look at it when he had the time and that would be it.”
Trump liked to ensure the assets were written about using “certain verbiage,” Weisselberg said.
“I might say beautiful. He might say magnificent,” he said when prompted to give an example. “I might say it was cute. He would say it’s incredible.”
Lawsuit set to go to trial in October
The $250 million lawsuit is set to go to trial in October, kicking off what will be several months of civil and criminal trials for the former president. Trump will not be required to attend the fraud trial, which could last as long as six weeks, because it is a civil case but he could testify in his defense.
The financial stakes are high for him and his family. James is seeking $250 million and to permanently bar Trump and his sons from serving as an officer or director of any business registered in New York state and block them from engaging in any new real estate transactions for five years.
The lawsuit alleges Trump, his adult sons and the Trump Organization enriched themselves by inflating the value of numerous properties, including Trump’s triplex apartment at Trump Tower, Mar-a-Lago and numerous golf courses.
This story has been updated with additional developments.
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