Accounting Firm Cuts Ties With Trump and Retracts Financial Statements - The New York Times

Because Ms. James’s investigation is civil, she cannot file criminal charges. But she could sue Mr. Trump and his company to seek financial penalties, and could try to shut down certain aspects of Mr. Trump’s business in New York.

“As the most recent filings demonstrate, the evidence continues to mount showing that Donald J. Trump and the Trump Organization used fraudulent and misleading financial statements to obtain economic benefit,” Ms. James said in a statement. “There should be no doubt that this is a lawful investigation and that we have legitimate reason to seek testimony from Donald J. Trump, Donald J. Trump Jr., and Ivanka Trump.”

It is unclear whether Mazars’ break with the Trumps will have any bearing on the district attorney’s criminal investigation into Mr. Trump. The firm has been cooperating with that investigation, and Mr. Trump’s main accountant at Mazars has already testified before a grand jury hearing evidence about Mr. Trump.

Understand the New York A.G.’s Trump Inquiry

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An empire under scrutiny. The New York State attorney general is currently conducting a civil investigation into former president Donald Trump’s business practices. Here’s what to know:

An empire under scrutiny. The New York State attorney general is currently conducting a civil investigation into former president Donald Trump’s business practices. Here’s what to know:

The origins of the inquiry. The investigation started after Michael D. Cohen, Mr. Trump’s former personal lawyer and fixer, testified to Congress that Mr. Trump and his employees had manipulated his net worth to suit his interests.

The findings. Ms. James detailed in a recent filing what she said was a pattern by the Trump Organization to inflate the value of the company’s properties in documents filed with lenders, insurers and the Internal Revenue Service.

The potential impact. Because the investigation is civil, the attorney general cannot file criminal charges and would have to sue Mr. Trump. Ms. James could seek financial penalties and try to shut down certain aspects of Mr. Trump’s business.

Mr. Trump’s response. Mr. Trump has filed a lawsuit against Letitia James, the New York attorney general, seeking to halt the inquiry. The suit argues that the attorney general’s involvement in the inquiry was politically motivated.

Financial statements. Mr. Trump’s longtime accounting firm, Mazars USA, disclosed that it could no longer stand behind annual financial statements it prepared for him. The statements are at the center of Ms. James’s investigation.

The office of the district attorney, Alvin Bragg, declined to comment.

Both investigations still face obstacles. While the statements may contain exaggerated estimates of Mr. Trump’s property values, those same documents also include a number of disclaimers, including acknowledgments that Mr. Trump’s accountants had neither audited nor authenticated his claims.

Another disclaimer notes that Mazars did “not express an opinion or provide any assurance about” the statements, a common caveat in statements of financial condition. The firm also disclosed that, while compiling the information for Mr. Trump, it had “become aware of departures from accounting principles generally accepted in the United States of America.”

Mr. Trump’s lawyers would likely argue that his lenders, sophisticated financial institutions like Deutsche Bank, would not have relied on the statements when providing him loans.

According to that filing, Mr. Trump claimed that the triplex apartment spanned 30,000 square feet, giving it an eye-popping value of $327 million. In truth, the apartment was 10,996 square feet.

Mr. Trump’s long-serving chief financial officer, Allen H. Weisselberg, later acknowledged to investigators that the company had overvalued the apartment by “give or take” $200 million.

This content was originally published here.


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