Former President Donald Trump is on trial in New York in a $250 million civil lawsuit that could alter the personal fortune and real estate empire that helped propel Trump to the White House.
Trump, his sons Eric Trump and and Donald Trump Jr., and other top Trump Organization executives are accused by New York Attorney General Letitia James of engaging in a decade-long scheme in which they used "numerous acts of fraud and misrepresentation" to inflate Trump's net worth in order get more favorable loan terms. The trial comes after the judge in the case ruled in a partial summary judgment that Trump had submitted "fraudulent valuations" for his assets, leaving the trial to determine additional actions and what penalty, if any, the defendants should receive.
The former president has denied all wrongdoing and his attorneys have argued that Trump's alleged inflated valuations were a product of his business skill.
- Deutsche Bank made money from Trump, defense emphasizes
- Judge, clerk subjected to daily threats, official says in gag order filing
- Trump's disclaimer told bankers to 'beware,' expert says
- Trump distances himself from preparation of statements
- Trump's misrepresentations cost banks $168M, expert testifies
- Trump, after testifying, fined $10,000 for violating gag order
- Controller valued Mar-a-Lago at $500M despite deed restriction
Trump firm 'in compliance' but under 'enhanced monitoring'
Donald Trump agreed to "enhanced monitoring" of the Trump Organization's finances after the company's independent monitor flagged cash transfers of roughly $40 million over the last 10 months.
Former judge Barbara Jones, the independent monitor requested by the New York attorney general in the case, wrote in a letter to Judge Arthur Engoron that she had identified three separate cash transfers of more than $5 million, totaling approximately $40 million. Jones said the transfers included $29 million in tax payments and roughly $10 million for insurance premiums.
"We have discussed with Defendants why these transactions were not previously disclosed, and I have now clarified (and Defendants have agreed) that all transfers of assets out of the Trust exceeding $5 million must be reported," Jones wrote.
Jones also requested information related to an intercompany loan and flagged the delayed disclosure of tax returns for six of Trump's entities, which defendants acknowledged as their mistake.
"Defendants continue to cooperate with me and are generally in compliance with the Court's orders, and have committed to ensure that all required information, including tax information and cash transfers, are promptly disclosed to the Monitor," Jones wrote.
Addressing a report she issued in August about incomplete financial disclosures by the Trump Organization, Jones added that the Trump Organization took additional steps to remedy and disclose the issue.
"By taking these steps I believe Defendants have resolved the issues identified in the August Report, subject to ongoing monitoring," Jones wrote.
Trump VP walks back testimony suggesting conspiracy
Trump Organization VP Patrick Birney, testifying for the defense, walked back testimony from earlier in the trial about receiving instructions to inflate the value of Trump's assets from the company's former CFO.
"Did Allen Weisselberg ever tell you that Mr. Trump wanted his net worth on the statement of financial condition to go up?" state attorney Eric Haren asked Birney during the state's case.
"Yes," Birney responded, describing that he received the instruction in Weisselberg's office between 2017 and 2019.
During an argument for a directed verdict earlier this month, Donald Trump's attorney Chris Kise cited that as some of the only testimony to support the New York attorney general's allegation that members of the Trump Organization conspired to inflate the former president's net worth.
Returning to the witness stand for the defense's case, Birney suggested that any changes to Trump's financial statement were based on material changes to assets.
"Were you ever directed to increase a number without there being an underlying basis to increase that valuation?" defense attorney Jennifer Hernandez asked.
"No," Birney said.
Judge Arthur Engoron adjourned court for the day after Birney completed his testimony.
"OK, class dismissed," Engoron quipped.
Deutsche Bank expected Trump to value assets fairly, banker says
Former Deutsche Bank managing director Rosemary Vrablic testified on cross-examination by state attorneys that Donald Trump, Ivanka Trump, and Donald Trump Jr. secured private financing using recourse -- meaning they were personally liable for the loan.
"Sorry about the recourse issue -- a dirty word, I know -- but it is a requirement in private banking," Vrablic wrote in a 2011 introductory email to Donald Trump Jr.
Vrablic confirmed that each of the Trumps she worked with -- Donald, Ivanka, and Donald Trump Jr. -- used a personal guaranty to secure better financing terms.
"It gives the flexibility to be creative on some solutions because the person is standing behind it," Vrablic testified.
State attorney Kevin Wallace appeared to focus on the personal guaranty during the cross-examination, with the discussion bringing the focus back on the representation of the value of Trump's assets.
While Vrablic confirmed that she never personally reviewed Donald Trump's statement of financial condition, she said the bank still expected it was accurate.
"You would have had an expectation that a borrower like Mr. Trump would present their financial information fairly?" Wallace asked.
"Yes," Vrablic replied.
Deutsche Bank made money from Trump, defense emphasizes
Defense attorney Jesus Suarez, in his direct examination of Deutsche Bank managing director Rosemary Vrablic, emphasized that Deutsche Bank was eager for Trump's business and made money from the loans they offered him.
"Your family is in the top 10 revenue generating names of Asset and Wealth Management now and he is thrilled with how it's grown," Vrablic wrote in a 2014 email to Ivanka Trump, referring to Vrablic's boss at Deutsche Bank.
That same year, Vrablic estimated that the bank made more than $6.8 million in fees from the Trump Organization.
Vrablic described her role as an intermediary between lenders at the bank and Ivanka Trump, both hunting for deals within the bank and courting the Trumps for increased business.
"Existing customers are the best source of additional customers," Vrablic said about importance of Trump's business, given his connections in real estate and his wealthy family.
Trump's disclaimer told bankers to 'beware,' expert says
Defense expert Jason Flemmons described the disclaimer included in Donald Trump's financial statement as the "highest level disclaimer" that could have been provided to bankers reviewing the document.
Flemmons said that the disclaimer, which he said includes "highly cautionary language," would allow a user to make claims that significantly departed from generally accepted accounting principles, known in the industry as GAAP.
"Was that language present in a substantially similar form in the compilation statements issued by Mazars for Donald Trump?" defense attorney Jesus Suarez asked.
"Yes," Flemmons said, adding that the disclaimer was "effectively saying 'user beware.'"
During his testimony and in statements to the media, Trump has claimed that the disclaimer shields him from liability in the case.
Suarez also used Flemmons' testimony to suggest that Trump's external accountants were responsible for understanding the methods used in the financial statement and determining their appropriateness.
That appeared to conflict with testimony of former Trump accountant Donald Bender of Mazars USA, who described his role as akin to plugging numbers provided by the Trump Organization into a template.