Trump Organization monitor flags errors and financial misstatements ahead of ruling in fraud case

The Trump Organization has cooperated with its independent monitor but risks putting out inaccurate financial statements, according to a report issued on Friday by a court-appointed monitor.

The report comes ahead of an expected ruling in a $370 million civil trial involving former President Donald Trump's company.

Trump, his sons Eric Trump 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 judge overseeing the case already found the defendants liable for using false documents to do business. The former president has denied all wrongdoing in the case.

The report – issued at the request of Judge Arthur Engoron to summarize the 14 months of the Trump Organization's court-appointed monitorship – found that the company has been cooperative, implemented some changes, and issued necessary corrections to financial statements. However, based on her review of over 3000 documents, retired judge Barbara Jones identified that the Trump Organization often provided documents "lacking in completeness and timeliness."

"It is important to note that the Trump Organization acknowledged the disclosure issues described after I brought them to its attention and has been open to recommendations to improve accuracy and transparency," Jones wrote, noting the company implemented changes to their disclosures and provided additional information following omissions.

However, Jones added, "Absent steps to address the items above, my observations suggest misstatements and errors may continue to occur, which could result in incorrect or inaccurate reporting of financial information to third parties."

Jones also said that the Trump Organization still lacks a formal compliance department, issued statements that include errors and misstatements, and operates in a manner that reflects "a lack of effective governance."

"For example, based on the inconsistencies described above, it does not appear that there are adequate accounting and presentation standards, procedures, or training associated with the preparation of financial disclosures. To the extent adequate standards and procedures do exist, they do not appear to have been followed across the organization," Jones noted.

Her report was issued on Friday, one week ahead of an expected ruling in Trump's $370 million civil fraud trial. Judge Engoron has closely watched Jones' monitorship, using one of her past reports to justify beginning the dissolution of the Trump Organization in his summary judgment order.

"Even with a preliminary injunction in place, and with an independent monitor overseeing their compliance, defendants have continued to disseminate false and misleading information while conducting business. This ongoing flouting of the court's prior order, combined with the persistent nature of the false SFC's year after year, have demonstrated the necessity of canceling the certificates," Engoron wrote in September.

Expressing concern that Jones' letters have offered an inaccurate picture of the Trump Organization's compliance, defense attorney Chris Kise unsuccessfully attempted to call Jones as a witness at the trial, which Engoron rejected due to Jones' role as an "arm of the court."

When called as a witness, Trump organization executive Mark Hawthorn defended his work coordinating with Jones and the overall conduct of the company.

"We believe everything they deemed as an objection we have responded to diligently and very accurately," Hawthorn said. "No one from that team has ever communicated to us that they have uncovered fraud or any irregularities."