2 years ago
NEW YORK — Triple-counting the square footage of a Manhattan penthouse. Claiming his name alone added 30 percent to the value of a Florida golf club. Valuing a property based on homes that could not be developed.
These are among the tricks former President Donald Trump allegedly used to inflate the value of his real estate holdings and obtain hundreds millions of dollars in financial benefits over more than a decade, according to a suit from New York Attorney General Tish James on Wednesday.
The suit, which also targets three of Trump's adult children and the Trump Organization, alleges a slew of accounting sleight of hand, some of which was even news to Trump's former personal attorney Michael Cohen, whose congressional testimony three-and-a-half years ago spurred James' probe.
"There may have been two or three [allegations] that I wasn't aware of, but the rest I was," he told CNN in an interview after the lawsuit was unveiled, adding that the claims lent to the “complete destruction” of Trump’s image as an expert businessman.
Trump allegedly overstated the value his name added to Trump National Golf Club, Jupiter in Florida on so-called statements of financial condition submitted to banks and tax authorities. The statements said there was no brand premium, but nonetheless claimed his image raised property values by 30 percent in 2013 and 2014, and 15 percent from 2015 through 2020, according to James.
Trump also claimed his own triplex apartment in Trump Tower as 30,000 square feet when it was actually a hair under 11,000, causing a 2015 valuation of $327 million in total or $29,738 per square foot, according to the attorney general.
In a statement, Trump attorney Alina Habba repeated the former president's claim that the case is politically motivated.
“Today’s filing is neither focused on the facts nor the law — rather, it is solely focused on advancing the Attorney General’s political agenda,” Habba said. “It is abundantly clear that the Attorney General’s Office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place. We are confident that our judicial system will not stand for this unchecked abuse of authority, and we look forward to defending our client against each and every one of the Attorney General’s meritless claims.”
To those who knew Trump when he was a player in New York’s real estate world decades ago, however, the sprawling fraud alleged in the suit came as little surprise.
“The guy is completely untrustworthy. Everyone knew you couldn't trust his word. That's why he didn't build a thing in years,” one high-profile real estate executive, who would only speak on the condition of anonymity, said in an interview.
The person said it was common knowledge among developers that Trump readily engaged in shady business practices, and described much of his real estate portfolio as a marketing and branding scheme.
“He’s a master of hyperbole and has been overstating his role and his importance for decades,” said a different developer who would only speak on the condition of anonymity.
If successful, James' suit would ban Trump from any commercial real estate transactions for five years — potentially spelling the end to what’s left of his real estate empire.
The AG says Trump priced his Mar-a-Lago club in Florida as high as $739 million — when it was actually worth a tenth of that — based on the "false premise" it could be used for residential purposes, even though he'd signed deeds foreclosing on that possibility.
The suit also lays out how Trump allegedly obtained a 2015 loan from Ladder Capital Finance based on real estate firm Cushman & Wakefield's purportedly inflated valuations of 40 Wall Street, an office tower in Lower Manhattan for which the Trump Organization owns a ground lease. Cushman, which declined to comment for this article, valued it at $540 million through a series of “unreasonable adjustments,” James alleged.
But Trump nonetheless claimed the property was worth $735.4 million on a financial statement submitted in support of the 2015 loan application, according to the AG's office. Three years earlier, he allegedly valued the property at $527 million, despite a bank-ordered appraisal it was only worth $220 million, James says.
At Trump Tower, the 58-story skyscraper on Fifth Avenue that’s also home to the Trump Organization’s headquarters, the firm said it consulted “outside professionals” to reach valuations in the annual financial statements between 2011 and 2019. But the suit says there’s “no evidence” any such third-party evaluation occurred and alleges the firm conducted a “series of coordinated actions” to artificially push up the building's estimated price.
James says Trump further distorted his net worth by repeatedly counting funds he did not control, such as money held by Vornado Partnership Interests, in which he had a minority stake.
Trump’s tax statements also neglected to mention his 50 percent interest in a joint venture in a Las Vegas hotel-condo tower, James alleged. In 2015, his organization submitted a nearly $25 million valuation for the Trump International Hotel and Tower to contest taxes Nevada was charging him. Yet that same year, his company reported the property was worth $107 million — “a value the Trump Organization reached using fraudulent methods,” according to legal papers James released.
At several of the Trump Organization’s golf courses — from Briarcliff Manor, New York, to Colts Neck, New Jersey to Mooresville, North Carolina — the firm inflated the value of unsold memberships to further bump up valuations.
“The pattern of fraud that was used by Mr. Trump and the Trump organization was astounding,” James said at a press conference in announcing her much-anticipated lawsuit.
Olivia Olander contributed to this report.
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