Tuesday, February 15, 2022

Trump's Long-Time Accountants Suddenly Quit And Admitted 10 Years Of Tax Information On His Businesses Cannot (And Should Not) Be Trusted; Trump Did Not React Well

Update: A quote from Barbara Res, a former construction executive at the Trump Organization:
If he gets away from this, there's no God and no reason to live.

* * *

Mazars USA, an accounting firm, severed all ties with Donald Trump last week, saying the accuracy of the "Statements of Financial Condition for Donald J. Trump for the years ending June 30, 2011 - June 30, 2020, should no longer be relied upon".

This decision should have severe consequences for Trump, who will likely face criminal charges in New York that he illegally inflated the value of his assets. Trump used those (now mostly likely false, according to the firm that filled them out) financial statements to secure bank loans. If Mazars insists that Trump's financial statements for the past decade are completely unreliable, the banks who have loaned Trump hundreds of millions of dollars could conceivably assert that Trump is in material breach of the lending agreements and call in those loans early, change the interest rates, or impose penalties or fees. Trump's total known debt is currently more than $1 billion.

From Mazars' letter, dated February 9, 2022:

We have come to this conclusion based, in part, upon the filings made by the New York Attorney General on January 18, 2022, our own investigation, and information received from internal and external sources. While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you to no longer rely upon those financial statements is appropriate.

As we have stated in the Statements of Financial Condition, Mazars performed its work in accordance with professional standards. A subsequent review of those workpapers confirms this.

Due in part to our decision regarding the financial statements, as well as the totality of the circumstances, we have also reached the point such that there is a non-waivable conflict of interest with the Trump Organization. As a result, we are not able to provide any new work product to the Trump Organization.

George Conway translated several phrases from Mazars' letter:

"decision regarding the financial statements" = they are false because you lied

"totality of the circumstances" = the D.A. is serious 

"non-waivable conflict of interest" = we are now on team D.A.

"not able to provide new work product" = sorry we're not going to jail for you

Regarding Mazars suddenly cutting trump loose, Conway told CNN: "This is about as calamitous a thing that could happen to a business that you could imagine." On Twitter, he admitted: "I was basically a neuron away from saying "he's in deep s--t".

New York Times, February 14, 2022:

Mazars' acknowledgment that the statements were fundamentally flawed was a potential blow to the Trump Organization as it attempts to fend off the long-running scrutiny of its finances. And for Mr. Trump, whose personal finances are intertwined with those of his family business and who has long faced questions about his taxes, Mazars is the latest in a long line of companies to break with him over the last year, following in the path of several banks, insurers and lawyers.  

The disclosures about Mazars' work for Mr. Trump appeared in new court documents filed by the New York attorney general, Letitia James, who is seeking to question the former president and two of his adult children under oath [Donald Trump Jr. and Ivanka Trump] as part of her civil investigation.

Washington Post, February 14, 2022:

[James's] office has combed through [Trump's] statements from 2004 to 2020 and discovered numerous discrepancies between the actual condition of his properties and his assertions about them in the statements, according to the January filing.

Trump's company allegedly provided statements to banks and insurers that included incorrect or misleading information on his Seven Springs estate in Westchester County, N.Y.; his triplex in Trump Tower; his Scotland golf resort; his Westchester golf club; Trump Park Avenue in Manhattan; and his 40 Wall Street office building.

James also alleged that the Trump Organization provided statements including inaccurate statements to the IRS and the General Services Administration, which holds the federal lease to Trump's D.C. hotel. 

It strains credulity well past its breaking point to think Mazars had no clue that Trump was lying his ass of to them for 10+ years. As Luppe B. Luppen writes at Pawprints:

The determination by Mazars that Trump's financial statements over a full decade are not reliable through no fault of its own amounts to a declaration that it has been repeatedly misled by its client. (Readers can come to their own conclusions about how credible it is for Mazars to purport to have only now discovered Trump's pattern of deception and whether this might amount to a more knowing collaborator belatedly seeking distance from the scheme.)

The accounting firm also said it had concluded that its new position casting doubt on the financial statements created a conflict of interest between it and the Trump Organization that could not be waived, and therefore it could do no new work on Trump's behalf.

Philip Rotner, The Bulwark, February 16, 2022:

Being fired by your accounting firm is never a good thing. When the accounting firm not only walks away from you but does so loudly with an express warning to users of your financial information that they can no longer rely on its accuracy, that's even worse. When access to loans is the lifeblood of your business, it's worse yet. And when all of this happens in the midst of civil and criminal investigations into your financial dealings, you could be in big trouble. . . .

This is terrible news for the man who calls himself the King of Debt. Access to cash is the lifeblood of the real estate business. Trump is already deeply in debt. His main lender, Deutsche Bank, cut its ties with him after the Jan. 6th Capitol attack. Prospective new lenders would have to be convinced, contrary to all existing evidence, that they could rely on the accuracy of the financial information provided by the Trump Organization. Existing lenders, including Deutsche Bank, could see the Mazars letter as a basis to call for immediate repayment of loans that are otherwise not yet due, depending on the terms of their loan agreements.

In a truly comical display of Trumpian dishonesty, the Trump Organization pretended that this potentially calamitous development is something positive. . . .


ProPubica published a profile on Mazars in May 2020 ("Meet the Shadowy Accountants Who Do Trump's Taxes and Help Him Seem Richer Than He Is"):

Trump's accountants are far from bystanders in the matters under scrutiny — or in the rise of Trump. Over a span of decades, they have played two critical, but discordant, roles for Trump. One is common for an accounting firm: to help him pay the smallest amount of taxes possible. The second is not common at all: to help him appear to the world to be rich beyond imagining. That sometimes requires creating precisely the opposite impression of what's in his tax filings.

Time and again, from press interviews in the 1980s to the launch of his 2016 campaign, Trump has trotted out evermore outsized claims of his wealth, frequently brandishing papers prepared by members of his accounting team, who have sometimes been called on to appear in person when they were presented, offering a sort of mute testimony in support of the findings. The accountants' written disclaimers — that the calculations rely on Trump's own numbers, rendering them essentially meaningless — are rarely mentioned.

Trump's accountants have been crucial enablers in his remarkable rise. And like their marquee client, they have a surprisingly colorful and tangled story of their own. It's dramatically at odds with the image Trump has presented of his accountants as "one of the most highly respected" big firms, solemnly confirming his numbers after months of careful scrutiny. For starters, it's only technically true to say Trump's accounting work is handled by a large firm.

In fact, Trump entrusts his taxes and planning to a tiny, secretive team of CPAs who have operated at various times from humble quarters in Queens and two Long Island office parks. That team, which has had two leaders with back-to-back multidecade terms, has been working for the Trumps since Fred Trump began using the firm back in the 1950s. It was eventually subsumed into Mazars USA, the American arm of a large international firm, through a series of mergers over decades.

One theme has been consistent: partners and sometimes the firm itself have faced accusations of fraud, misconduct and malpractice on multiple occasions, an investigation by ProPublica and WNYC has found.

On MSNBC, Timothy O'Brien, a Trump biographer, mocked the failed blogger, saying that Trump's numerous grifts to suck money out of his supporters' wallets is nothing new, but the schemes won't save his orange ass:

Good luck refinancing your debt when the accountants just walked out the door. That is going to give anybody else who would consider lending money to Donald Trump enormous pause. . . . Anything he can try to get cash from, he'll do. If you've got a bag of cash, Donald Trump will talk to you. . . . He is going to have to sell a lot of MAGA hats to be able to pay down $400 million in short-term debt that's coming due in the next few years . . . and perhaps well over a billion. . . . This kind of stuff isn't going to solve the problems he has. He's selling his hotel in Washington to deal with the kind of debt problems he has. He moved from New York to Florida, I think, for a variety of reasons, part of it's financial. And I think the fact that now that his accountants have decided to leave is yet another indication of what a mess he, his children, and his company have on their hands financially.

It is becoming much clearer, if it wasn't already, that Trump's reason for sanctioning a seditious coup to invalidate a fair election that he lost and attempting to install himself as an unelected leader was the legal protections afforded him if he remained in the White House. As a regular old fat fuck in Florida, he's extremely vulnerable (presumably).

Former federal prosecutor Kim Wehle said Mazars' decision is

a super big deal for the firm and, of course, for Donald Trump, because this information could give rise to banks calling their loans, saying, 'Listen, we gave you money in reliance on information that now turns out by your own accounting firm to be inaccurate.' That's separate from the potential legal liability from New York.

Trump is also facing heat for allegedly inflating the value of his daughter Ivanka's apartment to obtain a lease for the Trump International Hotel in Washington, DC. According to MSNBC's Rachel Maddow, New York Attorney General Letitia James has subpoenaed records related to the DC hotel from the federal government

looking into whether Trump got the lease on that property through fraud — whether the Trump Organization lied about its assets in order to obtain the lease for the property and the loans they used to pay for it.

We know from documents that were filed by Attorney General James last month that it was Trump's adult daughter, Ivanka Trump, who, according to the attorney general, negotiated the lease for that hotel with the federal government and negotiated a loan from Deutsche Bank to pay for it. Tish James is arguing that the means by which the Trump Organization described their own financial condition in order to get the lease and the loan were both fraudulent. . . .

Under her rental agreement, she apparently had the option to buy that [Park Avenue] apartment if she wanted to, for the cost of $8.5 million. But in the forms that were submitted to get the loan for the DC hotel, that very same apartment was listed as being worth more than $20 million. Then a few years later, they listed it as being worth $25 million, even though they knew there was an option to buy it for just $8.5 million.

Attorney General James is looking into exactly that type of potentially illegally inflation of the Trump family and Trump Organization's financial situation for a whole bunch of Trump properties.

James has also claimed that Trump used "fraudulent or misleading" asset valuations to get other loans and several million dollars in tax benefits. James has found "significant additional evidence indicating that the Trump Organization used fraudulent or misleading asset valuations to obtain a host of economic benefits, including loans, insurance coverage, and tax deductions."

One example: Trump misreported the size of his Manhattan penthouse, saying it was nearly three times its actual size — a difference in value of about $200 million. That information came from Allen Weisselberg, Trump's longtime financial chief, who was charged last year with tax fraud.

A few weeks ago (January 29, 2022), Trump whined to a crowd of his supporters in Texas:

If these radical, vicious, racist prosecutors do anything wrong or illegal, I hope we are going to have in this country the biggest protests we have ever had in Washington, D.C., in New York, in Atlanta . . . They're trying to put me in jail. These prosecutors are vicious, horrible people. They're racists and they're very sick. They're mentally sick.

(Vicious, racist, horrible, mentally sick. It's all projection.)

Trump also released a lengthy rant today, in which he basically lost his shit.

Trump's deranged ramblings include mentioning Hillary Clinton four times, putting his own name in quotation marks when referring to himself, referring to a 35-year-old woman who was apparently murdered in her Chinatown apartment, and repeating several times that no one – NO ONE!!!! - has ever been treated so badly – ever!!! – in the history of the world!!!

Trump might want to rethink that last sentence since he is a serial rapist.

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