As New York judge considers Donald J. Trump’s civil fraud suit, recent allegations about deficiencies in his company’s financial reporting could provide the court with grounds for taking firm action against both former President and his family business.
Arthur F. Engoron will soon decide on any consequences Mr. Trump may face as a result of New York attorney general Letitia James’ allegations that he falsified his net worth to secure favorable loans. Following a monthslong trial, Letitia James requested a penalty of approximately $370 million; she requested this figure as it follows on the heels of a separate jury verdict for defamation, in which Mr. Trump must pay $83.3 million as damages.
Last week, new allegations surfaced against Mr. Trump’s family business, the Trump Organization. An outside monitor assigned by Justice Engoron in late 2022 to watch over it has reported on this, with former federal judge Barbara Jones serving as her oversight monitor for how the company reports to lenders and banks its finances.
Her report revealed multiple paperwork issues at a family company trying to shake its legacy of laxness: missing disclosures, typos, math errors and inquiries into a $48 million loan between one of Mr. Trump’s companies and one of Ms. Jones’ law firm partners; she told the judge that this may indicate inadequate internal controls at play in this family business.
On Monday, Mr. Trump’s attorneys struck back, criticizing Ms. Jones as a monitor and accusing her of acting in bad faith so the Trump Organization would continue paying her. They claimed she had failed to identify any fraud, while most of her concerns had already been addressed by management.
“The monitor now alters immaterial accounting items to justify her continued appointment and her continued receipt of millions in excessive fees,” one of Clifford S. Robert’s lawyers noted in their letter to Justice Engoron, noting that Ms. Jones has already received over $2.6 million.
Ms. Jones did not respond to our request for comments.
Ms. Jones’ findings and responses from Mr. Trump’s attorneys could sway Justice Engoron to side more closely with Ms. James’ claim. In addition to seeking the $370 million penalty from Judge Engoron – as there was no jury for trial proceedings – James has asked that Mr. Trump and other defendants are barred from running any company in Illinois in future.
On Sunday, Mr. Trump responded to Attorney General Sessions’ charges that his financial statements reflect an amount which exceeds what they actually contain by posting to social media: “I AM WORTH MUCH MORE THAN SHOWN HERE.” He has maintained that lenders who deal with him did not become victims, since many made money as part of their deals with him.
Ms. Jones found in her report that the Trump Organization recently presented inconsistent financial information. For example, financial statements provided by the company indicated expenses associated with its downtown Manhattan building (40 Wall Street) amounted to more than $1 million whereas when reporting them to lenders they claimed they amounted only to $100,000.
Mr. Robert cited in his letter the discrepancy as the source of their financial woes, which had arisen due to discrepancies between an annual budget submitted to lenders and actual expenses reported on financial statements.
Ms. Jones also wrote that the Trump Organization’s disclosures to lenders did not comply with loan terms requiring him to provide details of his finances; she noted, however, that she was unaware of any lender concerns about any missing data.
Perhaps most intriguingly, the report raised new questions regarding Donald Trump’s controversial $48 million loan agreement that involved his Chicago hotel.
Ms. Jones noted in her footnotes that when she inquired about a loan agreement between one of Mr. Trump’s companies and himself, loan agreement did not exist and loan itself never existed despite it having been mentioned on presidential candidate disclosure forms for years by both candidates.
Mr. Trump’s lawyers refuted Ms. Jones’ account on Monday, noting that The Trump Organization never told her the loan existed but no money is currently owed on it.
Mr. Roberts complained in his letter that the monitor included false statements in her report.
Justice Engoron appointed Ms. Jones to head up the Trump Organization shortly after Ms. James filed her civil fraud suit in 2022, receiving nominations both from attorney general’s lawyers and those representing President Trump.
Ms. James requested that the monitor oversee the company for an extended period, but this request was sharply rejected by Mr. Trump’s legal team in their Monday letter, who likened Ms. Jones to an overzealous police inspector from “Les Miserables.”
“Further oversight is unnecessary,” they stated in their letter, as any further oversight would “unfairly enrich” Ms. Jones as she pursues some form of legal action against them in her “Javert-like quest”.
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