Mazars USA To Trump Organization: ‘You’re Fired!’ (Cooperating With NY Attorney General)

This is something you don’t see every day, in fact, almost never: an accounting firm firing its client because of repeated misrepresentations of financial condition which the accounting firm relied upon to produce misleading financial statements and tax filings.

Just to be clear, Mazars USA clearly knew that the Trump Organization was lying to it based upon the extensive caveats they put in the financial reports it prepared for the Trump Organization. Mazars USA was OK with this until now, with the Trump Organization facing a potential New York state RICO action. Mazars USA is trying to limit its criminal exposure by agreeing to be a cooperative witness and to turn over evidence to the New York Attorney General. There are no innocent parties here.

The Associated Press reports, Accounting firm: Trump financial statements aren’t reliable:

The accounting firm that prepared former President Donald Trump’s annual financial statements says the documents, used to secure lucrative loans and burnish Trump’s image as a wealthy businessman, “should no longer be relied upon” after New York’s attorney general said they regularly misstated the value of assets.

In a letter to the Trump Organization’s lawyer Feb. 9, Mazars USA LLP advised the company to inform anyone who had gotten the documents not to use them when assessing the financial health of the company and the ex-president. The firm also said it was cutting ties with Trump, its highest-profile client.

Mazars’ letter, made public in a court filing Monday, came just weeks after New York Attorney General Letitia James said her civil investigation uncovered evidence that Trump and his company used “fraudulent or misleading” valuations of its golf clubs, skyscrapers and other properties to get loans and tax benefits.

“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,” Mazars General Counsel William J. Kelly wrote to his Trump Organization counterpart, Alan Garten.

Kelly told Garten that Mazars could no longer work with Trump because of a conflict of interest and urged him to find another tax preparer. Kelly said several Trump-related tax returns still needed to be finished, including those of the former president and first lady.

That “conflict of interest” would be Trump’s longtime accountant Donald Bender testifying to a New York grand jury last December which, under New York law, gives him use immunity from prosecution. Trump’s longtime accountant testifies to N.Y. grand jury in criminal probe. A classic move against mobsters. It’s always the bookkeeper who takes them down.

Kelly said Mazars performed its work on Trump’s financial statements “in accordance with professional standards” but that it could no longer stand by the documents in light of James’ findings and its own investigation. Kelly said Mazars’ conclusions applied to Trump’s 2011-2020 financial statements. Another firm handled Trump’s 2021 financial statement.

James’ office included a copy of Kelly’s letter in a court filing as she seeks to enforce a subpoena to have Trump and his two eldest children, Donald Jr. and Ivanka, testify under oath. A state court judge, Arthur Engoron, is scheduled to hear arguments Thursday in the subpoena dispute.

James, a Democrat, said Monday that given the evidence, “there should be no doubt that this is a lawful investigation and that we have legitimate reason” to question Trump, a Republican, and his children, both of whom have been Trump Organization executives.

Trump’s lawyers have argued that any testimony they give could be used against them in a parallel criminal investigation being overseen by the Manhattan district attorney’s office — a probe that [has already] led to tax fraud charges last year against the Trump Organization and Allen Weisselberg, its longtime chief financial officer.

In a court filing last month, James’ office detailed several instances in which Trump misstated the value of assets on financial statements given to banks.

Deutsche Bank [also not an innocent party] accepted Trump’s financial statements without objection in a deal for $300 million in loans for three of his properties and, in internal memoranda, emphasized Trump’s reported financial strength as a factor in lending to him, James’ office said.

Another bank said it received financial statements in 2014 stating Trump had a net worth of $5.8 billion and liquidity of $302 million. A bank official involved in that deal told James’ office that if he were aware of misstatements on Trump’s statement of financial condition, he would have killed the deal.

James office said its investigation started after Trump’s former personal lawyer, Michael Cohen, told Congress in 2019 that Trump had a history of misrepresenting the value of assets to gain favorable loan terms and tax benefits.

Cohen gave copies of three of Trump’s financial statements to the House Committee on Oversight and Reform. Cohen said Trump gave the statements to Deutsche Bank to inquire about a loan to buy the NFL’s Buffalo Bills and to Forbes magazine to substantiate his claim to a spot on its list of the world’s wealthiest people.

Trump’s lawyers have portrayed Cohen as having a vendetta against Trump and said in a recent court filing that it “stretches all credibility to believe that” James’ office put “any legitimate stock” in his testimony. [Cohen brought receipts.]

James’ office responded Monday that not only did it rely on Cohen’s testimony, but that his testimony is “vindicated by the evidence obtained to date and Mazars’s notification that those statements should not be relied upon.”

Donald Trump likes to brag how he is “the king of debt.” According to Forbes, Donald Trump Has At Least $1 Billion In Debt, More Than Twice The Amount He Suggested. Good luck with being able to refinance that revolving debt now. And if Trump is indicted, his lenders can accelerate and call their loans. It can all come crashing down.

Mazar’s decision to cut ties with the Trump Organization spells very bad news for former President Donald Trump, according to conservative attorney George Conway.

For any business (including a privately-held one) that has outside financing or investors, having your financial statements (let alone 10 years' worth!) pulled by your accountants is just about the most calamitous thing that could happen to it, other than perhaps being indicted.

— George Conway (@gtconway3d) February 14, 2022

This is worse for him than getting impeached twice.

— George Conway (@gtconway3d) February 14, 2022

"decision regarding the financial 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 https://t.co/jbK2WUjncy pic.twitter.com/NbbDhUCbrL

— George Conway (@gtconway3d) February 14, 2022

Mazars has already provided thousands of pages of Trump Organization financial documents to the New York Attorney General’s Office and Manhattan District Attprneys office, after the U.S. Supreme Court let stand a lower court’s order to produce the documents.

Now, New York AG Letitia James really, really wants Donald Trump to unlock his two-dozen file cabinets in Trump Tower:

Donald Trump’s lawyers will go head-to-head with some of his potential prosecutors on Thursday over their demands that Trump, his daughter Ivanka, and his son Donald Jr. sit for depositions in an ongoing New York state civil probe.

But the two sides will also battle over a vast trove of paperwork the former president has refused to turn over.

According to sources and recent court filings, investigators’ sights are set on two dozen beige, metal file cabinets in the former president’s Trump Tower headquarters on Fifth Avenue in Manhattan.

The cabinets line a back wall of the skyscraper’s 26th floor, where Trump has his executive offices.

Given the former president’s reportedly heedless way with documents, New York Attorney General Letitia James appears particularly eager to secure their contents.

“They go back decades,” one source told Insider of the 26th floor’s stash.

“That’s just some of it,” said the source, who described potential evidence on condition of anonymity.

Still more Trump Organization file cabinets are located on other floors, the source added; additional files that are no longer active are stored in an off-site facility.

* * *

“While Mr. Trump famously does not use email or a computer, at least according to reports, he regularly generated handwritten documents,” she wrote.

The AG knows just where those documents are supposed to be thanks to one of Trump’s own executives.

The Trump Organization’s general counsel, Alan Garten, testified under subpoena last summer, telling the AG “that there were file cabinets at the Trump organization containing Mr. Trump’s files,” according to the January 18 filling.

Garten testified that, “Mr. Trump had assistants who maintained files on his behalf, that he received and maintained hard copy documents, and that he used Post-it Notes to communicate with employees,” the filing said.

Since those first subpoenas two summers ago, the AG’s filing continued, The Trump Organization has turned over just three of Trump’s own letters, the filing said.

Otherwise, what James refers to as “the custodial files of Donald J. Trump” have remained resolutely shut.

I guess Donny had better get busy flushing those documents down his golden toilet before Thursday’s hearing. If anyone sees a plumber’s truck out in front of Trump Tower, you know what happened.

CNN’s John Berman interviewed David Cay Johnston — one of the few journalists to obtain Trump’s tax returns — following news that the accounting firm Mazars dropped Trump as a client. David Cay Johnston predicts Trump is about to be hit with racketeering charges:

“What happens if Mazars cooperates with investigators?” Berman asked. “Which, by all accounts, it does seem that they are.”

“Well, Donald Bender, the Mazars accountant who prepares Trump’s tax returns testified before the Manhattan grand jury and New York has this very unusual law, if you testify before the grand jury, you are granted immunity,” Johnston explained. “That’s not true at the federal level and in other states. So, he no longer is in concern personally for anything he may have done, from the Manhattan prosecutors.”

“But, it does mean that Mazars is helping the prosecutors put together the, what I expect, will be a racketeering case. A New York state racketeering case against Trump, the Trump Organization, Allen Weisselberg and probably Donald’s three older children,” he said, referring to Donald Trump Jr., Ivanka Trump and Eric Trump.

New York’s Enterprise Corruption and the Organized Crime Control Act, often known as “little RICO,” is the state’s adaption of the federal Racketeer Influenced and Corrupt Organization Act (RICO) that is designed to go after organized crime.

The New York statute can carry prison terms of up to 25 years.

“Where do you think this ends for Donald Trump and the Trump Organization?” Berman asked.

“Well, the civil case — the civil matter by Letitia James — is going to result in a civil suit making numerous charges of falsification of documents, false claims, and obtaining benefits as a result. The Manhattan grand jury is eventually going to indict Donald Trump,” Johnston predicted. “They got 5 million pages of documents, John, they have to go through every one of them before they can finish their work.”

“But Donald Trump will be indicted on a state racketeering charge, I’m confident of that,” he said. “And perhaps in Westchester County, by Mimi Rocah, the new D.A. there and in Fulton County, Georgia, by Fani Willis, looking into voter fraud and now has a grand jury just for the purpose of investigating Trump’s effort to interfere with the Georgia vote count,” Johnston added.

I would not be so confident about any of this, Mr. Johnston. Prosecutors have the goods on Donald Trump for numerous criminal charges they could bring, and yet none of them have filed an indictment as yet. I’ll beleve it when I see it.