By Lukas I. Alpert
Donald Trump and his family, and the family business, egregiously misstated the value of their assets to get more favorable loan terms, allegedly through blatant accounting falsehoods, exaggerations and outright lies, according to a civil suit filed by the New York attorney general.
Over the course of the decade stretching from 2011 through 2021, the former president signed off on annual statements of financial condition that included more than 200 false and misleading valuations of assets he owned, the civil suit claims. He is alleged to have used the overstated figures to personally guarantee hundreds of millions of dollars in loans that his company took out for commercial developments.
“Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system,” said New York Attorney General Letitia James. “Mr. Trump and the Trump Organization repeatedly and persistently manipulated the value of assets to induce banks to lend money to the Trump Organization on more favorable terms.”
Trump and his family have dismissed the charges as being politically motivated.
The following are six of the most eye-popping examples James cited in her suit.
Donald Trump’s New York City apartment
The suit accuses Trump of claiming in 2015 that his triplex apartment at Trump Tower on Fifth Avenue in Manhattan was 30,000 square feet, more than three times its actual size of 10,996 square feet. That allowed him to value the apartment at a stratospherically high $327 million, at $29,738 per square foot. James’s suit notes that at that time only one apartment had ever been sold for over $100 million in New York City, in a newly built tower. The record price for an apartment in the then-30-year-old Trump Tower was $16.5 million, which breaks down to less than $4,500 per square foot.
James’s suit accuses Trump of lying about restrictions on what he could do with his famed Palm Beach, Fla., private club, Mar-a-Lago. In his statement of financial conditions, Trump claimed that there were no restrictions on the property and that it could be developed and sold for residential use at any time. That allowed him to place a value on the property of $739 million. In truth, James said, the deeds Trump signed when he acquired Mar-a-Lago in 1985 severely restricted what he could do with the 18-acre property, sharply limiting any changes to it and disallowing the right to develop the property into multiple residences. In reality, the club generated annual revenue of less than $25 million and should have been valued at around $75 million, the suit said.
In 2012, according to the suit, Trump valued 12 rent-stabilized apartments at his Trump Park Avenue building at $50 million, claiming there were no restrictions to what he could do with them. Rent-stabilized apartments are highly restricted, however, and their tenants under law cannot be forced out. Trump used the exaggerated valuation for the apartments, despite an appraiser’s telling him they were collectively worth only $750,000, the suit claimed.
Double the value
Bank-ordered appraisals for a commercial property Trump owned at 40 Wall St. valued it at $200 million in 2010 and $220 million in 2012. But in those same years, Trump listed the value of the building on his statement of financial conditions at $524 million and $527 million — more than double the appraisers’ opinions. Not only had Trump doubled the figure; he attributed the valuations he provided to the appraiser who had found the building to be worth half of what Trump was claiming, the suit said.
For Trump’s golf course in Aberdeen, Scotland, he based its valuation of $327 million on his having obtained zoning approval to develop 2,500 homes on the land. But he had received approvals to develop fewer than 1,500 cottages and apartments, many of which could only be used for short-term rentals, according to the New York civil suit. The difference accounted for more than 80% of the valuation Trump assigned to the property in 2014.
In calculating his properties’ valuations, Trump often applied a “brand premium” because of the supposed cachet attaching to the Trump name. But he also claimed in the statements that he had not included that in his figures. The rules of GAAP, or generally accepted accounting principles, prohibit the inclusion of “internally generated intangible brand premiums.” In the 2013 statement, the suit said Trump added 30% to the value of his golf course in Jupiter, Fla., as deriving from the Trump “brand.” That allowed him to claim that the golf course that he had purchased just a year earlier for $5 million had become worth more than $62 million. He used a similar accounting trick for six other golf clubs that year, the suit said.