The accounting firm that former President Donald Trump has relied on for decades to provide financial statements about his firm, the Trump Organization, has cut ties with the company, warning that a decade’s worth of documentation is not reliable.
The revelation that Mazars USA, a subsidiary of the Paris-based professional services firm Mazars, had severed its relationship with Trump came in a legal filing by New York State Attorney General Letitia James. The filing is part of an effort to have the court compel Trump and two of his adult children, Donald Trump Jr. and Ivanka Trump, to provide testimony in James’ investigation of the company’s finances.
In its letter announcing that it had ended its relationship with the Trump Organization, the company indicated that the revelations from the attorney general’s investigation, as well as an internal inquiry by the company itself, had caused it to lose confidence in the statements of financial condition it issued between 2011 and 2020.
The revelation is the latest in a series of events that have pushed the former president and his family back into the headlines in recent days.
Last week, it was revealed that Trump had illegally taken boxes of documents, some classified as top secret, to his home in Florida after leaving the White House in 2021. The National Archives and Records Administration retrieved at least 15 boxes of material from Trump’s representatives and is in negotiations to recover more.
Trump’s disregard for the rules governing the treatment of official documents has long been public knowledge. The former president was known for tearing up documents that White House staff would then retrieve from trash cans and tape back together in order to comply with the Presidential Records Act.
Also last week, a preview of an upcoming book by New York Times writer Maggie Haberman revealed that the former president is suspected of using other means to destroy official records. Haberman reported that during Trump’s four-year term, White House staff found documents clogging toilets in the building and believed that the president had been attempting to flush them away.
New court filing
The former president and his allies were in the news again last week, after a legal filing by Justice Department Special Counsel John Durham. Durham was appointed during the Trump administration to investigate federal law enforcement agencies’ handling of the probe into alleged ties between Trump’s 2016 election campaign and Russian intelligence services.
The filing, which dealt with Durham’s contention that a witness lied to federal investigators, included little new information. However, coverage of it by right-leaning media outlets created the false impression that it accused Trump’s opponent in the 2016 election, former Secretary of State Hillary Clinton, of hiring a technology firm to spy on Trump, even after he had taken office as president.
Trump issued a statement blasting the mainstream media for failing to report on what he characterized as a “major crime.” It soon became clear, however, that the filing made no such disclosure or accusation.
Accounting firm’s investigation
While Mazars USA’s announcement that it would no longer stand behind the Trump Organization’s statements of financial condition is certainly bad news for the company, it is not, by itself, evidence of specific wrongdoing by the firm.
Observers note it is important to understand exactly what Mazars was providing when it signed off on statements about the Trump Organization’s financial health. While Trump often characterized the Mazars reports as proof that he was extraordinarily wealthy, the documents did not actually provide proof of his net worth.
Mazars built the statements of financial condition from data provided by the Trump Organization itself, not on information from outside financial auditors or other independent analysis. Mazars was always careful to point that out in the documents, but the fact was usually omitted when Trump discussed the reports.
Discrepancies in valuations
The problems with this approach became evident last month, when New York Attorney General James submitted a court filing demonstrating that the Trump Organization had grossly overstated the value of many of its holdings in financial disclosures to creditors, in one case boosting a New York apartment’s value by approximately $200 million.
That meant Mazars’ statements of financial condition could have accurately reflected the data the Trump Organization provided while simultaneously presenting a wildly inflated picture of the company’s actual worth.
In its letter to the Trump Organization informing it of the decision to cut ties, Mazars said that it had “performed its work in accordance with professional standards” when preparing the statements of financial condition.
Citing that language, the Trump Organization suggested in a statement to the media that Mazars’ claim “effectively renders the investigations by the (district attorney) and (attorney general) moot.”
That claim is unlikely to carry any weight with the courts because, again, Mazars was not conducting an independent audit of the Trump Organization’s books.
Higher valuation of assets can make it easier for an enterprise to secure loans and attract investors. Whether Trump erroneously inflated asset valuations to the Trump Organization’s financial benefit is among the topics under investigation.