New York attorney general unveils investigation into Trump company's finances

New York State Attorney General Letitia James takes a question from a reporter after announcing that the state is suing the National Rifle Association during a press conference, Thursday, Aug. 6, 2020, in New York. (Kathy Willens/AP Photo)
New York state Attorney General Letitia James speaks to the press on Aug. 6. (Kathy Willens/AP)

Court documents made public on Monday revealed that the New York State attorney general’s office is conducting a wide-ranging investigation into alleged financial improprieties at President Trump’s real estate company and is accusing the business of trying to stall the probe.

The investigation has looked at a series of signature Trump properties, including Trump Seven Springs, a sprawling 213-acre estate in Westchester County, N.Y.; the 40 Wall Street office tower in Manhattan’s financial district; an office tower in Chicago; and the president’s golf club in Los Angeles. The investigators are trying to determine whether the Trump Organization reported the forgiveness of more than $100 million in loans in connection with the Chicago office tower as income, what tax benefits Trump claimed for multimillion-dollar conservation easements granted at Seven Springs and the L.A. golf club, and the details of a 2015 refinancing of the office building on Wall Street.

The court documents also indicate that, despite some initial cooperation, investigators for the office have run into a wall of opposition from Trump Organization officials and their lawyers. Specifically, the investigators say the Trump Organization has refused to produce documents to show how the conservation easement at Seven Springs was treated on federal tax returns, hid a raft of documents behind dubious claims of privilege, identified witnesses who turned out to have no firsthand knowledge of the matters under investigation, and refused entirely to produce a key witness — the president’s son Eric, who took over operations of the Trump Organization in 2017, after his father became president.

In addition, the investigators say that Trump’s lawyers have stonewalled their subpoenas for documents and testimony. The attorney general’s filings request that the courts compel the real estate company and its lawyers to comply with the office’s subpoenas.

“For months, the Trump Organization has made baseless claims in an effort to shield evidence from a lawful investigation into its financial dealings,” New York Attorney General Letitia James said Monday in a statement. “They have stalled, withheld documents, and instructed witnesses, including Eric Trump, to refuse to answer questions under oath. That’s why we've filed a motion to compel the Trump Organization to comply with our office’s lawful subpoenas for documents and testimony.”

Eric Trump and the White House did not respond to requests for comment. Alan Garten, an executive vice president and chief legal officer of the Trump Organization, denied any wrongdoing and suggested that James’s investigation was a political attack.

Eric Trump, son of President Donald Trump, yells from a vehicle after speaking at the Milwaukee Police Association, Tuesday, Aug. 18, 2020, in Milwaukee. (Morry Gash/AP Photo)
Eric Trump yells from a vehicle after speaking at the Milwaukee Police Association on Aug. 18. (Morry Gash/AP)

“The Trump Organization has done nothing wrong and, as the motion papers clearly state, the NYAG has made no determination that anything was improper or that any action is forthcoming,” he wrote to Yahoo News. “While we have tried to cooperate in good faith with the investigation at every turn, the [New York attorney general’s] continued harassment of the company as we approach the election (and filing of this motion on the first day of the Republican National Convention) once again confirms that this investigation is politically motivated. We will respond to this motion as appropriate,” Garten said.

James, a Democrat, became New York’s attorney general in 2018 after campaigning on a promise to aggressively investigate the president. She has jurisdiction over the Trump Organization because it is headquartered in Manhattan. The revelations about her investigation into the president’s real estate company come on the heels of a blockbuster lawsuit James filed earlier this month against the National Rifle Association, a major Trump backer, seeking its dissolution.

A source familiar with the probe who requested anonymity to discuss the ongoing investigation suggested that the Trump Organization feels threatened because James has obtained extensive documentation of the company’s finances, which are closely intertwined with the president’s personal fortune.

“Trump’s people are concerned because she has an in-depth look into his finances,” the source said of James.

James’s office has not publicly revealed everything its investigators know; the public filings are significantly redacted in some places, and they indicate that the investigators have filed a second narrative document highlighting other facts for the judge’s eyes only, in order “to protect the confidentiality of this ongoing investigation.” Despite the redactions, the fillings make clear that James’s office had access to internal Trump Organization documents, outside appraisals of properties and tax filings.

Trump’s personal and business taxes have been the source of intense speculation because he is the first president who did not publicly disclose his tax returns prior to taking office. The president has repeatedly said he cannot release his returns because they are “under audit.” There is no legal reason an audit would prevent him from releasing his tax returns if he wished to do so.

James is the first prosecutor to publicly reveal confidential details about Trump’s business practices since he took office. Her allies say they expected James to take on the president both because of her campaign promises and her roots.

“I’m not surprised that she’s aggressively going after Trump,” Jumaane Williams, who succeeded James as New York City’s public advocate, said. “Coming from Brooklyn, she loves a good fight.”

As the Trump Organization’s claim of “harassment” shows, James’s eagerness to take on the president could be used against her. On Twitter, Eric Trump posted a video on Monday evening showing James on the campaign trail promising to sue Trump and be “a real pain in the ass” for him.

“Without any basis, the [New York Attorney General] has pledged to take my father down from the moment she ran for office. This is the highest level of prosecutorial misconduct — purposely dropped on the eve of the Republican Convention for political points,” Eric wrote.

Geoffrey Berman, former U.S. attorney for the Southern District of New York, arrives at Rayburn House Office Building July 9, 2020 on Capitol Hill in Washington, DC.  (Alex Wong/Getty Images)
Geoffrey Berman, former U.S. attorney for the Southern District of New York, arrives on Capitol Hill on July 9. (Alex Wong/Getty Images)

Some experts have raised questions about whether James’s promises to go after the president would open her up to concerns that her focus on him amounts to a “vendetta.”

However, she isn’t the only major prosecutor who has taken an interest in the valuations and taxes paid on Trump properties. Two sources familiar with the situation told Yahoo News that last year the U.S. Attorney’s Office for the Southern District of New York was conducting an aggressive investigation into Trump’s real estate business with a specific focus on questionable practices related to the valuation of his properties. While federal prosecutors have not made their investigative findings public, James’s court filings alluded to the existence of the federal criminal investigation, and her investigators asked at least one witness about his testimony before the federal grand jury.

In June, Trump fired Geoffrey Berman, who was the U.S. attorney for the Southern District of New York. The U.S. attorney’s office, now led by Berman’s former deputy, Audrey Strauss, declined to comment.

There have previously been high-profile questions about property valuation and tax practices at the Trump Organization. Most notably, in February 2019, Michael Cohen, the president’s former longtime personal attorney, testified before Congress that Trump would fraudulently adjust his presentation of his finances in order to receive the most favorable treatment from both lenders and taxing authorities.

Michael Cohen, former lawyer for U.S. President Donald Trump, testifies before the House Oversight Committee on Capitol Hill, on Wednesday, February 27, 2019. (Cheriss May/NurPhoto via Gtty Images)
Michael Cohen, former lawyer for President Trump, testifies before the House Oversight Committee on Feb. 27, 2019. (Cheriss May/NurPhoto via Getty Images)

To back up his claims, Cohen provided a series of financial statements to congressional investigators that he said Trump had used to obtain loans from financial institutions. Cohen testified that the statements inflated the value of some of Trump’s assets, including Seven Springs, in order to receive more favorable loan terms. At the same time, Cohen testified, Trump would deflate the value of some of his assets for tax purposes.

Cohen, who did not respond to a request for comment, has written a tell-all book about his work for the president that is due out next month and has been billed as “the most devastating business and political horror story of the century.”

According to the filings, James’s investigation began with Cohen’s blockbuster testimony before Congress.

A source familiar with the investigations into the Trump Organization said the questions about property values and tax deductions aren’t limited to the properties that have been publicly identified in the filings from James’s office. The source, who requested anonymity to discuss the ongoing probes, suggested there may be similar issues with the president’s signature namesake skyscraper on Manhattan’s Fifth Avenue — Trump Tower.

“He doesn’t just do this with land,” the source said of Trump. “He does it in his buildings.”


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