NEW YORK (AP) 鈥 Donald Trump blamed his accountants. So did the two sons he entrusted to run his company. Now, as they mount their defense in the civil fraud trial threatening the former president鈥檚 real estate empire, his lawyers are too.
Trump鈥檚 lawyers spent Tuesday digging into outside accounting firm Mazars USA LLP鈥檚 role in preparing financial statements at the heart of New York Attorney General Letitia James鈥 lawsuit, upping the blame with expert testimony from a former federal financial regulator.
Jason Flemmons, testifying as an accounting expert, questioned some of the firm鈥檚 practices and raised doubts about earlier testimony from Donald Bender, the retired Mazars partner who spent years working on Trump鈥檚 financial statements.
Bender, the first witness called by state lawyers, testified Oct. 3 that he'd asked a Trump Organization executive for all of the company鈥檚 property appraisals 鈥 not just ones used for the financial statements 鈥 and that he was surprised when he learned years later that some hadn't been turned over.
Flemmons, a former deputy chief accountant at the U.S. Securities and Exchange Commission, said Bender鈥檚 claim was 鈥渘ot professionally plausible鈥 because such diligence isn鈥檛 required under professional accounting standards.
Compiling financial statements involves a 鈥渕uch lighter touch鈥 than more stringent accounting practices, like audits, and requesting appraisals 鈥渨ould be highly unusual" and 鈥渆ntirely inconsistent" with what鈥檚 required, Flemmons testified.
In preparing financial statements, also known as compilations, accountants need only documentation used to determine the value of assets, like Trump鈥檚 skyscrapers, golf courses and other properties.
In Trump鈥檚 case, Flemmons said, his company determined the numbers and met the requirements by providing justification for them and explaining instances where it used different standards to determine a value, which is permitted. Flemmons, who will return to the stand Wednesday, has not been asked to address the state鈥檚 specific claims that Trump executives used a variety of methods 鈥 sometimes misclassifying properties 鈥 to attain the highest values.
鈥淭here would be no obligation or expectation on the part of Mazars or any accountant performing compilation services鈥 to request appraisals that weren鈥檛 used to arrive at the values," said Flemmons, now a senior managing director at Ankura, a Washington, D.C., consulting firm.
A message seeking comment was left for Mazars. The firm cut ties with Trump last year and said his financial statements 鈥渟hould no longer be relied upon鈥 after James raised concerns about their accuracy.
Flemmons testified on the second day of the defense鈥檚 case as Trump鈥檚 lawyers seek to refute the state鈥檚 claims that the 2024 Republican front-runner, his company and top executives manipulated the value of his assets to make him look wealthier and his properties more successful than the actually were.
James, a Democrat, alleges Trump, his company and top executives by billions of dollars on the financial statements by inflating property values. The documents were given to banks, insurers and others to secure loans and make deals. James is seeking more than $300 million in what she says were ill-gotten gains, and she wants the defendants banned from doing business in New York.
Before the trial, Judge Arthur Engoron ruled that Trump and other defendants committed fraud by exaggerating his net worth and the value of assets on his financial statements. The judge imposed a punishment that could strip Trump of some marquee properties, though an appeals court is keeping them in his control for now.
Trump has denied wrongdoing. On the stand Tuesday, Flemmons echoed Trump鈥檚 longstanding assertion that disclaimers on the financial statements insulated him from liability for discrepancies or misstatements.
鈥淚t鈥檚 effectively saying user beware,鈥 Flemmons testified.
Trump has argued that, if anything, his financial statements undervalued how much his properties were worth. On the stand last week, he reiterated his belief that his Mar-a-Lago estate in Florida is worth up to $1.5 billion, more than double the highest value listed for it on his financial statements.
Trump鈥檚 lawyers ran with that claim Tuesday, arguing it didn't matter if he overvalued some of his properties because he significantly undervalued others.
They raised the argument while questioning another expert, real estate developer and Trump friend Steven Witkoff, who claimed that Trump鈥檚 Doral, Florida, golf resort had been severely undervalued on his financial statements.
鈥淚s it your position that if one property is overvalued by $300 million and another property is undervalued by $300 million it balances out and there鈥檚 no misstatement or fraud?鈥 Engoron asked, criticizing the argument as 鈥渞idiculous鈥 and shutting it down.
Witkoff, who鈥檚 hosting a fundraiser for Trump in Florida next month, testified that developers value their properties based on their potential 鈥 like building condominiums on a golf course or turning an office tower into apartments 鈥 rather than their current state.
Donald Trump Jr., a Trump Organization executive vice president, testified Nov. 1 that he signed off on statements as a trustee of his father鈥檚 trust, but had left the work to outside accountants and the company鈥檚 then-finance chief, Allen Weisselberg.
鈥淎s a trustee, I have an obligation to listen to those who are expert 鈥 who have an expertise of these things,鈥 Trump Jr. said.
His brother, Eric, echoed that sentiment, testifying Nov. 3 that he relied on 鈥渙ne of the biggest accounting firms in the country鈥 for assurance that the financial statements were accurate.
Donald Trump, testifying Nov. 6, said he paid Mazars millions of dollars for its services and said he gave McConney and Weisselberg 鈥渢otal authority鈥 to work with the firm and give it whatever it needed to come up with his financial statements.
鈥淚f the accounting firm was unhappy, they would go back and they would say, we need this, we need that,鈥 Trump testified. They were very insistent on that. Very insistent on that. But they came up with statements in each of those years, so obviously they were satisfied."
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