- Wednesday was Trump’s third day of presenting defense witnesses at his civil fraud trial in NY.
- An ex-SEC accountant offered blunt testimony on Trump’s net-worth statements.
- He noted “questionable” and “glaring” issues with the statements, despite being Trump’s own witness.
When it comes to Donald Trump’s estimates of his net worth, “questionable,” and “inconsistencies” are words you’d expect to hear only from his accuser, the state of New York.
But on Wednesday, an expert accountant took the stand in Trump’s defense for a second day at the former president’s Manhattan fraud trial, and used these very words to describe the creative math at the center of the case.
“It’s certainly a red flag for me,” testified the expert, Jason Flemmons, referring to an internal, Trump Organization spreadsheet from 2016 displayed on an overhead screens in the lower Manhattan courtroom.
“I’d want to know more,” Flemmons said of the spreadsheet, in which Trump claimed some $200 million in ready cash. State officials say those millions were actually locked in a partnership that Trump did not have sole authority to withdraw from.
“It’s a red flag?” the judge in the non-jury trial, state Supreme Court Justice Arthur Engoron, cut in.
“Based on my expertise,” Flemmons answered, “I would have a lot of questions about it,” he said, adding, “this is a rather glaring issue.”
The not-so-ready cash was just one of nearly a dozen net-worth red flags identified Wednesday by Flemmons. A former fraud enforcer for the Securities and Exchange Commission, Flemmons had begun testifying on Trump’s behalf on Tuesday, when he described the broad wiggle room allowed in estimating net worth.
New York Attorney General Letitia James has alleged that over the past decade, Trump’s annual net-worth statements fraudulently exaggerated his worth by as much as $3.6 billion a year, allowing him to reap at least $250 million in profits and interest-rate savings.
But Flemmons did more Wednesday than confirm some of the attorney general’s worst fraud allegations.
He testified that red flags pop up routinely in the process of drafting net worth statements, which are used by banks in deciding who to offer loans to, and at what interest.
“It happens all the time,” he said. And it certainly happened a lot in Trump’s net-worth statements, by Flemmons’ own description.
Led through a decade of statements by defense lawyer Jesus Suarez, Flemmons described numerous “discrepancies” and “inconsistencies.”
These included Trump tripling the actual square footage of his Manhattan penthouse, his secretly adding a Trump “brand premium” to his total worth, and his inflating the value of Trump Park Avenue by valuing rent-stabilized condo units at market rate.
But Flemmons deflected blame for these discrepancies onto that old Trump stalking horse: the outside accountant.
It’s the accountant’s obligation, Flemmons testified Wednesday, to catch discrepancies, and not the responsibility of the person signing the statement or attesting to its truth, as Trump or his sons have done every year for the past decade.
“That’s why you have outside accountants involved in this process,” Flemmons said.
James and her team of lawyers would – and have – begged to differ. It’s just like lying on your taxes, they have argued in court and in filings: You can’t dodge legal responsibility by blaming your accountant.
Trump’s longtime accountant at Mazars USA, Donald Bender, said in testimony last month that while his firm was responsible for compiling Trump’s annual net-worth statements, it was up to Trump and his executives to turn over accurate liability and market value data.
This, the attorney general has alleged, Trump did not do.
“Blame the accountants” has been one of Trump’s go-to defenses in his New York fraud travails, going back to the criminal payroll tax-fraud case his company lost a year ago.
James is seeking a judge’s verdict that would permanently ban Trump and his two eldest sons from running a business in New York. She is also seeking at least $250 million in financial penalties.
Flemmons is scheduled to continue his testimony Thursday under cross-examination by Kevin Wallace, a senior counsel at the AG’s office. The defense case and any rebuttal case by the attorney general’s side are expected to take another month or more.