The accounting firm that prepared former President Donald Trump’s annual financial statements said the documents, used to secure lucrative loans and burnish Trump’s image as a wealthy businessman, “should no longer be relied upon” after New York’s attorney general said they regularly misstated the value of assets.
In a letter to the Trump Organization’s lawyer on February 9, Mazars USA LLP advised the company to inform anyone who had possession of the documents not to use them when assessing the financial health of the company and the former president.
The firm also said it was cutting ties with Trump, its highest-profile client.
Mazars’ letter, made public in a court filing on Monday, came just weeks after New York Attorney General Letitia James said her civil investigation uncovered evidence that Trump and his company used “fraudulent or misleading” valuations of its golf clubs, skyscrapers and other properties to receive loans and tax benefits.
“While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you to no longer rely upon those financial statements is appropriate,” Mazars’ General Counsel William J Kelly wrote to his Trump Organization counterpart, Alan Garten.
Kelly told Garten that Mazars could no longer work with Trump because of a conflict of interest and urged him to find another tax preparer.
Kelly said several Trump-related tax returns still needed to be finished.
The Trump Organization said in a statement it was “disappointed that Mazars has chosen to part ways” but took Kelly’s letter as a positive because the accounting firm had not found material discrepancies in Trump’s financial statements.
The letter “confirms that after conducting a subsequent review of all prior statements of financial condition, Mazars’ work was performed in accordance with all applicable accounting standards and principles and that such statements of financial condition do not contain any material discrepancies,” the Trump Organization said.
“This confirmation effectively renders the investigations by the DA and AG moot.”
Kelly said Mazars performed its work on Trump’s financial statements “in accordance with professional standards” but that it could no longer stand by the documents in light of James’ findings and its own investigation.
James’ office included a copy of Kelly’s letter in a court filing as she seeks to enforce a subpoena to have Trump and his two eldest children, Donald Jr and Ivanka, testify under oath.
A state court judge, Arthur Engoron, is scheduled to hear arguments Thursday in the subpoena dispute.
James, a Democrat, said on Monday that given the evidence, “there should be no doubt that this is a lawful investigation and that we have legitimate reason” to question Trump, a Republican, and his children, both of whom have been Trump Organization executives.
Trump’s lawyers have argued that any testimony they give could be used against them in a parallel criminal investigation being overseen by the Manhattan district attorney’s office – a probe that led to tax fraud charges last year against the Trump Organization and Allen Weisselberg, its longtime chief financial officer.
