Former U.S. President and Republican presidential candidate Donald Trump looks on as he speaks during a campaign rally in Erie, Pennsylvania, U.S., July 29, 2023.
Lindsay Dedario | Reuters
The independent financial monitor for the Trump Organization told a New York judge she identified issues of incompleteness and inconsistency in certain disclosures to lenders and others by the company owned by former President Donald Trump.
Barbara Jones, the monitor, told New York Supreme Court Judge Arthur Engoron that Trump and his company defended the Trump Organization’s disclosure practices in the areas she had flagged, but will change how they disclose information in light of her claims.
“In the interest of cooperation and transparency, Defendants have agreed to address in future disclosures to lenders the items I have identified and otherwise adjust their practices based upon my observations,” Jones wrote in a letter filed in court Friday.
CNBC has reached out to lawyers and representatives of the Trump Organization requesting comment about Jones’ claims.
The former federal judge was appointed in November as a financial monitor as part of a case where the company, Trump, and several of his children are being sued by New York Attorney General Letitia James for alleged widespread fraud related to financial statements.
The trial in the case is set for Oct. 2.
James, last year, requested an outside monitor after becoming concerned that Trump was trying to move the legal structure of his companies out of New York to avoid her jurisdiction.
Engoron wrote that James’ request was justified given the “persistent misrepresentations throughout every one of Mr. Trump’s [Statements of Financial Condition] between 2011 and 2021.”
Jones, in her letter to the judge, noted that the Trump Organization is comprised of assets held by the Donald J. Trump Revocable Trust, which acts as a guarantor for loans and owns commercial and residential real estate, hotels, golf courses and licensing ventures, among other things.
During her review of nine loan agreements, more than 75 financial disclosures, and thousands of supporting documents, Jones said she observed that information regarding certain material liabilities provided to lenders … has been incomplete.”
Those liabilities, she noted, included “intercompany loans between or among Truth entities and Donald J. Trump, certain of the Trust’s contingent liabilities, as well as refundable golf club membership deposits.”
Jones wrote that “the Trust also has not consistently provided all required annual and quarterly certifications attesting to the accuracy of certain financial statements.”
She noted that the company’s annual audited financial statements for certain entities, which are prepared by an outside accounting firm, “list depreciation expenses.”
“However,” Jones added, interim financial statements given to third parties, which are prepared internally by the Trump Organization about the same entities, “inconsistently report depreciation expenses.”
The attorney general, in her lawsuit, alleges the defendants committed widespread fraud involving years’ worth of false financial statements related to the company’s business.
James is seeking $250 million and a bar on the Trump Organization from doing business in New York.
James alleges that Trump massively overstated the values of assets in statements to banks, insurance companies and the IRS to obtain more favorable loan and insurance terms for his company, and to lower its tax obligations.