Dramatic twist in Trump investigation as accounting firm cuts ties and says financial statements can’t be relied on

A letter from accounting firm Mazars stating that former president Donald Trump’s ‘statements of financial condition’ cannot be relied upon is part of a court filing by New York Attorney General Letitia James

Andrew Feinberg
Washington, DC
Tuesday 15 February 2022 13:34 GMT
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The longtime accounting firm for former president Donald Trump and his eponymous real estate company has cut ties with both and has warned the company that nearly a decade’s worth of his financial statements “should no longer be relied upon”.

In a letter to Trump Organization chief legal officer Alan Garten, Mazars attorney William Kelly wrote that information contained in court filings by New York State Attorney General Letitia James, as well as “our own investigation and information received from internal and external sources” has caused the firm to conclude that Mr Trump’s company should stop relying on financial statements dating from 30 June 2011 to 30 June 2020 and inform “any recipients thereof” — a category which could include many of the former president’s creditors — of the unreliability of those documents.

“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,” he added.

Mr Kelly also said Mazars would no longer be serving Mr Trump or the Trump Organisation “in part” due to the decision about the financial statements and “the totality of the circumstances,” and because there is now a “non-waivable conflict of interest” between the company and Mazars.

“As a result, we are not able to provide any new work product to the Trump Organization,” he said.

Mr Kelly’s letter amounts to Mazars firing Mr Trump and his company as a client by declaring they will no longer do business with either because the firm feels that Mr Trump and his company repeatedly misled their own accountants.

Because Mazars will no longer be aiding the Trump Organization, Mr Kelly said the former president and former First Lady Melania Trump will need to find a new tax preparer for their returns, which are due on 15 February.

The letter from Mazars was made public by Ms James’s office along with a court filing informing the judge overseeing the civil tax evasion case against the company of the fact that Mr Trump’s accountants can no longer vouch for his financial statements to bolster the state’s case for compelling the former president, his eldest son Donald Trump Jr, and his daughter Ivanka Trump to appear for sworn depositions.

“This development further reinforces what OAG’s previous submissions already showed: The Court should order Respondents’ compliance with OAG’s document and testimonial subpoenas,” lawyers for the attorney general’s office wrote.

Mr Trump and his children have asked a New York State court to quash the subpoenas and have claimed that Ms James is investigating whether they or the Trump Organization committed tax fraud solely out of political animus and for no legitimate reason. They have also filed a separate federal lawsuit to stop the investigation or enjoin her from participating in it.

But in a separate filing last month, the attorney general’s office said it had uncovered “significant ... evidence” which indicates that the former president’s company “used fraudulent or misleading asset valuations to obtain a host of economic benefits, including loans, insurance coverage, and tax deductions”.

The attorney general’s office also hit back at Mr Trump’s claim that he is being singled out for investigation unlawfully in Monday’s filing by noting that he and his attorneys could not provide an example of “other person identified in congressional testimony as having engaged in fraud and misrepresentation whom OAG has declined to investigate—particularly not any with a history of enforcement actions and complaints regarding alleged fraudulent conduct”.

“Nor do they identify another person shown through substantial evidence to have used false and misleading financial statements to obtain financial benefits whom OAG has not subpoenaed,” they added.

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