Former Trump Organization controller testifies there's no 'right way' to calculate property valuations
Donald Trump's corporate executives once raised the estimated worth of his Trump Tower penthouse by $20 million US partly because of the value of his celebrity, according to trial testimony Thursday.
Another $100-million hike in the estimate was based on a single email from a real estate broker, who hadn't commissioned an appraisal, didn't inspect the triplex and was told it was three times its actual size.
From a witness stand, former Trump Organization controller Jeffrey McConney shed light Thursday on calculations central to Trump's New York civil business fraud trial.
New York Attorney General Letitia James's lawsuit alleges the former U.S. president conspired with top executives to exaggerate his wealth and deceived lenders and others. Trump denies any wrongdoing.
In pre-trial testimony, Trump said people who did business with him were warned not to trust the statements and that he never thought the documents "would be taken very seriously."
He described the financial statements as more a "compilation of properties" than a true representation of their value, saying some numbers were "guesstimates."
Integral to some loans
But McConney's testimony came with evidence that the documents were integral to some loan deals.
In letters shown in the court, McConney told a bank that he was providing Trump's 2015 and 2016 financial statements as required under the conditions of a loan for his Seven Springs estate north of New York City.
To figure the penthouse value, Trump executives combed through real estate listings, looking only for the highest-priced similar apartments, McConney testified.
And the $100-million increase in 2012?
"I'm basing that on the email from Kevin," McConney said, referring to real estate agent Kevin Sneddon.
The broker had offered a quick estimate based on an asking price for a similar triplex in a Trump-owned building elsewhere in Manhattan — an apartment that ultimately sold for only 40 per cent of the asking price.
The next year, McConney tacked on another $20 million, upping the estimated value of Trump's penthouse to $200 million — a change based partly on a Trump real estate executive's suggestion that the apartment's celebrity connection warranted a higher price.
Contributed own calculations
McConney also acknowledged making his own calculations, instead of relying on the numbers in a bank appraisal, to increase the stated worth of Trump's Wall Street office building by $227 million.
Those and other asset valuations went onto Trump's financial statements, which in turn went to banks, insurers and others. James calls that "persistent and repeated fraud."
Trump says James, a Democrat, is just trying to damage his 2024 presidential campaign.
McConney reasoned there was no "right way" to determine valuations and that it was appropriate to calculate the value of Trump's apartment based on asking prices instead of sales prices as appraisals do.
Judge Arthur Engoron said: "I think any high school student knows the right way."
McConney, who worked at the Trump Organization from 1987 until February, also testified at the company's criminal tax fraud trial last year. Granted immunity from prosecution, the ex-controller admitted breaking the law to help fellow executives avoid taxes on company-paid perks, including by filing false tax returns. The company was convicted. Trump himself wasn't charged in that case.
McConney's appearance Thursday followed days of testimony from two accountants who worked on the financial statements.
James's legal team sought to demonstrate that Trump and his company had complete control over the preparation of the statements, with the outside accountants relying on information from the company.
The defence tried to show that if there were problems, they were accountant Donald Bender's fault.
Bender, who prepared the statements for years, insisted Thursday that he asked Trump Organization executives for all required documents but didn't always get them.
He said he learned about some missing appraisals only during Manhattan prosecutors' investigation into Trump's business practices.
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