The Washington PostDemocracy Dies in Darkness

Why Trump’s accounting firm ditched him

As the former president’s business is being investigated, Mazars said it can no longer vouch for financial statements it prepared for the company

(Justin Lane/EPA-EFE/REX/Shutterstock)

Two investigations in New York are looking at whether former president Donald Trump’s company falsified its records to either avoid taxes or get loans.

And Trump and his company just got troubling news on that front: Their accounting firm won’t vouch for them anymore and is ditching them entirely. Mazars said in a recent letter that a decade’s worth of financial statements it prepared for the Trump Organization “should no longer be relied upon,” report The Washington Post’s Jonathan O’Connell and Shayna Jacobs.

That is a damning development for Trump’s company, because it lends credence to the allegations that some of its financial statements were misleading or false. Here’s what’s going on.

What the Trump Organization is being investigated for

Did the former president’s business dodge taxes and/or commit fraud?

The attorney general of New York, where the Trump Organization is based, is investigating whether Trump undervalued his properties, such as his golf courses, so the company could pony up less when it came time to pay taxes. She is also looking at whether the Trump Organization overstated the value of its properties to banks to get better deals on loans.

There is a similar criminal investigation of the company led by the Manhattan district attorney, which alleges that the company doctored tax records to avoid paying taxes.

What they have found so far

These two investigations have been going on for several years. The one led by the attorney general of New York is a civil investigation, which means it could lead to the Trump Organization paying fines or being subject to lawsuits.

New York Attorney General Letitia James (D) hasn’t alleged direct wrongdoing by the former president, but she’s trying to get him and his children to talk under oath as she tries to determine whether “widespread fraud” permeated the Trump Organization. She has said her investigation has obtained nearly 900,000 documents from the Trump Organization.

As for the criminal investigation by the Manhattan district attorney, the Trump Organization and its chief financial officer were indicted this summer on suspicion of keeping two sets of books to dodge taxes. Prosecutors allege the company had one set of internal books keeping track of cars and tuition and gifts for company executives, and another set of books for tax authorities that omitted all of that taxable compensation.

How Trump’s accounting firm factors into this

The firm, Mazars, is a crucial link for investigators. The accounting firm has worked with the Trump Organization for decades, and it helped the company prepare financial statements that Trump would hand out to banks and potential business partners.

A number of these statements were just flat-out wrong, The Post reported in 2019. For instance, one said Trump Tower had 68 stories; it has 58. Another said that a vineyard he owned in Virginia had 2,000 acres; it had 1,200.

These were so far off from reality that one accounting expert told The Post it was “humorous.”

In 2019, as Trump’s exaggerated financial statements came to light, Mazars didn’t comment.

But as James’s investigation has gone on, Mazars has suddenly decided that it had no choice but to stop working with the former president’s company and to disavow a decade’s worth of financial statements it prepared for the Trump Organization.

“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 executive William J. Kelly said in a recent letter revealed by James’s investigation. He cited findings by James and Mazars’s own internal investigation as reasons to sever ties with the Trump Organization.

House Democrats say this mirrors what they found in their investigations. They spent years trying to get financial records from Mazars — Trump sued, and that case went all the way to the Supreme Court. Congress eventually got the records and in October said it found that Trump’s financial statements to apply for a lease for the Trump International Hotel in D.C. were misleading.

“Mazars’ letter is further confirmation of what has long been suspected: former president Trump’s claims about his shady financial dealings simply cannot be trusted,” said Rep. Carolyn B. Maloney (D-N.Y.), chairwoman of the House Committee on Oversight and Reform, which is still investigating Trump’s financial conflicts as president.

What this could mean legally for Trump

It’s bad news for his company. Legal experts say this probably means that the very firm that prepares his documents has arrived at its own findings that are consistent with at least some of the allegations made against the Trump Organization by investigators. It’s pretty damning that Mazars now says its own work can’t be trusted.

“Accounting firms don’t make the decision to quit their clients lightly,” said Barbara McQuade, a former federal prosecutor who is with the University of Michigan Law School. “ … They are distancing themselves from the Trump Organization because they fear that wrongdoing is likely to be exposed.”

Could Mazars be in trouble, too? McQuade said it’s possible. “This effort to distance themselves could be an effort at self-preservation,” she said. It depends on whether Mazars knew the information it was getting from the Trump Organization was false or whether it was misled, too.