The Trump Organization owns an office building at 40 Wall Street in Manhattan. In 2012, when the company was listing its assets for potential lenders, it said the building was worth $527 million — which would make it among the most valuable in New York.
That was less than one-thirtieth the amount it had claimed the year before.
That property is now under scrutiny from the Manhattan district attorney and New York attorney general, along with several others like it for which the Trump Organization gave vastly different value estimates, according to public records and people familiar with their investigations who spoke on the condition of anonymity to discuss ongoing inquiries.
After the indictment of the Trump Organization’s chief financial officer this summer for income tax fraud, prosecutors now appear to be examining whether the company broke the law by providing low values to property tax officers, while using high ones to garner tax breaks or impress lenders.
New York Attorney General Letitia James (D) has said she is considering a lawsuit, and prosecutors in the Manhattan District Attorney’s Office have also convened a new grand jury, which could vote on criminal charges, according to the people familiar with the investigations.
Among the other properties under scrutiny: former president Donald Trump’s California golf club, for which he valued the same parcel of land at $900,000 and $25 million depending on the intended audience, and an estate in suburban New York, for which Trump’s valuations ranged from $56 million up to $291 million. The valuations were all given in the five years before Trump won the presidency.
Prosecutors appear to have dug deeply into these properties, according to court papers and people familiar with the investigation. They have compiled reams of emails, planning documents and financial data, even seeking the initiation fees Trump charged golf club members as far back as a decade ago. In Los Angeles, they have asked for geology reports on the rock layers under Trump’s course — where the value was affected by a history of landslides.
They have also sought detailed records from two outside companies that worked with the Trump Organization to formulate these valuations: appraisal firm Cushman & Wakefield and law firm Morgan Lewis. In court filings, prosecutors have referred to emails in which they said Trump executives or a Morgan Lewis lawyer pushed appraisers to change their findings. Neither Morgan Lewis nor Cushman & Wakefield responded to questions.
Real estate appraisers said it was highly unusual for any property owner to give such widely different values for the same property during the same time period.
“This is way, way beyond anything that’s believable,” said Norm Miller, a professor of real estate finance at the University of San Diego who has appraised properties for 50 years. “I’ve never seen anything with a gap that extreme.”
But extreme is not the same as illegal. Legal experts said that if prosecutors wish to prove a crime, they will need to do more than simply prove Trump’s valuations were wrong.
“Is it an overly optimistic? Is it an enthusiastic perception?” said Robert Masters, a former top aide to the district attorney in Queens. “Does that make it a lie?”
Masters said prosecutors would probably need to show that the figures were wrong on purpose — falsified deliberately, with an intent to deceive a lender or the government. Masters said that may require a witness on the inside, who could explain the decision-making behind the numbers.
“Is there somebody there who can translate the books?” he said.
The Trump Organization said in a statement on Monday that prosecutors should focus on other problems in New York. Eric Trump, the former president’s son and a top Trump Organization executive, also called the investigations an example of the “weaponization of political prosecutors.” “It is eroding Americans’ confidence in the legal system and it has to stop,” Eric Trump wrote in a statement.
This summer, Trump’s longtime CFO Allen Weisselberg and two Trump companies were indicted on charges of felony tax fraud. Prosecutors allege Weisselberg deceived income tax authorities by hiding some of the pay and benefits that he and other company executives received.
Trump himself was not accused of wrongdoing in that case. Weisselberg and the two companies have pleaded not guilty, and a trial is not expected until late next year.
Now, the investigations into Trump’s company appear to be undergoing a shift — both in leadership and in focus.
Manhattan District Attorney Cyrus R. Vance Jr. (D), who led the criminal side of the investigation for three years, declined to run for reelection. He will be replaced at year’s end by Democrat Alvin Bragg.
James, who is running a civil investigation of Trump’s company and assisting with Vance’s criminal probe, is staying. For now. She already has entered the governor’s race for 2022.
Vance, Bragg and James all declined to comment for this article.
In recent months, investigators have looked beyond the income tax issues that were the focus of Weisselberg’s indictment, according to public records and people familiar with the investigation.
They have appeared to focus on allegations about the values of Trump’s properties that were first raised publicly by former Trump lawyer and “fixer” Michael Cohen in his testimony to Congress in 2019. Cohen said Trump used these values to deceive, inflating or deflating the same asset to get advantages he didn’t deserve. “Mr. Trump is a cheat,” Cohen said then. Trump responded by noting that Cohen had pleaded guilty to providing false testimony to Congress in the past.
James’s office has even commissioned its own appraisals of some Trump properties, to provide a standard to which they could compare Trump’s valuations, according to two people familiar with the investigation.
Investigators seem focused on the valuations of at least four Trump properties, according to court filings and people familiar with the investigation.
One is the office building at 40 Wall Street. Another is in California, where Trump owns a golf course atop oceanfront cliffs in the Los Angeles suburb of Rancho Palos Verdes.
The cliffs have a history of landslides: In 1999, when somebody else owned the course, a 2,000-foot slide pulled the 18th hole into the ocean. After Trump bought the land in 2002, he sought to make extra money by building homes along the course — but city officials blocked those plans in one section of the course, saying a layer of slippery ash inside the cliffs made it vulnerable to slide again.
After that, records show, Trump’s company seemed to tell two divergent stories about the same land.
In filings with property tax authorities — when it was advantageous for the land to be worth less — Trump seemed to bow to the difficulty of developing the land. In 2013, he told the county tax assessor that the entire 17-acre parcel was worth just $900,000, less than a single home in that neighborhood.
But when it was advantageous for the land to be worth more, Trump’s company said it was. Twenty-seven times more.
That valuation came in 2014, as Trump’s company sought to get a “conservation easement” on that same parcel, formally giving up the right to build homes there.
For tax purposes, an easement works like a charitable donation: Instead of donating money, Trump was donating value — the money that the land would have brought him, if he’d built homes on it.
The bigger that value was, the bigger the tax deduction could be. In that case, Trump’s company, relying on an appraisal from Cushman & Wakefield, said the plot was worth at least $25 million.
In 2012, Trump’s “Statement of Financial Condition”— a document that is typically used to demonstrate value to potential lenders — said the course had “52 home sites available for sale,” indicating a potential source of future cash flow.
At the time, however, the club had only received approvals for 36 home sites and six of them had already been sold, according to public records.
In May — after Reuters published an article on the club’s fluctuating valuations — investigators from James’s office contacted the city of Rancho Palos Verdes. They asked for hundreds of thousands of pages of documents, covering the history of the club’s efforts to get home lots approved, according to an email exchange released by the city’s lawyers.
They also wanted reports on the geology under the course — the factor that had limited Trump’s ability to develop it. “We will take any reports you were able to find issued from the year 2000 and forward,” a staffer for James wrote, according to an email that the city’s attorneys provided The Washington Post.
James’s office has said it has jurisdiction to investigate this California course because its owner, Trump, was a resident of New York at the time.
Investigators have also probed two different Trump properties in Westchester County, N.Y., just north of Manhattan.
One of them is a 212-acre estate called Seven Springs. As in California, Trump spent years trying to get approval to build new homes on this land. Then he gave up those rights, again using a conservation easement to “donate” the value he hadn’t yet been able to create.
To get that easement, Trump’s company got another appraisal from Cushman & Wakefield, which valued the lost development rights at $21 million, according to copy of the appraisal obtained by The Post. In court filings last year, James’s office alleged that Eric Trump, the former president’s son, had pushed his attorneys and the appraisers to increase their original estimate.
Also in Westchester County, investigators have examined Trump’s golf club in the town of Briarcliff Manor.
In 2015, his company sued the local property tax authorities to lower that club’s valuation, saying the property was worth just $1.4 million. If the town had agreed, that would have reduced the club’s tax bill by 90 percent.
But in the same year, when Trump filed his financial disclosures as a candidate for president, he listed the club’s value as being more than 35 times higher: “Over $50 million.”
Jeffrey Dugas, who later appraised that club on behalf of Trump’s company, said neither number was accurate in his opinion. But, Dugas said, the huge gap between the two numbers was not — to him — evidence of a crime.
He said the two numbers were probably prepared for different audiences, with different methodologies.
The $1.4 million figure, he said, may have been a lowball estimate from Trump’s lawyer, a kind of opening offer to start a negotiation with local tax authorities. And the $50 million figure may have been Trump’s own guess as to what the course would be worth, if he ever got approvals to build homes on it.
“Neither of them go together,” Dugas said, calling them “apples and oranges.” Trump’s lawyer in that property tax case did not respond to a request for comment.
The New York Times reported last month that Westchester County District Attorney Miriam “Mimi” Rocah (D), is also investigating that course, but Rocah’s office has not commented.
The full scope of the investigations into the Trump Organization’s valuations is unclear, hidden by the secrecy of a grand jury.
But in every case, those laws require proof of intent: Prosecutors have to show that someone made the false statements knowingly, in an effort to deceive or to cover up a crime.
Legal experts said prosecutors could face an especially high burden when applying these laws to the real estate industry — where the value of any property is always somewhat subjective, and where some amount of self-serving puffery is the norm.
That opens the door to an everybody-does-it defense.
“I’m doing what was expected. I’m not fooling anybody. I’m working within a system where this is the norm,” said Rebecca Roiphe, a former prosecutor and a professor at New York Law School, playing out a hypothetical argument.
Another possible defense: Trump’s company could say he didn’t set these valuations himself but relied on outside experts such as appraisers, accountants or lawyers. In this case, prosecutors have seemed to focus on what Trump or his executives told those experts, and when they pushed them to change their original opinion.
Samuel W. Buell, a law professor at Duke University, said prosecutors often look for evidence that their targets misled their own experts. That negates the “gatekeeper” defense, he said, and may show evidence of an intent to mislead.
“You lied to the gatekeeper, and that’s the only reason they let you through,” Buell said.