New York State presented Donald Trump and his company sued for involvement in financial fraud. Forbes USA has documents and footage of Trump talking about the building at 40 Wall Street, the first property mentioned during the Attorney General’s press conference, which appears to support the state’s claims.
At the heart of New York City’s financial district stands a tower with a limestone base and copper top that has turned green over time like the Statue of Liberty. Tenants on the top floor can see Lady Liberty and the rest of New York Bay. At the entrance on the first floor, a few steps from another legendary American building – the New York Stock Exchange, visitors are greeted by large golden letters that add up to the inscription THE TRUMP BUILDING (“Trump Building”).
It’s an imposing building and most landlords would think it speaks for itself. But Trump is not like that. Ever since the billionaire acquired a long-term lease on the property in 1995, he has been boasting about the building, claiming it is bigger, taller and more expensive than it really is. On September 11, 2001, the day a terrorist attack made 40 Wall Street the second tallest tower in Lower Manhattan, Trump infamously declared on television, “Now it’s the tallest.” Over the years, the Trump Organization has provided the public, the media, and the firm’s creditors with a ton of false information. Now the building is at the center of a lawsuit by New York State Attorney Letitia James, who accuses Trump and his company of engaging in financial fraud because they lied about the value of the Trump Organization’s assets to make the firm more attractive.
Last year, as part of a prosecutorial investigation, Donald Trump received a request to provide eight sets of documents. Most of them are documents in which it is possible to detect some kind of fraud and that someone may be forging financial information: financial statements, debt documents, insurance policies, and so on. However, New York State fraud law requires that the prosecution must prove intent. It seems that one of the sets of documents – “all documents and correspondence with Forbes magazine” – should serve just this purpose.
For decades, Trump and his henchmen have lied to Forbes USA about the state of his finances, which we, as expected, reported in the annual ranking of the 400 richest Americans according to Forbes. In the debut issue in 1982, the tycoon appeared with his father, and their combined fortune was estimated at $ 200 million – but even then he insisted on a higher estimate. “Donald claims to have a net worth of $500 million,” we wrote at the time. By 2000, the statements had become bolder: “In Donald’s world, he owns more than $5 billion, but here on Earth, much less.” Last year, two Forbes USA journalists received subpoenas from the Manhattan District Attorney and had to testify before a jury to corroborate information contained in two articles about Trump’s machinations.
Suddenly, the former president’s lies took on more weight. Now it’s potential evidence in multiple investigations (in a civil case by the state’s attorney general and a criminal case by the Manhattan district attorney) that could cost Trump millions of dollars and a chance to be in the White House again. He denies all allegations and calls the Attorney General’s investigation “a vengeful and selfish attempt to fish something out.” Meanwhile, Trump’s lawyers are working hard to keep the authorities out of the documents. However, Letitia James’s office has amassed a huge archive of materials and has submitted hundreds of documents to the court. But the authorities still don’t have the full picture, in part because Donald Trump lives like he’s trying to avoid written evidence: no texts, no emails. However, Forbes has material that the prosecution does not, including years of interview tapes and a 2015 audio recording that places Trump at the center of the alleged hoax.
40 Wall Street has always attracted colorful characters. In 1799, the Bank of the Manhattan Co. operated in a building that had previously been on the same site. Aaron Burr – This was five years before Burr killed Alexander Hamilton. In the 1980s Ferdinand Marcos, the former president of the Philippines, secretly acquired a stake in the building. In 1995, by the time Donald Trump appeared, the building was practically empty. He signed a lease for 64 years, and the building is located on land that has long been controlled by a German family of ship brokers (Hinnebergs). According to Trump, he paid only $1.3 million. He later invested other people’s funds in this facility.
In 1998, Deutsche Bank gave Trump $125 million to renovate the building, choosing to ignore the scandal in Atlantic City, New Jersey, where three of his casinos had already filed for bankruptcy, and focus on potential profits in Lower Manhattan. “I looked at the financials and the issue was resolved,” says Mike Offit, who helped provide the loan and laid the groundwork for Trump’s decades-long relationship with Deutsche Bank. “I mean, he needed $125 million. I said, ‘It’s impossible for this building to cost less than $200 million when he’s done with it.’
Of course. Trump has marbled the lobby, installed high-speed elevators and lowered rents. By 2000, the building was 96% occupied, with American Express being a key tenant. Things were going so well that in 2008 a source showed a Forbes reporter an offer to buy the building for $525 million. Trump should have accepted. Soon the global economy collapsed, and tenants hurried out of 40 Wall Street, leaving more than a third of the facility empty.
In August 2009, Capital One, the building’s then lender, reportedly expressed doubts about the cash flow. It’s not hard to guess why. The bank provided a loan of $160 million. Assuming that Trump paid 5.7% (he later stated that the loan rate was exactly that) on this amount, then theoretically in 2009 he should have paid $9 million. tax records show that the building generated only $8 million in profit that year. According to the attorney general, Capital One met with Trump, and Cushman & Wakefield assessed the asset and determined it was worth $200 million as of August 1, 2010.
In the 2011 financial statements, Trump listed his number. “The current estimate of $524.7 million is based on successful negotiations to change the terms of the lease and an assessment made by Mr. Trump in conjunction with his partners and outside experts,” the court document said. To justify this high valuation, the Trump Organization looked to the bright future and used projected earnings instead of actual earnings, inflating profits from less than $10 million to $26 million.
It seems that attempts to deceive banks and Forbes have been made consistently. “Trump inflated his fortune by billions and tried to justify it with the help of the media, including Forbes and other financial publications,” says Michael Cohen, a former Trump lawyer who was involved in this fraud and later turned against his former boss. “Essentially, any press release or mention of a false estimate would be attached to his misrepresented financial statements as evidence of their authenticity.”
Forbes analyzed its own archives to find out just how far the Trump Organization was willing to go. In 2013, a Forbes journalist noted that he had seen evidence that the Trump Organization was making huge profits from 40 Wall Street. “Allen [предположительно, речь идет о финансовом директоре Аллене Вейссельберге] showed me a total rent of $48.39 million and an expense of $20.68 million with [чистом операционном доходе] $27.7 million,” the journalist wrote in his notes. Other documents now in Forbes’ possession, but not available at the time, suggest that operating income was closer to $10 million. “Hi,” wrote someone named Jeff (probably Trump Organization Controller Jeffrey McConnie) . — Our stabilized [чистый операционный доход] from Wall Street, 40 is approximately $24 million. According to the bond prospectus, real net operating income for that year was $11 million.
We weren’t the only ones fooled. Deutsche Bank, the Zurich insurance company and another financial institution have also relied on the inflated numbers, according to the office of Letitia James, which is now pushing to have Weisselberg and McConnie permanently banned from working in New York corporate financial control. Credit must be given to Capital One, who was skeptical of the Trump Organization. In November 2015, the company had to pay $5 million towards the loan body. Ahead of that date, Weisselberg made a bold offer: maybe Capital One wouldn’t demand $5 million since 40 Wall Street was doing so well and the property had reached a $550 million valuation? Capital One, which had decided two months earlier that the property was worth $257 million, turned down the offer.
The Trump Organization found another borrower. Weisselberg contacted his son, Jack, who works at Ladder Capital, a real estate investment trust that both owns properties and lends money to other owners. The head of Ladder Capital, Brian Harris, says that Weisselberg Jr. works in sales and “does not have the slightest authority regarding the distribution of capital in my company.” The borrower agreed to the deal and provided the loan, structured in such a way as to provide protection measures. Trump contributed $9.5 million, gave a personal guarantee, and agreed to repay a portion of the principal over time. It worked out great for him: the new loan cut his mortgage rate from 5.71% to 3.66%, saving him about $3 million in annual debt servicing. As part of the deal, Cushman & Wakefield once again valued the property, this time at a suspiciously high $540 million, $320 million more than the firm’s valuation three years earlier. Cushman declined to comment. Ladder combined the debt with other loans and sold everything to investors as commercial mortgage-backed securities, positioning 40 Wall Street as a $540 million building.
A couple of months after receiving the loan, Donald Trump was in a great mood. He sat in his office at Trump Tower and spoke openly with Forbes about years of trying to climb the list of America’s richest people. The audio recording of this conversation, which took place on September 21, 2015, clearly shows that Trump not only participated in attempts to mislead the world about the size of his assets, but was ready to do more than anyone else, and even admitted his motivation. “It was useful for funding,” he said.
Even though Trump had just restructured the mortgage at 40 Wall Street, he couldn’t help but brag about it one more time. It is a 78-story building, Trump said, although his firm had previously promoted the building as 72 stories, but it actually has only 63 floors, according to documents filed with the municipality. “This year it will bring, how much, you say, $50 million? he asked, turning to Allen Weisselberg, and immediately answered faster than he could say anything. – At least 50 million. Yes, by the end of the year.
After touting some other assets, Trump returned to the skyscraper. “If I were to sell 40 Wall Street, I could make $750 million for it tomorrow,” he said, citing the amount as $15 million higher than the $735 million included in his personal accounts and $210 million. higher than the $540 million in Cushman & Wakefield’s already dubious estimate.
A Forbes reporter noted that the building was 1.2 million square feet, rounding the actual figure to 1,165,207 feet. “Actually, there are 1.3 million,” Trump said. “By the way, it’s 1.3, to be honest.” The same journalist then said that Forbes had estimated his net operating income at $24 million, the same inflated amount that “Jeff” (presumably McConnie) had quoted a year earlier.
“Where did you get this from? We will make $64 million net, net after debt service this year, no less,” Trump announced, sensing an opportunity to inflate the $24 million and the $50 million that had just been announced just minutes ago. Loan and tax documents show that Trump’s actual income from the building that year, after debt service, was approximately $1 million.
“Are you still paying off the $160 million mortgage?” the journalist asked.
“Yes, we are still paying the mortgage,” Trump acknowledged and turned to Weisselberg again. “How much is the mortgage rate, 2.5%?”
“Yes, that’s right,” Weisselberg replied. In fact, the rate was 3.66%, as stated in the bond reports and financial statements. Trump returned to the topic of profitability and named an even higher amount. “This building will bring in almost $70 million this year,” he said, adding millions in minutes. “I remind you: 1.3 million square feet.”
“It’s good to say things like that,” said another journalist.
“But the point is that you miss a lot,” Trump countered, adding, “You will damage your reputation. Look, I’ll just say that Forbes is a bankrupt magazine and doesn’t know what it’s talking about, okay? That’s all I’ll say. Because I feel bad for you.”
40 Wall Street never hit the numbers on which the loan was based. Annual net operating income peaked at $20.7 million in 2018, a couple of million short of underwriters’ forecasts. Then the situation began to deteriorate. In January 2020, employment fell to 89%. By the end of the year, while New York City was under lockdown, 40 Wall Street’s operating profit had dwindled to $14 million. The following year started poorly, with the January 6 Capitol riot. Two tenants have publicly announced that they are going to leave the building in the near future. By the end of 2021, operating income had dipped to $12.7 million, and documents show employment fell to 84% this year, the lowest in 10 years.
From a purely financial point of view, Trump will do well in the short term. The building brings in enough money to pay $10 million annually in interest and principal, although there is likely little left after capital expenditures are covered. However, the former president has plenty of cash to spare, as he reportedly netted $162 million through the refinancing of a building in San Francisco and another $135 million or so through the sale of a Washington hotel.
However, in the long run, Trump may have problems. According to the bond prospectus, it now pays $2.3 million in annual rent to the owner of the land on which 40 Wall Street stands. But in 2033, the amount of the rent will change. According to court documents, when Cushman & Wakefield appraised the building on behalf of Capital One, they assumed the land rent would jump to more than $15.5 million at that point. For some reason, the appraisers reportedly changed their accounting approach. rent when the valuation was increased in 2015. Assuming rent rises to $15.5 million in 2033, that would hit Trump’s bottom line and possibly leave him with nothing.
Given these complications, it was hard to imagine, even before the attorney general’s lawsuit, that the former president would be able to get a new 10-year loan when the Ladder loan came due in 2025. The prosecutor is now seeking to bar Trump from borrowing from institutions registered with the New York City Department of Financial Services for five years.
However, as practice has shown, Trump is excellent at getting away with it. Earlier this year, Mazars, the accounting firm that had helped Trump keep records for years, cut ties with him and stepped down from responsibility for the last 10 years of reporting. According to court documents, it has already been replaced by the Texas firm Whitley Penn. Cushman & Wakefield decided to stop working with Trump, but some of the appraisers moved on to Newmark, the company that helped the Trump family sell the Washington hotel. Meanwhile, the Trump Organization has restructured $700 million in debt over the past year despite allegations of fraud related to the alleged compensation mechanism. The firm pleads not guilty.
This begs the question: Will Donald Trump be held personally responsible for lying about the size of his fortune for years? The New York State Attorney hopes so, of course. “Ordinary people cannot lie to a bank about how much money they have to get a loan on favorable terms to buy a house or pay for a child’s education,” she said at a September 21 press conference. “And if they did that, the authorities would punish them. What’s the difference?”
RBC news agency, 05.10.2021, “Trump has not been included in the Forbes richest Americans ranking for the first time in 25 years”: Forbes magazine published the ranking of the 400 richest people in the United States for 2021. For the first time in 25 years, ex-president Donald Trump was not included in the list. […]
He lacked $400 million for this. Now his fortune is estimated at about $2.5 billion. According to the magazine, since the beginning of the COVID-19 pandemic, Trump has lost $600 million, because, unlike technology companies, the hotel business and office buildings that make up the backbone of his business empire, brought their owners less income due to the coronavirus pandemic.
In 2016, shortly after winning the presidential election, the Federal Government Ethics Commission pointed out to Trump the need to give up his existing assets in order to avoid a possible conflict of interest. Then Trump refused to do it, which, according to the publication, cost him $ 2 billion. Analysts believe that Trump’s fortune could grow by 80%, to $ 4.5 billion, if, following the recommendations of experts, he sold his assets five years ago, covered existing debts and taxes, and then prudently invested the remaining funds.
Trump first entered the list of the 400 richest people in the United States in 1996. Then he took the 368th position. From 1997 to 2016, he was among the 200 richest people in the country. His best achievement was 71st place, which he took in 2003. — Inset K.ru
Forbes.ru, 07/22/2021, “The president without a salary: how Donald Trump earned $ 2.4 billion in four years in the White House”: If you delve well into real estate documents, as well as financial and debt documents, it becomes clear that during the period From January 2017 to December 2020, Trump’s income amounted to $2.4 billion.
If not for the pandemic, this amount would have been even higher. In the first three years of his presidency, Trump’s empire brought him an estimated $650 million annually. But in 2020, revenue dropped to about $450 million as the business was decimated by COVID-19. […] Trump received the lion’s share of his income from his golf clubs, which brought him about $940 million in four years. […]
In the San Francisco office building at 555 California Street, where Trump owns 30% of the assets, rents rose from $42 million to $43 million last year, according to released documents. The same thing happened in the New York house at 1290 Avenue of the Americas, where Trump’s earnings increased from $55 million to $58 million.
When it comes to hotels, licensing, and the management sector, things have not gone so smoothly. Revenue between 2017 and 2019 remained above $100 million, but in 2020 fell closer to $50 million. Given the debt burden on the former president’s assets in the hotel industry, this was the most unprepared area of his business for the impact of the pandemic. […] In 2017, Trump sold real estate for $32 million, in 2018 for $53 million and in 2019 for $32 million. But in 2020, he earned only $435,000 selling apartments in Las Vegas. — Inset K.ru
TASS, 08/09/2022, “FBI at Donald Trump’s estate. What is known about the search in Mar-a-Lago”: On August 9, Federal Bureau of Investigation (FBI) officers searched the estate of former US President Donald Trump in Florida, presumably in as part of an investigation into a case at the request of the National Archives and Records Administration (NARA) for improper handling of documents. […]
WP, citing sources, said bureau agents were looking for classified documents related to nuclear weapons, among other things. The Department of Justice and the FBI declined to comment on the publication of the publication. Trump called this information a lie.
According to The Wall Street Journal, agents seized 11 sets of classified documents: about 20 boxes with documentation, photographs, notes, a pardon decree for former Trump adviser Roger Stone, and some information about the “President of France.” Among other things, there were materials classified as “top secret”, which, according to the publication, can only be stored in “special state institutions.” The agents, according to Fox News, were allowed to seize “all physical documents and credentials that are evidence obtained illegally or are the fruits of crimes, as well as other illegally stored objects,” including presidential documents created during Trump’s tenure. heads of state from January 20, 2017 to January 20, 2021. — Inset K.ru