Trump's Shifting Net Worth May Bear Clues for Investigators

(Bloomberg) -- How President Donald Trump may have inflated and deflated his personal wealth is more than mere curiosity: It could be of keen interest to any authorities trying to figure out if he misrepresented himself to insurance companies and lenders.

Former Trump fixer Michael Cohen attested to Trump’s shifting wealth valuations to lawmakers on Wednesday, bearing what he said were annual net-worth summaries prepared for Trump earlier this decade. Trump handed the summary with high valuations to lenders and journalists, Cohen testified. When it came to tax authorities, he lowballed.

If falsehoods went to financial institutions, that would provide fertile ground for prosecutors in New York, according to Seth Taube of Baker Botts. While Cohen’s history of lying means his testimony shouldn’t necessarily be taken at face value, Taube said, he presented the sort of information that could be bolstered with documents and other cooperators, and then brought to a jury.

Taube, a former prosecutor, said it’s the sort of situation he would have looked at back then and said, “there are no unfruitful directions in an inquiry. Everywhere you look you can find a possible crime,” he said.

Cohen didn’t make clear whether any of the examples he provided were also under scrutiny by investigators. But he referred to acts committed by Trump that hadn’t been discussed and are being examined by the federal prosecutors in the Southern District of New York, where Cohen pleaded guilty and was sentenced to three years in prison.

“I am currently working with them right now on several other issues of investigation that concern them,” Cohen said.

Trump Organization representatives didn’t immediately respond to a request for comment.

In the documents introduced by Cohen, Trump’s wealth numbers were strikingly elastic. In 2012, Trump had $5 billion of assets, according to that year’s one-page summary. Just nine months later, an updated summary showed his assets had nearly doubled, to $9.17 billion. The difference? Brand value. Trump put his at $4 billion.

The records add further detail to an old story about Trump -- that his penchant for bluster often extended to how he described his wealth. Neither he nor his company has ever publicly provided a valuation method for how they assess his brand. When he announced his candidacy for president, a document dated 2014 listed the value of “licensing deals, brand and branded developments” at $3.3 billion, making the value of the Trump brand as ethereal as it is massive. The Bloomberg Billionaires Index values Trump at $2.8 billion.

“It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed among the wealthiest people in Forbes, and deflated his assets to reduce his real estate taxes,” Cohen said in prepared remarks. He added that the financial documents for three years ending in 2013 were given to Deutsche Bank “to inquire about a loan to buy the Buffalo Bills.”

A spokesman for Deutsche Bank declined to comment.

Inflated Numbers?

Cohen said Trump also used the documents when interacting with insurance companies, which legal experts said could pose additional jeopardy for Trump.

“We would provide them with these copies so that they would understand that the premium, which is based sometimes upon the individual’s capabilities to pay, would be reduced,” Cohen told lawmakers. Asked if that was done at Trump’s direction and with his knowledge, Cohen said, “Yes,” adding that he believed the numbers had been inflated.

Such a misrepresentation could lead to the policy being torn up, or worse, according to Maria Vullo, the recently departed superintendent of New York’s Department of Financial Services, which oversees insurers in the state.

“False statements made to an insurance company in order to obtain an insurance policy, or a particular policy provision, or a reduced premium, could create a basis to void the policy on the basis of fraud,” Vullo said. “In addition, there are various state and federal laws that proscribe and penalize the making of false statements for purposes of personal gain.”

Conflicting Figures

Trump and his family company have been fiercely protective of the values they place on their real estate assets and vigorously dispute figures that conflict with their own.

One curious example is a mansion and surrounding 200-acre property that Trump bought in the mid-1990s in Westchester, New York. Back then, he paid $7.5 million. In 2012, according to the records Cohen submitted to Congress, Trump valued the property at $291 million. It’s unclear what supported the valuation, though the summary referred to integral “accompanying notes” that weren’t present in what Cohen filed.

The property’s declared value had settled considerably by last year, according the federal financial disclosure that Trump makes annually as president. Trump valued the property between $25 million and $50 million, a drop that wouldn’t be explained by local price swings.

The formula Cohen referenced -- low valuations for tax assessments and high ones for assets and net worth -- also may have held true for Trump’s golf properties.

The sparse financials appear to reflect the addition, in 2012, of two golf properties that Trump purchased around that time. He paid $150 million for the Trump National Doral Miami in Florida, and $27 million for Golf at Trump National Charlotte in North Carolina, or a combined $177 million, according to media reports.

On a financial statement dated June 2012, Trump reported the value of his “club facilities and related real estate” -- a single line item that encompasses properties from California to Scotland -- increased by $256 million.

Around the same time, he contested the valuation of the two new clubs for tax purposes, getting them down to $98 million, according to a report in the Charlotte Observer.

Although it’s common to value golf properties differently for tax assessments and financial reporting, the Trump properties’ spread appeared to be large, according to Laurence Hirsh of Golf Property Analysts in Conshohocken, Pa.

Trump, in a 2007 deposition, offered insight into how he valued his courses. "The real value placed on all of this land is if somebody wanted to go out ... and do houses,” he said.

Property Valuations

Cohen also detailed two ways he said the Trump Organization “inflated” its valuations.

The first involved comparable properties. The company, Cohen said, found similar properties and looked for the highest price per square foot among them. Then, Cohen said, the Trump Organization took that figure and applied it to Trump-owned properties.

The second involved a phantom figure. Cohen said the Trump Organization would take a building’s annual rent payments from tenants, and then “make up the multiple” and apply that number to the gross rent roll. Trump knew about this valuation method. The multiple, Cohen said, was “based upon what he wanted to value the asset at.”

--With assistance from David Voreacos, Shannon Pettypiece and Sonali Basak.

To contact the reporters on this story: Caleb Melby in New York at cmelby@bloomberg.net;Shahien Nasiripour in New York at snasiripour1@bloomberg.net;Greg Farrell in New York at gregfarrell@bloomberg.net;Neil Weinberg in New York at nweinberg2@bloomberg.net

To contact the editor responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net

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