Politics

Tax firm Mazars fires Trump Organization as client, says former president's financial statements are unreliable

Key Points
  • The accounting firm Mazars has fired the Trump Organization as a client after saying that a decade's worth of statements of ex-President Donald Trump's financial condition "should no longer be relied upon," the New York Attorney General's office revealed in a court filing.
  • Mazars, which for years prepared Trump's income tax returns, informed the Trump Organization's top lawyer Alan Garten of that move and conclusion in a letter last Wednesday.
  • The letter was cited by AG Letitia James' office on Monday as it asked a state judge to order the Trump Organization, Donald Trump Jr. and his sister Ivanka Trump, and others to comply with subpoenas seeking documents and testimony.
  • Attorney General Letitia James' office has been investigating how the Trump Organization valued certain real estate assets in applications for loans, insurance policies, and tax-related issues.
Former President Donald Trump pauses as he speaks at a rally Saturday, Jan. 15, 2022, in Florence, Ariz.
Ross D. Franklin | AP

The accounting firm Mazars has fired the Trump Organization as a client after saying that a decade's worth of statements of ex-President Donald Trump's financial condition "should no longer be relied upon," the New York Attorney General's office revealed in a court filing Monday.

Mazars, which for years prepared Trump's income tax returns and financial statements used to obtain loans for his company, told the Trump Organization's top lawyer Alan Garten that it would no longer represent the company due to the lack of reliability of the financial statements in a letter last Wednesday.

The letter was cited by AG Letitia James' office on Monday as it asked a state judge to order the Trump Organization, Donald Trump Jr. and his sister Ivanka Trump, and others to comply with subpoenas seeking documents and testimony.

James for several years has been investigating how the Trump Organization valued certain real estate assets in applications for loans, insurance policies, and tax-related issues.

Trump's former personal lawyer Michael Cohen has told Congress that the company manipulated the value of those assets depending on the circumstance to obtain better financial terms and to lower its tax obligations.

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James' office said last month that it had determined that statements of Trump's financial condition described his valuation process "in broad terms and in ways which were often inaccurate or misleading when compared with the supporting data and documentation that the Trump Organization submitted to its accounting firm."

Those statements were prepared by Mazars based on information provided by the Trump Organization.

Mazars told Garten in Wednesday's letter that he should inform any recipients that the statements of Trump's financial condition for 2011 through 2020 "should not be relied upon."

The firm told Garten that its conclusion was based on filings made by the AG's office, "our own investigation," and other information from different parties.

"While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based on the totality of the circumstances, we believe our advice to no longer rely upon those financial statements is appropriate," Mazars said in its letter to Garten.

Mazars also said in its letter that it would no longer "provide any new work product to the Trump Organization."

The firm said it based on its decision about the past work's reliability, "as well as the totality of circumstances, we have also reached the point such that there is a non-waivable conflict of interest with the Trump Organization."

Mazars said that as of the writing of the letter, "there are only a limited number of tax returns that still remain to be filed, including those of Donald J. Trump and Melania Trump. We will be providing you a list of those returns and their status towards completion separately."

"The due date to file those returns is February 15, 2022," Mazars said.

The Manhattan District Attorney's Office is conducting a parallel criminal investigation into the issues that James is eyeing in her civil probe.

The DA's office last year obtained Trump's personal and corporate tax returns dating to 2011 after a years-long fight by the former president to block a subpoena for those and other documents from Mazars.

Garten did not immediately respond to a request for comment from CNBC.

A Trump Organization spokesperson, in a statement to NBC News, said, "While we are disappointed that Mazars has chosen to part ways, their February 9, 2022 letter confirms that after conducting a subsequent review of all prior statements of financial condition, Mazars' work was performed in accordance with all applicable accounting standards and principles and that such statements of financial condition do not contain any material discrepancies."

"This confirmation effectively renders the investigations by the DA and AG moot," the spokesperson said.