By Tom Winter and Dareh Gregorian -
NBC News
Mazars USA, an auditor, has reported that the accounts of the past decade of the Trump Organization can no longer be considered reliable, according to a letter released Monday by New York Attorney General Letitia James as part of her civil investigation into the company. former president.
Mazars also announced that it will no longer work with the Trump Organization, which means the company may have to obtain new audits that could complicate its ability to obtain loans.
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In a February 9 letter from Mazars Group General Counsel William J. Kelly to Trump Organization General Counsel Alan Garten, the auditing firm said its work from 2011 to 2020 "should not be trusted."
“We are writing to inform you that the Statements of Financial Position of Donald J. Trump for the years ending June 30, 2011 — June 30, 2020, should no longer be relied on and you should inform the recipients thereof. that are currently based on one or more of those documents that those documents should not be relied on,” Kelly wrote in a letter released Monday by James.
Kelly said "this conclusion is based, in part, on submissions made by" James' office and "our own investigation, and information received from internal and external sources."
Former President Donald Trump speaks to supporters at a Turning Point Action rally in Phoenix on July 24, 2021.Ross D. Franklin/AP
"Although we have not concluded that the various accounts, as a whole, contain material discrepancies, based on the totality of the circumstances, we believe our advice not to continue to rely on those accounts is appropriate," according to Kelly.
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The details exposed by Mazars are far from common in the accounting industry, according to Lynn Turner, a former chief accountant at the Securities and Exchange Commission.
"Receiving a letter like this from your auditor is very unusual," Turner said.
“It indicates that there is something in the accounts that is significant and needs to be reviewed,” he added.
A spokesperson for the Trump Organization, however, characterized the development as good news for the company and bad news for the attorney general's civil investigation and the Manhattan district attorney's criminal investigation into the company's financial practices.
“Although we are disappointed that Mazars has decided to separate, your letter of February 9, 2022 confirms that, after conducting a subsequent review of all previous financial statements, Mazars' work was performed in accordance with all applicable accounting standards and principles and that said accounts do not contain any material discrepancies,” the spokesperson explained in a statement on Monday.
"This confirmation nullifies the investigations of the prosecutor and the attorney general," he added.
James has been involved in a year-long investigation into former President Donald Trump's company, trying to determine whether the former president accurately represented his financial condition by either seeking loans or limiting his tax liability.
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The letter from Mazars released by James was included in court documents opposing Trump's claims that the investigation is illegitimate and that he and his company are victims of "selective enforcement" by the attorney general.
The former president and two of his sons, who were executives at his company, have been fighting attempts by the attorney general to make them testify under oath.
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"As the most recent filings show, the evidence continues to mount to show that Donald J. Trump and the Trump Organization used fraudulent and misleading account reports for financial gain," James said in a statement Monday.
“There should be no doubt that this is a legal investigation and that we have legitimate reasons to seek the testimony of Donald J. Trump, Donald J. Trump, Jr. and Ivanka Trump,” he added.
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The prosecution opened the investigation based on 2019 congressional testimony from Trump's former lawyer, Michael Cohen, who alleged that Trump and the Trump Organization misrepresented asset valuations for financial gain.
Trump's lawyers argued earlier this month that he "stretches all credibility to believe that the [prosecuting attorney's office] put any legitimate action on Mr. Cohen's testimony," given that he pleaded guilty to lying to Congress and various financial crimes. before agreeing to testify before the House of Representatives.
James' office countered Monday that Cohen's allegations were "significant" and that his allegations were "supported by the evidence obtained to date and Mazars' notice that those [financial] statements should not be relied upon."
In his letter, Mazars says he has reached a point where "there is an inalienable conflict of interest with the Trump Organization" and that he can no longer do any new work for the company.
With Trump's longtime accounting firm cutting ties, the former president and reality star will now have to find new accountants to review his personal records in any future filings with a bank or insurance company, a move that could make it more difficult to obtaining loans.
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"The bank loan officer will be very concerned about this as it creates uncertainty about the company's ability to repay the loan," Turner said.
The parting of the ways could also affect Trump's tax returns.
"At the time of this writing, only a limited number of tax returns remain to be filed, including those for Donald J. Trump and Melania Trump," the letter from Mazars said.
“The deadline to file those returns is February 15, 2022,” she added.
