The New York attorney general’s office on Monday said that it is investigating President Donald Trump and his company over how they valued multiple Trump’s assets on annual financial statements that were used to obtain loans, as well as to get economic and tax benefits.
The disclosure of the civil probe by Letitia James’ office came as after it filed court documents seeking to compel the Trump Organization, Trump’s son Eric Trump and Trump entities and lawyers to comply with investigative subpoenas issued by James as part of the probe.
“The action seeks to compel the testimony of Trump Organization Executive Vice President Eric Trump, who was intimately involved in one or more transactions under review, as well as the production of thousands of documents wrongly withheld,” James’s office said in a statement.
James opened the probe last year after Trump’s former lawyer Michael Cohen “testified before Congress that Trump’s annual financial statements inflated the values of Trump’s assets to obtain favorable terms for loans and insurance coverage, while also deflating the value of other assets to reduce real estate taxes,” her office said in a statement.
James’ office said that Eric Trump, executive vice president of the Trump Organization, “Was scheduled for an [Office of Attorney General] interview last month to discuss his role in certain Trump Organization projects.”
“Despite earlier agreeing to be interviewed by the OAG, Eric Trump now refuses to appear,” James’s office says.
The office also said that another person who has failed to comply with a subpoena is a land-use attorney who worked with the Trump Organization on the so-called Seven Springs Estate, a 212-acre estate in Bedford, in Westchester County, N.Y.
“One particular focus of this inquiry, as relevant here, is whether the Trump Organization and its agents improperly inflated, or caused to be improperly inflated, the value of the Seven Springs Estate,” court records said.
“Valuations of Seven Springs were used to claim an apparent $21.1 million tax deduction for donating a conservation easement on the property in tax year 2015, and in submissions to financial institutions as a component of Mr. Trump’s net worth,” the filing said.
But James’ office in a statement also said it was eyeing other properties, including 40 Wall Street, “a mixed use building in lower Manhattan that the Trump Organization owns an interest in.”
“In 2010, the Trump Organization entered into a note and mortgage in connection with the property that was modified to have a total principal loan amount of $160 million — $20 million of which was personally guaranteed by Donald Trump,” James’s office said.
The probe also is looking at Trump International Hotel and Tower Chicago, “a hotel and residential complex in Chicago that was absent from Donald Trump’s ‘Statement of Financial Condition’ in 2009 and in subsequent years” the office said.
And James’s office is eyeing Trump National Golf Club – Los Angeles.
That golf course and clubhouse is owned by the Trump Organization, which “donated a conservation easement over part of the property in 2014 and received a tax deduction for it,” according to a press release by the AG.
James’ office “has not concluded its investigation and has not reached a determination regarding whether the facts identified to date establish violations of law,” according to the filing, which was made in the New York state Supreme Court in Manhattan.
Trump Organization spokesman Alan Garten in a statement said, “This is simply a discovery dispute over documents and the like.”
“As the motion papers clearly state, the NYAG has made no determination that anything was improper or that any action is forthcoming. We will respond to this motion as appropriate,” Garten said.
The Financial Times last year noted that Trump, who bought Seven Springs for just $7.5 million in 1996, valued it in 2012 at a whopping $291 million.
But Forbes magazine just two year later reported that the property was worth less than $19.5 million “based on recent property sales and advice from local realtors and assessors.”
Forbes’ valuation was nearly 15 times less than what Trump valued the property at.
After purchasing the property, the Trump Organization sought for several years to subdivide and develop Seven Springs into more than one dozen individual lots, but the project stalled.
An affidavit filed by James’ office said that James “has kept this investigation confidential to avoid prejudice to the investigation and to avoid undue reputational harm to witnesses and the subjects of the investigation.”
James’ office “has not concluded its investigation and has not reached any determination regarding whether the facts identified to date establish violations of any applicable laws,” according to the affidavit, which was filed by an assistant attorney general.
The affidavit also says that during the investigation, James’ office “has obtained information … from numerous individuals and entities whose identities it has sought to keep confidential.”
“Premature public disclosure of their identities or the evidence they have provided could impair [the office’s] ability to seek further testimony and documents from those and other witnesses and entities.”
Because James’s office “has not yet reached a determination regarding whether the facts identified in this investigation establish violations of any applicable laws, premature public disclosure of the witnesses and evidence collected to date could result in undue reputational and other harm to witnesses and subjects of the investigation,” the affidavit said.
James, in a prepared statement, said, “Nothing will stop us from following the facts and the law, wherever they may lead. For months, the Trump Organization has made baseless claims in an effort to shield evidence from a lawful investigation into its financial dealings.”
“They have stalled, withheld documents, and instructed witnesses, including Eric Trump, to refuse to answer questions under oath,” James said.
“That’s why we’ve filed a motion to compel the Trump Organization to comply with our office’s lawful subpoenas for documents and testimony. These questions will be answered and the truth will be uncovered, because no one is above the law.”
– Additional reporting by CNBC’s Jim Forkin