Trump fraud-trial experts offer chillaxed theory of asset valuation in defense testimony

  • Donald Trump's lawyers have begun presenting the meat of his NY fraud defense case.

  • On Tuesday, one expert described how appraisals were highly subjective and sometimes wrong.

  • A second expert said a wide variety of "methodologies" could be used in setting a property's value.

Lawyers for Donald Trump, his sons, and his company began presenting the meat of the New York fraud-trial defense case on Tuesday, with a pair of experts who pushed an almost-anything-goes theory of how to stick a price tag on a piece of property.

Want to low-ball what your skyscraper is worth in hopes of a property tax break? Or to highball the same property to impress a bank?

It's all good, expert witnesses said in daylong testimony at the non-jury trial, where Trump is fighting New York civil allegations that he wildly exaggerated — by billions of dollars a year — the value of his properties in a decade of financial statements.

As Trump himself put it in a pre-trial deposition two months ago, "You know, people come up with numbers. Sometimes they're right, sometimes they're wrong."

Trump's first expert agreed on Tuesday that appraisals were highly subjective.

"There are real-life examples that I've encountered in my 37 years of experience where they don't get it right," the expert, the real-estate developer Steve Witkoff, said of real-estate appraisers.

So just pick the "methodology" that helps get the outcome you want, and then show your math, said Trump's second expert, the forensic accountant Jason Flemmons, who's based in Washington, DC.

Flemmons said the choices were many.

The property's worth could be its "liquidation value" or its "reproduction value," and you could use its "assessed value for property tax purposes," he said.

You could also value a property based on what comparable properties recently sold for or on what any range of appraisers say it's worth, he added.

"It's a judgment call, in my experience," Flemmons explained.

"Would any of the different methods be more right or more wrong?" the Trump defense lawyer Jesus Suarez asked him.

"No," providing it's a recognized method, Flemmons answered. "There is no wrong or right method," he said, "as long as you choose one of them and you disclose what you're doing."

Trump's two expert witnesses were markedly different from each other in terms of objectivity and experience. The first, Witkoff, is a self-described Trump friend, longtime fundraiser, and fellow developer who had never been an expert witness before.

The second, Flemmons, is a highly qualified consultant who, for 12 years, helped catch financial bad guys as a forensic accountant for the Securities and Exchange Commission.

Flemmons is scheduled to continue his direct defense testimony Wednesday, followed by cross-examination by a lawyer for state Attorney General Letitia James.

James' lawyers have countered that regardless of any subjectivity in the art of appraisals, a lie is still a lie.

The AG has alleged that beyond his exaggerations, Trump also made numerous objectively provable misrepresentations to banks. These include wrongly claiming that he had millions in cash immediately on hand and tripling the square footage of his Fifth Avenue penthouse in Trump Tower.

Trump would also leave out key details in his financial documents, James alleges, including hiding the fact his lease to 40 Wall Street wouldn't let him build condos and hiding numerous other lease, zoning, and deed restrictions in giving banks rosy estimates of what his land and buildings were worth.

The defense case and any rebuttal case by the state are expected to take another month or more.

James has asked the judge to permanently ban Trump and his sons from running a business in New York; she is also seeking financial penalties of more than $250 million.

A previous decision by the judge, New York Supreme Court Justice Arthur Engoron, has already found the defendants liable for fraud and set stiff penalties, which are on hold, that include a receiver taking over the company.

Read the original article on Business Insider