3 Trump properties in Florida named in New York lawsuit about inflated values. Here’s how those assets were used

A sweeping complaint filed by New York’s attorney general accusing former President Trump and his business associates of inflating values of Trump-owned properties around the world included charges involving three Florida properties: Mar-a-Lago, the historic home that Trump turned into a winter retreat and social club, and golf courses in Jupiter and Doral.

Trump’s trophy Mar-a-Lago Club in Palm Beach is the most prominent Florida property listed in the State of New York’s civil lawsuit brought against the former president Wednesday that alleges he lied about the values of his various holdings on sworn statements used to obtain loans and reduce his tax obligations.

Trump and individuals associated with his organization engaged in numerous acts of “fraud and misrepresentation” in the preparation of annual statements of financial condition between 2011 and 2021, the complaint states. The statements “grossly inflated Mr. Trump’s personal net worth” by billions of dollars, it says, and repeatedly used the “false and misleading” statements to induce banks to lend money to the Trump Organization on better financial terms than otherwise would have been available to the company.

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“The number of grossly inflated asset values is staggering, affecting most if not all of the real estate holdings in any given year,” the complaint states. Eleven statements produced from 2011 to 2021 include more than 200 false and misleading statements, it says.

“This investigation revealed that Donald Trump engaged in years of illegal conduct to inflate his net worth, to deceive banks and the people of the great state of New York,” James said at a New York news conference. “Claiming you have money that you do not have does not amount to the art of the deal. It’s the art of the steal.”

James said her investigation uncovered potential criminal violations, including falsifying business records, issuing false financial statements, insurance fraud, conspiracy and bank fraud. She said her office is referring those findings to federal prosecutors and the Internal Revenue Service.

Trump lawyer Alina Habba said the lawsuit “is neither focused on the facts nor the law — rather, it is solely focused on advancing the Attorney General’s political agenda.” She accused James of abusing her authority “by prying into transactions where absolutely no wrongdoing has taken place.”

From the lawsuit, here is what the attorney general is alleging about how Trump used the Florida properties to gain improper financial benefits:

Located between the Atlantic Ocean and Intracoastal Waterway, the retreat used by Trump as a southern White House while president was the scene of an August search by the FBI as part of a Department of Justice criminal investigation into the removal of White House records when Trump left office.

Trump bought the estate in 1985 for $10 million. He upgraded it in 1995, adding a private club with a spa, tennis courts and ballroom.

According to the lawsuit brought by James, Trump’s business, the Trump Organization, allegedly inflated the property’s value on the false premise that it occupied unrestricted property and could be developed for residential use, even though he allegedly knew that the asset was subject to an array of tight restrictions.

The allegation takes aim at a so-called “conservation easement” that Trump entered into in the Town of Palm Beach that helped him claim federal tax deductions. Such easements, which he also donated on properties in New York, California and New Jersey. carry permanent restrictions on development.

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“The Trump Organization and Mr. Trump knew that Mar-a-Lago was subject to a host of onerous restrictions and limitations — agreed to and signed by Mr. Trump — that precluded any usage of the property as anything other than a club, precluded the property’s residential subdivision, and required considerable preservation expenses, among other limitations,” the lawsuit says.

“Despite full knowledge and awareness of those facts, the Trump Organization valued Mar-a-Lago in each year from 2011 to 2021 based on the false premise that those restrictions did not exist. For these and a host of other reasons, all of the valuations of this property were false and misleading.”

At her news conference, James said the club generated annual revenues of less than $25 million and the estate should have been valued at about $75 million.

“However, Mar-A-Lago was valued as high as $739 million,” she said. “Mr. Trump used inappropriate schemes to inflate the value of his other golf clubs.”

The complaint alleges that “false and misleading statements of financial condition were used to secure and maintain financial benefits, including financing and insurance, on favorable terms” for several Trump properties, including the Trump National Doral Golf Club in Miami-Dade County.

The statements were used to convince Deutsche Bank to extend a $125 million loan or combination of loans in connection with the organization’s purchase of the golf course resort, the complaint states.

“As to each of these loans, the truthfulness and accuracy of the pertinent Statement, as certified by Mr. Trump, was a precondition to lending,” it says, adding that Trump or his trustees would submit annual statements as required by the loan covenants, and certify their accuracy.

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The property is owned by a company called Endeavor Trump 12 LLC.

Among the ways that the value of Trump National Doral was inflated was by recording “a number of deals between entities within the Trump Organization concerning its own properties.” Such deals are known as “related-party transactions.”

Yet, the organization claimed in statements that values represented were derived only from “associations with others,” the complaint states. Generally accepted accounting practices in the United States (GAAP) require disclosure of details of related-party transactions.

According to the suit. the Trump Organization, through the entity Jupiter Golf Club LLC, purchased the club for $5 million in cash.

“Less than a year later, Mr. Trump valued the same property at $62 million on his 2013 Statement of Financial Condition,” the suit said.

“That inflation represented a markup of 1,100%. Indeed, for every year from 2013 to 2020, virtually all of the value attributed to Jupiter was fraudulently overstated due to several deceptive methods and assumptions.”

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Trump reported an inflated purchase price of the Jupiter course using an inappropriate “fixed-asset” approach, the complaint states. The bulk of the value in that approach was based on including $41 million in “refundable” memberships in claiming he paid $46 million when he actually paid $5 million.

But he did not disclose the inclusion of those inflated liabilities in his financial statements, the suit says, and instead “took the opposite position, stating that his potential liability for those membership deposits was zero.”

He inflated the value of the Jupiter course by another 30% that he claimed was the value of the “Trump brand,” the complaint says.

Fort Lauderdale private attorney Richard Serafini, who formerly worked for the Justice Department as well as for the New York State attorney general’s office, said the Florida properties are involved in the case as they were a part of Trump real estate holdings that were allegedly involved in efforts to secure loans.

“They were used in the valuations on the financial statements and as such they were part of transactions that took place in New York,” he said. “The companies were using the properties in Florida and elsewhere outside of New York as assets that they were submitting to banks and financial institutions. And those assets were overvalued, according to the complaint.”

Information from The Associated Press is included in this report.