Ex-Trump Org. executive testifies that Eric Trump led him to inflate values of some properties
CNN
By Lauren del Valle and Kara Scannell, CNN
(CNN) — The former controller of the Trump Organization says that Eric Trump directed him to make certain decisions that led to the inflated valuations of several Trump properties.
Jeff McConney, also a co-defendant of former President Donald Trump, Eric Trump and Donald Trump Jr., testified Friday as the first week of the civil fraud trial came to an end.
Internal Trump Org. spreadsheets shown in court Friday show notations by McConney that say Eric Trump directed McConney in phone conversations about certain property valuations that would later appear on the financial statements the judge in this case has ruled fraudulent.
McConney testified that in those phone calls that Eric Trump directed him to factor certain things into the calculations that ultimately led to what the New York attorney general says are inflated valuations of properties including Seven Springs and the Trump National Golf Club Westchester.
(Attorneys for Eric Trump have argued he was not aware that any phone conversations with McConney were used to formulate value assets in the financial statements for Trump properties.)
The testimony came at the end of a dramatic week in New York. The former president attended the trial for three days, turning the trial into a media circus. He was also issued a gag order after making false allegations about one of Judge Arthur Engoron’s clerks.
“I can tell you this trial, in all my 33 years, it’s chaos,” Trump attorney Christopher Kise said during a separate appeals court hearing Friday afternoon.
Allen Weisselberg, Trump’s long-time chief financial officer who served 5 months in prison for his role in a decade-long tax fraud scheme after making a plea deal, is expected to testify when the trial resumes Tuesday.
How McConney increased the value of properties
During his testimony McConney testified to the methodologies that he used to compute asset valuations like Mar-A-Lago which the attorney general’s office highlighted to the court as improper.
Under questioning by special counsel to the New York attorney general Andrew Amer, McConney said he calculated Mar-A-Lago’s valuation as though it could be sold as a private residence.
McConney testified that he did not know at the time that Trump had deeded away his right to develop the property beyond its use as a social club in 2005.
McConney also said that he and Weisselberg consciously agreed to calculate the value of apartments at Trump Park Avenue, without factoring in that the units were rent stabilized, which significantly lowers the real-estate value because they cannot be rented at market price.
The former controller said that he and Weisselberg increased the value of multiple Trump golf clubs by adding what they considered the value of Trump’s name on the properties, called a brand premium.
Amer produced the annual statements of financial condition that contained a note stating, “The goodwill attached to the Trump name has significant financial value that has not been reflected in the preparation of this financial statement.”
McConney confirmed he was aware that disclaimer was on the annual financial statements.
He also testified when valuing Trump’s Seven Springs development beginning in 2011, he included the value of seven homes not yet built at the property. He said he did this at the direction of Eric Trump, who oversaw the project.
Spreadsheets shown in court show McConney’s phone conversations detailing the methodology of the Seven Springs valuation.
McConney similarly included 71 unbuilt units as realized profits in the valuation for Trump’s Briarcliff, New York golf course. He did this on more than one financial statement even when the development approval of those units had been paused, he testified.
Amer also rehashed McConney’s testimony from the Trump Organization criminal tax fraud trial last year when the former controller said that he committed fraud at the behest of Weisselberg because he was afraid he’d lose his job.
Over defense objections, Amer reminded the judge that McConney admitted that he knew it was illegal to help Weisselberg commit fraud when he helped him not only cheat taxes but also cut a payroll check to Weisselberg’s wife so she could illegally receive social security benefits.
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