After beginning with the testimony of Donald Trump Jr. on Nov. 13, defense attorneys in the case brought by New York Attorney General Letitia James against former President Donald Trump continued to present witnesses attesting there was no fraud in the Trump Organization statements of financial condition.
On Nov. 14, experts Steven Witkoff and Jason Flemmons testified on valuation and the specifics of certain Trump Organization deals.
The attorney general had sought to prohibit both experts from testifying, arguing that the judge had already found President Trump liable for fraud in his Sept. 26 summary judgment, making the witnesses’ appearance “irrelevant.”
Multiple Factors
Mr. Witkoff is a real estate executive, who first met President Trump inside a deli in the 1980s. His testimony focused on 40 Wall Street, not from the perspective of an appraiser, but from another developer who'd done a similar deal, valuing the property from his experience and expertise.He explained his experience developing various types of properties, and how bringing in different appraisers resulted in different figures.
Defense attorney Chris Kise responded to objections saying that “the point is that fraud hasn’t been established” in the case.
He claimed state attorneys had “cherry-picked” issues in their complaint, and his witnesses were meant to help “present to the court the whole picture” of how the Trump Organization presented its finances.
“This witness is just one small piece of the puzzle,” Mr. Kise said. “In order to establish materiality or intent you have to consider all these factors.”
Mr. Witkoff explained that several factors a developer would take into account when establishing value were cash flow and what could be done with a property, including opportunities for redevelopment, rental, retail, residential, hospitality, and others, and constraints on a property.
Jason Flemmons, an accounting expert, said similar things in his testimony following Mr. Witkoff.
Previously with PricewaterhouseCoopers, Mr. Flemmons did audit work and signed off on the fairness of statements of financial conditions, and forensic accounting for a wide range of industries.
He testified on generally accepted accounting principles (GAAP), and the various different standards used to talk about value.
For example, the estimated current value is very different from fair value, which is internal and external valuations respectively, he explained.
In coming up with those figures, accountants would use different methods, but the bigger distinction was the perspective. Appraisals were yet another method and option.
“There are many options available to a preparer of those SFCs [statements of financial condition],” Mr. Flemmons said.
“At the end of the day what’s important is that the method be disclosed ... there is no one right value. A reasonable person may disagree.”
He added that it was not unusual for many millions to be added to a property’s valuation based on projected future earnings and that this was neither a “right or wrong” thing to do.
“It’s a judgment call,” he said.
The future use and projected revenue of a property would be considered and reflected in those financial statements, he added.
“That current value is in many ways dependent on what happens in the future.”
