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Trump found to have fraudulently boosted value of Scots homes by up to £200m

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The Herald reports this was part of a scheme to dupe banks and to borrow more at lower rates.

It comes as it emerged the Aberdeen club’s operating company has run at a deficit since it opened in 2012 and has amassed total losses of more than £13 million in the ensuing 11 years.

A US judge found it had been wrongly stated that 2500 homes had already been built as part of a project associated with the loss-making Trump International Golf Club in Aberdeen.

There was planning permission to build only 500 and no development had taken place.

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A judge’s civil fraud case findings found the Trump Organisation had valued the 2500-home development at £83,164 when an appraisal it received placed it at less than half that – putting the value of the undeveloped Aberdeen land at £207.9m.

The Trump Organisation had been accused by New York Attorney General Letitia James of inflating prices by producing false financial statements that inflated Trump’s net worth.

The Attorney General said this was “particularly egregious in light of Trump’s decision to indefinitely postpone all development plans” after the Scottish Government approved nearby offshore wind farm plans.

Trump has recently been ordered to pay nearly $355m to New York state for lying about the values of his properties as part of “material fraudulent misstatements,” including those which relate to the housing development associated with the Trump International Golf Club in Aberdeen.

The former US president opened his first golf resort on the Menie estate in 2012 despite concerns over potential environmental damage and later tried to stop a wind farm being built off the coast, arguing it would spoil the view.

Across the calendar year of 2022, Trump International Golf Club Scotland Limited, which operates the resort, made an after-tax loss of £738,344 following a £696,845 loss in 2021.

In 2012, it incurred a £1,746,643 deficit followed by a £1,822,577 loss in 2023.

The Aberdeen case formed part of a wider legal action that claims the company lied “by billions” through submitting false financial statements to banks and insurance companies in a bid to obtain better rates on loans and insurance coverage.

Trump did manage to escape having some of his companies dissolved, which could have meant bankruptcy at the end of a civil investigation by the office of the New York Attorney General.

Judge Arthur Engoron also banned him from serving as a company director or taking out loans from banks in the state for three years.

Trump is currently campaigning for a second non-consecutive term as US president and has claimed the ruling is a “political witch hunt”.

Court documents seen by The Herald argued that Trump, associated companies, and some executives engaged in “numerous acts of fraud and misrepresentation” in official financial statements covering at least the years 2011 through to 2021.

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In a statement of fact also seen by the newspaper, the judge said in valuing the non-golf course property, initial permission had been to develop only 500 homes as year-round private residences.

However, the financial statements from 2014 to 2018 not only valued the area based on permission to develop 2500 of the properties “but also as if those residencies had already been built”.

It also states that despite receiving an appraisal by commercial property consultants Ryden LLP in July 2017 valuing the development profit of private homes at a maximum of £33,296 from 2017 to 2018, the Trump Organisation valued them at £83,146 per home.

That put the overall valuation at £207.9m.

In 2019, the Trump Organisation started valuing each home at £106,969 – more than triple the original value – with supporting information saying it had permission to build 2035 residences, therefore putting the valuation at £217.63m.

According to the judge’s findings, Trump was questioned about Aberdeen, and whether he was aware the financial statements from 2014 to 2018 valued the property as if the organisation could build 2500 year-round private residences, when in fact they had only been given permission to build 500.

He said “I don’t know, but it could very well be. It’s sort of like a painting. You could do pretty much what you want to do. The land is there. You could do what you want to do. So you could do either one of them, actually.”.

The judge’s findings say that when confronted with evidence that, in 2014, the Trump Organisation had submitted a statement to UK regulators stating that it did not intend to develop the Aberdeen property any further because of Donald Trump’s opposition to wind farms.

The National: Former US president Donald Trump (Alex Brandon/AP)

Trump (above) said in a testimony to the court: “At some point that will be developed into a magnificent job. I just don’t want to do it now.”

The judge said: “Notwithstanding the foregoing, the 2014-2018 (financial statements) valued Aberdeen not only as if Donald Trump had permission to develop 2500 private year-round residences, which he did not, but also as if those residences had already been built, and the (financial statements) and supporting data failed to account for any development costs associated with making the hypothetical residences a reality.”

Trump’s empire was spared from one of the worst potential outcomes – the cancellation of its business licences, which is commonly known as the corporate death penalty.

Instead, the judge ordered two tiers of oversight – an independent monitor to report to the court for up to three years and a separate independent director of compliance to be installed.

The judge is also requiring Trump to pay interest on the profits he made by committing the fraud (known as “prejudgment interest”), which could bring the final amount penalty total to around £354m. 

Along with what Trump has been ordered to pay, his two sons and co-defendants, Donald Jr and Eric, must each pay £3.1m and are currently barred for two years from doing business in New York.

Another co-defendant, Allen Weisselberg, the former chief financial officer of the Trump Organisation, has been ordered to pay £793,600.

Trump, his company, and its affiliates cannot apply for loans in New York for three years.

“There is overwhelming evidence that each of these defendants made or participated in making a false statement in the business records of an enterprise, with the intent to defraud”, the judge stated.

He said Trump was “aware of the key facts underpinning “various material fraudulent misstatements” in the (financial statements) and then listed a series of matters including that it was represented that he had permission for 2500 residences in Aberdeen when there was permission to build only 500.

The stiff penalty was a victory for James, a Democrat who sued Trump over what she said was not just harmless bragging but years of deceptive practices.

She described it as an “inflated home sale” and that the development should have been valued using an income-based approach rather than a fixed-assets approach – described as basing the value on Trump’s capital contributions and adjusting by a “multiplier”.

The Attorney General said the Trump Organisation confirmed in a public, audited financial statement shortly before finalising Trump’s 2014 Statement that it did not intend any residential development on the property for the foreseeable future in the wake of his opposition to the proposed wind farm in Aberdeen Bay. 

In testimony to the Scottish Government in April 2012, Trump said that he “cannot proceed with [the development] if the hotel is going to be looking at industrial turbines, and no one here would do so if they were in my position.”

The Trump Organisation also challenged the Scottish Government’s approval of the wind farm through litigation and lost one challenge in February, 2014.

The billionaire property developer had alleged that Alex Salmond (below), then Scotland’s first minister, had secretly interfered in the decision to approve the 11-turbine European offshore wind deployment centre site (EOWDC) in Aberdeen Bay – a claim rejected in court by Lord Doherty.

The National: Alex Salmond

The Attorney General had argued that up to 2018 when Trump had “apparently reversed” his position and applied for a reduced development, neither Trump or his company factored into the valuation the indefinite postponement of any development plans.

Engoron concluded that the former president and his co-defendants “failed to accept responsibility” for their actions and that expert witnesses who testified for the defence “simply denied reality”.

The judge called the civil fraud at the heart of the trial a “venial sin, not a mortal sin”.

“They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff,” said Engoron.

“Yet, defendants are incapable of admitting the error of their ways.”

He said their “complete lack of contrition and remorse borders on pathological.”

“The frauds found here leap off the page and shock the conscience,” the judge added.

Trump’s lawyer Alina Habba called the verdict “manifest injustice” and “the culmination of a multi-year, politically fuelled witch hunt”.

Judge Arthur Engoron issued his decision after a two-and-a-half-month trial, which saw the Republican presidential front-runner bristling under oath that he was the victim of a rigged legal system.

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Trump called the verdict a “complete and total sham”.

The judge decided on the case because juries are not allowed in this type of lawsuit and neither  James’ office nor Trump’s lawyers asked for one.

The suit is one of many legal headaches for Trump as he campaigns for a return to the White House.

He has been indicted four times in the last year — accused in Georgia and Washington DC of plotting to overturn his 2020 election loss to Democrat Joe Biden, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid to porn actor Stormy Daniels.

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