Donald Trump has long been known as a notorious cheater on the golf course.
And in the sweeping civil fraud lawsuit filed on Wednesday against the former president and his family, New York Attorney General Letitia James charged that Trump’s golf properties in New Jersey and elsewhere were allegedly at the center of a long-running scheme to make it appear like he was far wealthier than was actually the case.
“With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system,” James said. “In fact, the very foundation of his purported net worth is rooted in incredible fraud and illegality.”
The numbers game alleged by the attorney general’s office was aimed not only at burning Trump’s billionaire image. He also gave him a financial advantage, investigators charged, such as in obtaining favorable loan terms. At the same time, the 214-page complaint charged that the Trump Organization would play down the value of its assets at other times for tax purposes.
“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 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.”
Trump’s golf properties stretch from Bedminster, Pine Hill in Camden County and Colts Neck, all in New Jersey, to Mar-a-Lago in Florida, and to clubs in New York, Los Angeles, Charlotte, and Scotland. The lawsuit claimed that Trump’s financial statements did not list separate values for each of those facilities.
“Instead, the values for those properties are lumped together into a single figure. This was done intentionally to conceal significant swings in the value attributed to individual clubs and to conceal the methods used to arrive at those values,” the court filing noted. “This lump sum figure was by far the largest asset value on Mr. Trump’s statement of financial condition every year.”
James, a Democrat, is seeking to remove the Trumps from businesses engaged in the alleged fraud — which would include the Trump National Golf Clubs. She also wants an independent monitor appointed for no less than five years to oversee the Trump Organization’s compliance, financial reporting, valuations and disclosures to lenders, insurers and tax authorities.
Trump, in a statement posted to his Truth Social platform, called the lawsuit “Another Witch Hunt by a racist Attorney General” and called James, who is Black, “a fraud who campaigned on a ‘get Trump’ platform, despite the fact that the city is one of the crime and murder disasters of the world under her watch!”
Trump lawyer Alina Habba said the allegations in the lawsuit are “meritless.”
In a statement, 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.”
According to the lawsuit, Trump and the Trump Organization “employed various deceptive schemes” to inflate their values.
Each year, according to the New York filing, Trump derived the value of the golf course based on his capital contributions since the inception of his ownership adjusted by a “multiplier,” which is known as a fixed-assets approach and does not factor in any depreciation.
But using that approach to derive the market value of a golf course is contrary to industry practice, the lawsuit said. In fact, Trump himself acknowledged as much to the IRS in 2012 when seeking to maximize the value of a conservation easement related to his golf club in Bedminster.
Suchments ease provide big tax breaks in exchange for preserving open space.
The IRS sought to reduce the amount of the Bedminster conservation easement. But Trump’s attorney argued that the easement should be based on the income the golf course could generate and that was the relevant metric, telling the government “the price at which a golf course will trade depends on the revenues that it can produce.”
At the same time, in an appraisal that the Trump Organization submitted to the IRS, it was stated that an income-based approach was the acceptable method for valuing a golf course.
However, that’s not the approach the organization would later take when it was assessing golf courses for property tax assessment purpose to argue for lower tax assessments.
At the Trump National Golf Club in Colts Neck, for example, the Trump Organization purchased the property in July 2008 for $28 million. According to the lawsuit, the company’s valuations of Colts Neck would later be inflated by false and misleading numbers, including purported improvements of the clubhouse and purported value of unsold memberships.
The Trump Organization priced the vast majority of unsold membership at two to more than three times the then-current $50,000 price of a membership, while failing to account for the considerable time it would take to sell those memberships.
“Nor was there any evidence to suggest that the membership prices and figures reflected in the supporting data were bona fide projections of membership revenue,” the attorney general’s office said.
At the Trump National Golf Club in Pine Hill, NJ, the attorney general alleged that similar misstatements were used on the organization’s Statements of Financial Condition from 2011 to 2021.
The Trump Organization did not account for ground lease expenses when computing valuations of the property. The valuations failed to include rent payments required under the terms of the ground lease or account for the fact that the ground lease agreement required consent of the landlord in order for Trump to transfer his leasehold interest to non-related parties.
In addition, the Trump Organization also employed the unsold membership scheme, said the attorney general. For example, in 2011 the listed initiation fee was only $10,000, but the company valued all of the unsold memberships at prices ranging between $15,000 and $35,000. And in 2012 the unsold memberships were valued at prices ranging between $15,000 to $30,000.
“In reality, Trump Organization records showed that most initiation fees were waived for new members,” the lawsuit said.
The attorney general’s office said the Trump Organization ignored the most basic rules and standards for financial reporting, including representing that Mr. Trump had cash on hand that he did not; ignoring critical restrictions that would significantly lower property values when setting valuations; changing the methodology used to value properties from year to year, without reason or notice and using vastly different methods to value different properties even in the same year.
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Ted Sherman may be reached at email@example.com. Follow him on Twitter @TedShermanSL.