Why Trump's Accountants' Withdrawal Is A Big Deal

Mortgage fraud and/or wire fraud convictions can carry $1 million fines with up to 30 years in prison.  While the current New York State investigations into Der Trumpenfuhrer and his business practices are in the civil realm, there remains the possibility that things could flip to criminal investigations and the action this week by the Trump organizations long time accounting firm Mazars USA LLP certainly has increased the possibility.  In a letter filed in the New York court proceeding, not only did Mazars sever its relationship with Trump, but it also stated that Trump’s financial statements, from 2011 to 2020, “should no longer be relied upon,”  This all but admits that the accounting firm now believes it was provided with false and likely fraudulent information inorder to create false pictures of the Trump organization's finances and property values as it sought loans,insurance coverage and various tax treatments. Put another way, the accountants had to choose between Trump and saving their own ass, and they opted for the latter option.  An op-ed in the Washington Post by constant Trump critic George Conway lays out why this could prove were damaging for Trump and his vile spawn and leave Trump with the choice of (i) lying under oath and facing perjury charges or (ii) invoking the 5th Amendment and refusing to testify and fostering an appearance of guilt.  Here are highlights:

It has often been tempting, but never a safe wager, to predict the demise of Donald Trump.

He lost the presidency and both houses of Congress, and was impeached for high crimes and misdemeanors twice. He’s being investigated in New York for business fraud, and in Georgia for election fraud. He’s being probed by the House’s Jan. 6 select committee — and, one would hope, ultimately by the Justice Department — for whipping up a riot and attempting a self-coup.

Yet somehow he has managed to survive, legally, financially and politically. . . . .But maybe, just maybe, this time will be different.

On Thursday, a judge in New York ordered Trump, along with his daughter Ivanka and his son Donald Jr., to testify within 21 days at civil depositions in the New York attorney general’s investigation of potential fraud at the Trump Organization. The judge’s opinion brutally rejected Trump’s arguments for blocking the depositions: It would have been “blatant dereliction of duty” for the attorney general not to take the testimony, the judge explained, because prosecutors have unearthed “copious evidence of possible financial fraud” in Trump’s business.

That evidence includes a letter that might turn out to be, as a practical matter, the biggest blow Trump has ever suffered, even bigger than his six corporate bankruptcies and two presidential impeachments. A blow dealt not by prosecutors, plaintiffs, politicos or the press — but by his own longtime accountants.

Trump’s accounting firm, Mazars, sent a letter on Feb. 9 to the Trump Organization terminating its relationship with Trump. The letter was astounding in many respects.

Mazars said that 10 years of Trump’s financial statements, from 2011 to 2020, “should no longer be relied upon,” and that Trump should tell that to the people he gave them to. The accountants explained that they reached this conclusion based upon court filings previously made by the New York attorney general, as well as the accountants’ own investigation and other sources.

And then they quit. Under the “totality of the circumstances,” Mazars wrote, “we have also reached the point such that there is a non-waivable conflict of interest with the Trump Organization. As a result, we are not able to provide any new work product to the Trump Organization.”

Translated from legal-accountingese, the letter was an unmitigated disaster for Trump, far beyond his possibly having to file late returns. By saying the statements “should no longer be relied upon,” the accountants effectively announced, You misled us. By “totality of the circumstances,” they likely meant, The prosecutors investigating you, and the case they’re making, are serious.

By pronouncing “a non-waivable conflict of interest,” they were all but saying, We’re on team A.G. — or we might have to join someday soon. And by saying no “new work product” and quitting, they essentially declared, We don’t trust you — and we’re certainly not going to jail for you.

All this could threaten Trump’s livelihood — his all-important mogulhood — in a way no setback ever has before. Even a guilty verdict in a Senate impeachment trial would have affected only his entitlement to temporary government housing.

Now the man who long has had trouble finding decent legal representation might find it all but impossible to find new auditors and tax preparers. It’s hard to imagine that any reputable accounting firm will touch his tax returns, let alone fix and bless his financials for a decade or more.

Even if lenders don’t exercise any rights they might have to call in their loans, Trump apparently still needs to refinance hundreds of millions’ worth of them soon. As Trump biographer Timothy L. O’Brien of Bloomberg Opinion puts it, “Good luck refinancing your debt when the accountants” — who have just declared a decade of your financials utterly worthless — have “just walked out the door.”

So Trump would face a heap of problems even if the New York attorney general (and the Manhattan district attorney she’s working with) closed up shop tomorrow. No wonder Trump’s son Eric was all but crying when he mentioned the prosecutors this week on Fox News.

But as Thursday’s ruling makes clear, the prosecutors aren’t going away anytime soon. And in 21 days, absent some relief from a higher court, Trump will face a profound conundrum at his deposition.

Will he testify and (assuming he’s even capable of it) tell the truth, and possibly implicate himself in crimes? Or will he provably lie under oath, and virtually guarantee himself an indictment for perjury?

Or will he do the sensible thing — plead his Fifth Amendment right against self-incrimination hundreds of times, as Eric Trump and the company’s finance chief, Allen Weisselberg, already have done — and face the political embarrassment (and, in civil litigation, the negative inferences) that would entail? In court Thursday, Trump’s lawyer said that he was advising his client to do precisely that.

Stay tuned. Could this be, at long last, the beginning of the end for Trump?  As always, don’t bet on it — but this time, don’t be surprised if it is.