Going Back To Mazars For A Moment

Trump’s accounting firm says a decade’s worth of his financial statements “should no longer be relied upon.” Here’s our profile of the firm that, till today, put its name behindTrump’s grandiose claims about his wealth: https://t.co/o2j7NTTOXv

— Nicholas Varchaver (@nickvarchaver) February 14, 2022

10 years later, they finally decide something is amiss? Let me put it this way:

This @propublica piece from 2020 is worth a reread. https://t.co/lQVUHdTowM pic.twitter.com/NitgAV3SVV

— George Conway (@gtconway3d) February 15, 2022

Now let me put that in context:

But Trump’s accountants are far from bystanders in the matters under scrutiny — or in the rise of Trump. Over a span of decades, they have played two critical, but discordant, roles for Trump. One is common for an accounting firm: to help him pay the smallest amount of taxes possible. The second is not common at all: to help him appear to the world to be rich beyond imagining. That sometimes requires creating precisely the opposite impression of what’s in his tax filings.

Wait; it gets better:

Trump’s accountants have been crucial enablers in his remarkable rise. And like their marquee client, they have a surprisingly colorful and tangled story of their own. It’s dramatically at odds with the image Trump has presented of his accountants as “one of the most highly respected” big firms, solemnly confirming his numbers after months of careful scrutiny. For starters, it’s only technically true to say Trump’s accounting work is handled by a large firm.

In fact, Trump entrusts his taxes and planning to a tiny, secretive team of CPAs who have operated at various times from humble quarters in Queens and two Long Island office parks. That team, which has had two leaders with back-to-back multidecade terms, has been working for the Trumps since Fred Trump began using the firm back in the 1950s. It was eventually subsumed into Mazars USA, the American arm of a large international firm, through a series of mergers over decades.

One theme has been consistent: partners and sometimes the firm itself have faced accusations of fraud, misconduct and malpractice on multiple occasions, an investigation by ProPublica and WNYC has found. 

Mazars, at least the part working for Trump, is not entirely clean of hands.

 Since Trump’s accountants merged their practice into Mazars in 2010, they have been present for Trump’s scandals, too. Mazars accountants prepared the tax returns for the Donald J. Trump Foundation, forced to shut down and ordered to pay more than $2 million in damages after a New York attorney general’s investigation exposed a history of illegal self-dealing. And the Manhattan DA’s office, which is investigating whether the Trump Organization falsified its business records to cover up hush-money payments to adult film actress Stormy Daniels, subpoenaed not only Trump’s tax returns but also various internal records and assessments prepared by Mazars.

Well, garbage in, garbage out.  Mazars can reasonably argue they were relying on data provided by Trump, but only to a small degree. That’s hardly GAAP, for one thing. The idea of an "outside" accounting firm is the imprimatur it is supposed to bestow. As we found out with Enron a few decades back, that "approval" isn't always worth the paper it is printed on; and the accounting firm can be held accountable.  Mazars is probably acting now to avoid the fate of Arthur Anderson (death, in other words). This article indicates they should have to act harder. But as Trump doesn’t run a publicly traded company, a la Enron, it’s more likely Mazars is buying their way out of trouble.

I have to quote at least this much, if only to show Trump is not sui generis; or even all that unique:

Whether by design, or perhaps just coincidence, Trump’s accountants have occasionally displayed the sort of audacity often associated with their client. Consider this example involving New York City taxes back in the 1980s. Mitnick claimed that Trump was exempt from paying tax on profit he made by flipping a Trump Tower condo. He had acquired the unit at cost, $634,648, ostensibly for providing “consulting services” to his development partnership, then sold it 19 days later for $3 million.

At an administrative court hearing, Mitnick defended deductions that he’d claimed offset any profits from Trump’s consulting business, even as he failed to provide any documentation or explanation for those expenses, according to the 15-page court opinion in the case. He went so far as to deny that he’d prepared the federal tax return for Trump that also claimed the deductions, even though his signature was on the document.

The accountant evidently protested vociferously in the New York case, leading the administrative law judge to scoff, “The problem at issue is not one of double taxation, but of no taxation.” The total amount at stake was relatively modest — $87,693.57, including penalties and interest — but Mitnick, on Trump’s behalf, contested it for more than a decade before a city appeals panel finally put an end to the case, ordering Trump to pay up.

There was another Trump accountant on the Mazars payroll after Mitnick. His sole job was to do Trump’s bidding, er, work on Trump’s accounts. Mazars is now trying to back away from all of that. Trump is as exposed as if he were nekkid in Times Square at high noon in July.

The ProPublica report was written in 2020, as the Supreme Court was considering whether or not to force Trump to turn over documents to Congress and the Manhattan DA. It ends on this now rather prophetic note:

The greatest revelations also may not be contained in the tax returns themselves, which will lack detail about Trump and his businesses, but in the thousands of pages of other materials that Congress and the DA have also subpoenaed. These include the hundreds of corporate returns, also prepared by Mazars, detailing Trump’s investments, his debts, his sources of income and his partners. Equally important, the accountants’ work papers and communications with the Trump Organization could reveal unguarded internal assessments and exchanges about his finances.

The report mentions that Mazars was central in preparing documents to "prove" Trump was as wealthy as he ever wanted to claim he was (Trump still has Forbes convinced he's worth billions; that is based on representations from Mazars, in turn based on what Trump told them to say).  How much Trump is really worth is now the least of Trump's problems.  I think Trump's goose is now well and fully cooked, and will be served up long before 2024.