A theme throughout New York Attorney General Letitia James’s multimillion-dollar fraud lawsuit against former President Donald Trump is that she undervalued the property if it allowed her to save money and overvalued the property if it helped her obtain larger loans.
The Trump International Hotel & Tower Chicago storefront is cited as an example of how Trump allegedly sought to have it both ways. When he needed collateral, he and his team placed a high value on the property and when he wanted a tax break, he said the property was worthless, according to the lawsuit filed Wednesday by James’ office.
Once touted as a jewel in Trump’s portfolio, Chicago’s Trump Tower was, in reality, mired in questionable funding for years.
The 220-page lawsuit says the downtown Chicago property, officially owned by 401 North Wabash Venture LLC, was valued at $133 million in recent years by Deutsche Bank, which lent Trump money for the project, but he told a story. different: he said it was worthless — when filing his taxes.
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In an attempt to try to avoid detection, Trump and the Trump Organization intentionally did not include the skyscraper on his various financial condition statements so that it would not expose the different values he placed on the property, according to the lawsuit.
“Since 2009, its value has been excluded from Statements of Financial Position,” which are essentially balance sheets reviewed by lenders and others showing assets and liabilities, the suit says.
Based on sworn testimony, the reason for the omission was that “Trump did not want to take a position on the Declarations that would conflict with a position on the value of the property he has represented before tax authorities,” the suit states. “(The) investigation revealed that the tax position taken was that the property had lost its value according to Mr. Trump and therefore formed the basis of a substantial loss under the federal tax code.”
The Chicago hotel and residence is “relevant” to the case brought by James’ office because “Mr. Trump and the Trump Organization obtained bank loans on the building or its components as collateral and the statements were part of the loan transaction.” ”, says the lawsuit.
Any use of different property values could put Trump in a difficult position given that he allegedly certified his financial statements as true and accurate in multiple loan agreements, including loans he personally guaranteed for the skyscraper on the Chicago Riverfront.
Among the loan transactions cited in the lawsuit was one in which the Trump Organization paid off a $98 million loan to $19 million with proceeds from the sale of condos on the Chicago property, but then successfully raised the loan from Deutsche Bank. at $54 million, to a Loan of $73 million, with Trump’s personal guarantee.
Included in the guarantee, according to the suit, were “unsold condominium units and the Trump International Hotel Chicago.”
By 2015, according to the lawsuit, the Trump Organization had paid what it owed on the remaining balance of the $45 million loan.
But since the property had been appraised at $133 million, that was to Trump’s advantage because the appraisal triggered specific provisions in his loan agreement that meant “Mr. Trump’s personal guarantee was removed,” according to the suit.