Predictably, Donald Trump wants you to think his longtime accounting firm’s decision to ditch the Trump Organization last week is no big deal. In fact, he would like you to not think about it at all.
But that hasn’t stopped members of his inner sanctum from wondering if the highly publicized investigations in New York could actually be what ultimately torches the ex-president’s sprawling family business.
This is why, after accounting firm Mazars USA dropped the Trump Organization, three people close to former President Trump told The Daily Beast they have each urged Trump—or others in his family and brain trust—to take this possibly ruinous development seriously.
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“I’ll be honest with you: I have said for years that this whole thing is one big fishing expedition,” one of the sources said. “I’ve expected it to just fizzle at some point, or to turn up ticky tacky shit that can score prosecutors big headlines. The Mazars news was the first time I started thinking, ‘Hey, this might be serious.’ Could Donald Trump [and his business] be screwed? I don’t know, but I’m not as confident as I once was in saying, ‘No.’”
The question now facing the Trump Organization—which is already in hot water after being indicted in Manhattan for criminal tax fraud last summer—is whether the pillars propping up his business empire will now crumble.
The massive bank loans that fund his real estate development projects are the foundation of his empire. Banks that approved lending Trump money for his golf courses and skyscrapers relied on his personal guarantees and “statements of financial condition”—guarantees that are now shaky at best.
None of these sources who spoke to Trump believed he was taking this as seriously as he should. Two of them said the former president told them that his business empire has been doing “great,” no matter what prosecutors are trying to do to it.
But notably, all three predicted that this latest Mazars development would likely strengthen Trump’s resolve to run again for the presidency in 2024.
“Right now, all the voters care about is stopping the decline of the United States and President Trump is the one person who they know who can do it,” claimed John McLaughlin, who served as one of Trump’s top pollsters in 2016 and 2020. “Voters could care less who his accountant might be. As long as Joe Biden fails, President Trump grows stronger.”
After a day of remaining silent on the topic, the ex-president released a lengthy statement Tuesday night insisting that, among many other things, “We have a great company with fantastic assets that are unique, extremely valuable and, in many cases, far more valuable than what was listed in our Financial Statements.”
However, Mazar’s decision on Feb. 9 to disavow every financial condition statement Trump made from 2011 until 2020 does more than cast a shadow of doubt on his riches and his future.
That’s because lending agreements often include provisions that immediately cancel a deal—causing the loan to default—if the underlying documents prove false. According to a widely cited analysis by journalists at Bloomberg, the Trump Organization has had at least $590 million of debt coming due between 2021 and 2025. It’s unclear if Trump’s loan deals included a “material change in condition” clause, but if they did, as most do, the fallout could spell financial ruin.
Steven J. Solomon, an attorney in Miami who leads the bankruptcy practice at the national law firm GrayRobinson, warned about the gravity of the situation for the Trump Organization.
“It’s incredibly significant. And frankly, I’ve never heard of a situation where an accounting firm is going back retroactively 10 years,” he told The Daily Beast. “This would be a trigger point. If your lender doesn’t have confidence in you because it can’t rely on the information, you can’t be friends anymore.”
In theory, Solomon said, the lenders could move to seize whatever collateral Trump put on the table. That could include whatever assets Trump put at risk to borrow what Bloomberg calculated to be $100 million for Trump Tower in Manhattan or another $125 million for the Trump Doral golf resort.
But the banks that lent millions to Trump will be hesitant to suddenly call their loans back for fear that it could start a financial landslide that ultimately dooms their precious borrower, and reduces the chance that the money will be paid back, several bankruptcy lawyers told The Daily Beast.
The political fallout of banks demanding their loans back could also factor into their decision. While liberals and good-government groups may call on Trump’s lenders to do just that, the backlash would likely fall more on the banks than it would Trump. The former president’s supporters are unlikely to think any less of Trump if his successful businessman persona suddenly evaporated. Instead, Trump would likely just incorporate the episode into his already perfected politics of aggrievement.
Still, that doesn’t mean banks calling back the loans wouldn’t sting.
According to government disclosure forms Trump signed during his last week in office a year ago, Trump is on the hook for more than $130 million to Deutsche Bank that’s due starting in 2023. His lifeline there is seemingly gone now that his long-time banker, Rosemary Vrablic, abruptly resigned amid allegations of shady deals with Trump’s son-in-law, Jared Kushner.
Meanwhile, those disclosure forms show that Trump owes another $110 million to the real estate investment trust Ladder Capital Finance that’s due starting this year—although Trump continues to have a family friend at the firm widely believed to be his loyal ally in the form of director Jack Weisselberg, son of the Trump Organization’s indicted chief financial officer.
But even if these big lenders don’t want to call back their loans, government-regulated banks will still be under pressure to independently investigate Trump’s real financial health, out of fear that they’ll run afoul of responsible banking laws.
“This is going to be incredibly troubling and at the same time. You’re going to have bank regulators looking… at these loans and determining that there are these questions being raised about the solvency of the borrower,” Solomon said.
It’ll get even worse for the Trump Organization. Solomon called the manner of Mazars’ sudden exit “a dark cloud” that will easily scare off any other respected accounting firm from taking its place.
And that, in turn, invites unscrupulous characters from all over the globe to come swooping in to the rescue.
“This explodes the national security risk by a factor of 10, because now he's going to be desperate for new loans. Legitimate banks are not going to touch him. So it expands the universe of shady characters who could offer him loans in return for favors that might include disclosing U.S. national security secrets,” said Joseph Cirincione, a fellow at a think-tank, the Quincy Institute for Responsible Statecraft.
Any influx of foreign cash is sure to reenergize the aggressive effort by Democrats in Congress who in 2017 sued, unsuccessfully, to nail him as president for violating rules about receiving gifts and benefits from foreigners. Their effort, which died in federal appellate court in 2020, showed how difficult it is to hold an American president accountable for running afoul of emoluments clauses of the U.S. Constitution.
“Whether it is the Saudis, Russians, narcoterrorists—anybody with access to hundreds of millions would be in the running for Donald Trump’s new loan officer,” Cirincione said. “That is why you don’t give security clearance to people who are financially compromised.”
And the American public wouldn’t know much about it unless Trump gets back in the White House.
But for all the financial trouble this spells for Trump’s family company, Mazars’ decision to turn on him might be the catalyst to bring down Trump himself for alleged crimes because any proven fraud puts further pressure on the already indicted CFO, Allen Weisselberg, who faces trial later this year.
Barbara A. Res, a former construction executive at the Trump Organization who wrote a tell-all book called Tower of Lies, noted that any bank loan officers would have dealt directly with Weisselberg all these years.
“Weisselberg is who’s in trouble now. He's probably the one that gave all the information to the accountants. They didn’t get it out of thin air. They worked with Weisselberg, He’s the guy. They didn’t check [real estate values] themselves. They’re not real estate people,” she said.
“I hope that they flip Weisselberg, because this is a big deal with him. He’s the one who’d go to jail for this, I would think,” she added.
Res, who now does speaking engagements about women in the construction industry, recalled the ways she saw Trump dupe business partners in the 1980s and 1990s. She told The Daily Beast that Trump never went as far as fabricating years of financial statements because “people didn’t let him do things like that. We controlled him. But he reached the point where he no longer had anyone who’d say no to him.”
“If he gets away from this, there’s no God, and no reason to live,” she said.
