Former President Trump and Deutsche Bank’s years-long symbiotic relationship came to the forefront of his New York civil fraud trial this week when top executives who once loaned the former president’s business hundreds of millions of dollars gave the most compelling defense yet in his trial.
The executives bolstered arguments Trump’s counsel has made from the start: that the bank wanted to work with the Trump Organization, did its own due diligence and found no fraud.
In fact, the bankers’ testimony was such a boon to Trump’s defense that his lawyers asked the judge to issue an immediate decision in their favor.
But the trial judge — who has often butted heads with Trump and his legal team, and who already found Trump’s business liable for fraud — did not appear convinced.
“I would point out that the mere fact that the lenders were happy doesn’t mean that the statute wasn’t violated, doesn’t mean that the other statutes weren’t violated,” Judge Arthur Engoron said, taking the request under advisement.
Engoron has already found Trump, his business and several executives liable for fraud, determining that New York Attorney General Letitia James proved the crux of her case. The trial is addressing other claims, including conspiracy, insurance fraud and falsifying business records.
The judge, who is overseeing the trial with no jury, will alone decide the verdict.
James sued Trump and his business last year, claiming the business mogul-turned-president misled lenders and insurers by falsely altering the value of his business’s assets on key financial statements to receive tax and insurance benefits.
The Deutsche Bank executives’ views aside, state lawyers say that misrepresentations in company financial statements nonetheless shortchanged banks by millions of dollars, also misleading the government.
Throughout the trial, Trump’s attorneys have attempted to show that banks were eager to work with the Trump Organization and excited by the outcomes of their partnerships — that there was “no victim” of the business’s real estate dealings, implying the New York attorney general had no right to bring the case because the banks did not sue him over misrepresentations.
The defense on Wednesday introduced 2011 emails between then-bank Managing Director Rosemary Vrablic and colleagues, in which Vrablic expressed significant interest in working with the Trumps.
“We are whale hunting,” she wrote after meeting Donald Trump Jr., before she had met his father.
She testified Wednesday that the bankers used “whale” to refer to very wealthy clients.
Vrablic would become Trump’s lead banker, and their working relationship would span a decade.
Deutsche Bank loaned Trump millions for high-end properties in Florida, Chicago and Washington, D.C., and Trump’s celebrity helped the bank lure in other high-profile clients.
Nicholas Haigh, Deutsche Bank’s former risk management officer, previously testified in the New York attorney general’s case that Trump’s statements of financial condition played a vital role in the approval of two of those loans: a $125 million loan in 2011 for Trump’s Doral, Fla., golf resort and a $107 million loan in 2012 for his Chicago hotel.
Trump was able to secure bigger loans with lower interest rates thanks to the documents, Haigh said. The Doral property had roughly an 8 percent interest rate, while the Chicago property had a 3 to 5.45 percent interest rate, according to state evidence.
Trump personally passed along his statement of financial condition to Deutsche Bank when negotiating the Doral loan agreement, writing to the bank’s CEO that Trump hoped he’d “be impressed” with the document, evidence showed.
But those cushy deals had consequences for the banks, the New York attorney general’s office argues. Earlier in the trial, an expert witness hired by the state testified that the Trump Organization’s skewed financial statements may have cost banks more than $168 million in interest across four projects.
The statements of financial condition, which detail the value of Trump’s assets and were used to secure loans and deals, are at the heart of the state’s case. Trump’s three eldest children — Donald Trump Jr., Ivanka Trump and Eric Trump — distanced themselves from the documents in their individual testimonies, but for Trump, there is no escaping the financial statements that bear his name.
Trump previously played down the importance of the documents, testifying that they were “not really documents that the banks paid much attention to.”
“I’ve been dealing with banks for 50 years and probably know banks as well as anybody,” Trump said on the witness stand earlier this month. “I know what they look at; they look at the deal.”
The former president and his lawyers have also asserted that banks are required to do their “own due diligence,” not just relying on the Trump Organization’s representations in the statements.
“Banks check the work,” Trump testified.
Deutsche Bank Managing Director David Williams’s testimony Tuesday backed that perspective. He said Tuesday that bankers viewed their clients’ statements of financial condition as “subjective or subject to estimates,” taking their own look at the reports of net worth.
“I think we expect clients’ provided information to be accurate,” Williams said. “At the same time, it’s not an industry standard that these statements be audited.”
“They’re largely reliant on the use of estimates,” he added, so bankers routinely “make some adjustments.”
Vrablic testified similarly the next day, claiming that she never personally reviewed Trump’s statements of financial condition but that the bank expected it to be accurate.
“You would have had an expectation that a borrower like Mr. Trump would present their financial information fairly?” state attorney Kevin Wallace asked, according to ABC News.
“Yes,” Vrablic replied.
The Associated Press contributed.