Attorney General's investigation into Trump Organisation turns focus on former US president Donald Trump's Scottish resort

A wide-ranging fraud inquiry by New York's Attorney General into the Trump Organisation's financial dealings has turned its focus on the former US president's inaugural Scottish golf resort.

Letitia James is spearheading an investigation into the 75-year-old's firm. She has told a court that it has uncovered evidence the firm had used “fraudulent or misleading “valuations of its assets to obtain economic benefits.

The inquiry has angered Mr Trump, who has sued to bring it to a halt on the grounds of political bias, and accused Ms James of wanting to “harass” and “intimidate” him as part of a “witch hunt”.

Now court filings by Ms James's office show the probe is actively looking into the finances around Trump International Scotland in Aberdeenshire.

It alleges Mr Trump’s firm overstated the value of its land, and cited its ability to build 2,500 homes at the site, despite the fact that neither the Trump Organisation nor its Scottish subsidiaries have ever been granted planning approval for that many properties.

In a motion that seeks a court order enforcing testimonial subpoenas issued to Mr Trump and two of his adult children, Donald Trump Jr and Ivanka, Ms James said her office had collected “significant additional evidence indicating that the Trump Organisation used fraudulent or misleading asset valuations to obtain a host of economic benefits, including loans, insurance coverage, and tax deductions”.

The various parcels of land which make up the resort near Balmedie were purchased by the Trump Organisation in 2006 for $12.6 million (£9.2m).

Fomer US president Donald Trump at his Aberdeenshire golf resort in 2010. Picture: Derek Blair/AFP/Getty

A key element of Ms James’s investigation is what is known as ‘statements of financial condition’ filed by the Trump Organisation. The documents are designed to detail Mr Trump’s assertions of his net worth, based principally on asserted values of particular assets minus outstanding debts.

Between 2004 and 2020, such statements were compiled by Mazars, a US accounting firm, relying on a supporting data spreadsheet and back-up material prepared by Mr Trump’s firm.

In turn, the Trump Organisation and Mr Trump cited these statements in their dealings with other parties, such as financial institutions, other lenders, and insurers.

However, Ms James alleges the statements misstated objective facts, miscategorised assets, failed to use fundamental valuation techniques, and failed to advise that certain valuations were inflated for brand value.

New York Attorney General Letitia James is looking into Trump International Scotland as part of her investigation into the former US president's firms. Picture: Drew Angerer/Getty

Her latest filing states the Trump Organisation’s supporting data led to Trump International Scotland being valued at £75m in 2011, the year before it opened.

It cites an email sent by George Sorial, a former executive vice-president of the Trump Organisation, which Ms James said was provided by Mr Sorial to a Scottish accountant, who was then expected to pass the information on to Forbes magazine.

In Trump International Scotland’s accounts for that year, filed with Companies House, the firm stated that its total assets, less current liabilities, stood at £20.4m.

Ms James’s filing also notes the email to Forbes was a component of the Trump Organisation’s valuations of the property in 2012 and 2013.

In 2014, it adds, Mr Trump’s firm valued the resort at $435m (£320m), more than double the previous year’s valuation. Some four fifths of that 2014 valuation was derived from the Trump Organisation’s estimate of the property’s residential development potential.

That same year, accounts filed with Companies House put Trump International Scotland’s total assets, less current liabilities, at £29.7m.

Ms James notes the supporting data was based on the development potential of 2,500 homes, despite the fact the Trump Organisation has never had approval to develop that number of properties.

It was initially given the green light to build a 450-room hotel, 950 holiday apartments, 500 residential homes and 36 golf villas. However, Mr Trump’s plans have since been scaled down, with approval granted in 2019 for 550 homes.

The latest court filing states that when asked about the difference between the numbers cited by the Trump Organisation, and the actual number of properties approved for building, Allen Weisselberg, the company’s chief financial officer, “could not explain this discrepancy”.

It also notes that in filings to Companies House for 2013, Mr Weisselberg – charged last year with criminal tax fraud as part of a separate US investigation – stated that future phases of the project had been postponed.

The filing states that in 2017, the Trump Organisation had commissioned an appraisal that suggested that if 557 private homes were built, it would result in a “total net present valued profit” of between £16m to £18m.

“The Trump Organisation valued the undeveloped residential land at more than ten times that amount, £212,160,000, that year,” it explains.

In a statement, Ms James said: “The Trumps must comply with our lawful subpoenas for documents and testimony because no-one in this country can pick and choose if and how the law applies to them. We will not be deterred in our efforts to continue this investigation and ensure that no one is above the law.”

But a spokeswoman for the Trump Organisation said: “The only one misleading the public is Letitia James. She defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule.

"Three years later she is now faced with the stark reality that she has no case. So, in response to Trump suing her and filing multiple ethical complaints, and on the heels of her failed governor's race, she has no choice but to mislead the public yet again by misrepresenting the facts and ignoring her own inflammatory comments. Her allegations are baseless and will be vigorously defended.”

Mr Trump and Ivanka Trump resigned from their roles at Trump International Scotland in 2017. Donald Trump Jr and his brother, Eric, are still directors.

Last month, Trump International Scotland reported losses of £1.3m, the ninth consecutive year it has been in the red. The firm remains reliant on interest free loans from Mr Trump totalling £40.6m.

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