As a New York judge weighs Donald J. Trump’s civil fraud case, new accusations of deficiencies in his company’s financial reporting could provide the judge with ammunition for a forceful ruling against the former president and his family business.
The judge, Arthur F. Engoron, will soon decide on any consequences Mr. Trump might face as a result of the New York attorney general’s accusation that he fraudulently exaggerated his net worth to obtain favorable loans. After a monthslong trial, the attorney general, Letitia James, asked for a penalty of roughly $370 million, which would come on the heels of a separate jury verdict in a defamation case requiring Mr. Trump to pay $83.3 million.
The new accusations against Mr. Trump’s family business, the Trump Organization, came late last week in a report from an outside monitor whom Justice Engoron assigned in late 2022 to keep an eye on the company. The monitor, Barbara Jones, a former federal judge, has overseen how the company represents its finances to lenders.
Her report highlighted several paperwork issues at a family company trying to shake a legacy of sloppiness: missing disclosures, typos, math errors and questions about a $48 million loan between Mr. Trump and one of his companies. Ms. Jones, now a law firm partner, told the judge that collectively, the issues “may reflect a lack of adequate internal controls.”
On Monday, Mr. Trump’s lawyers fired back, questioning Ms. Jones’s ability as a monitor and accusing her of acting in bad faith so that the Trump Organization would have to continue to pay her. They said she had not identified any fraud, and that the company had addressed most of her concerns.
“The monitor now twists immaterial accounting items into a narrative favoring her continued appointment, and thereby the continued receipt of millions of dollars in excessive fees,” one of the lawyers, Clifford S. Robert, wrote in a letter to Justice Engoron, noting that the company had already paid Ms. Jones more than $2.6 million.
Ms. Jones did not respond to a request for comment.
Ms. Jones’s findings, and the response from Mr. Trump’s lawyers, could embolden Justice Engoron, who often seems skeptical of the former president’s assertions and sympathetic to Ms. James’s case. In addition to the $370 million penalty, Ms. James asked the judge, who will decide the case himself — there was no jury in the trial — to bar Mr. Trump and other defendants from running any company in the state.
In a social media post on Sunday, Mr. Trump took aim at the attorney general’s accusations, writing: “I AM WORTH MUCH MORE THAN THE NUMBERS SHOWN ON MY FINANCIAL STATEMENTS.” He has argued that his lenders were not victims, noting that they made money from their dealings with him.
In her report, Ms. Jones found that the Trump Organization had recently presented some financial information inconsistently. In financial statements, for example, the company said that expenses associated with its downtown Manhattan building, 40 Wall Street, were more than $1 million. But when reporting the same expenses to a lender, the company claimed that they were only $100,000.
In his letter, Mr. Robert said that the difference resulted from the discrepancy between a projected annual budget — which was submitted to the lender — and the actual expenses, which were recorded in the financial statements.
Ms. Jones also wrote that the Trump Organization’s disclosures to lenders did not appear to fully honor loan terms requiring Mr. Trump to submit information about his finances. She wrote, though, that she was not aware of any concerns expressed by lenders about the missing information.
Perhaps most intriguingly, the report raised new questions about the perplexing $48 million loan, a transaction involving Mr. Trump’s Chicago hotel.
In a footnote, Ms. Jones wrote that when she inquired about the loan, the company told her that a loan agreement did not exist — and that in fact the loan itself had “never existed.” Yet for years, on disclosure forms required of presidential candidates, Mr. Trump had mentioned the loan between himself and one of his companies.
Mr. Trump’s lawyers disputed Ms. Jones’s account. The Trump Organization did not tell her that the loan never existed, his lawyers said on Monday: It existed, they said, but nothing is currently owed.
“The monitor has included a demonstrable falsehood in her report,” Mr. Roberts said in his letter.
Justice Engoron chose Ms. Jones to oversee the Trump Organization in the fall of 2022, shortly after Ms. James filed the lawsuit that led to the civil fraud trial. She was nominated by both the attorney general’s lawyers and lawyers for Mr. Trump.
Ms. James has asked that the monitor oversee the company for years to come — a consequence that Mr. Trump’s lawyers objected to vehemently in their Monday letter. They compared Ms. Jones to the zealous police inspector villain in “Les Misérables.”
“Further oversight is unwarranted,” they wrote, saying it would “unjustly enrich” Ms. Jones as she “engages in some ‘Javert’-like quest” against them.
