By Chase Peterson-Withorn
New York Attorney General Leticia James is investigating Donald Trump’s Trump National Golf Club in Los Angeles as part of her investigation into whether Trump exaggerated the value of the property to his creditors, insurers and the Service. US Internal Revenue.
One of James’s claims: that Trump valued the unsold plots on the property at $ 4.5 million, even after he had received an estimate valued at close to $ 1.1 million.
This is not surprising, given what Trump has claimed to Forbes over the years. Trump bought the 261-acre property for $ 27 million in 2002 after a landslide destroyed part of the golf course and the previous owners went bankrupt.
He had big plans to rebuild the stadium and surround it with villas. In 2005, Trump said he owned 75 plots of land on the property and planned to sell 75 homes on them for $ 10 million each. By 2009, things were going so well in Trump Los Angeles – despite the national real estate crash – that its chief financial officer, Allen Weisselberg, said buyers were buying homes for about $ 10 million and vacant lots for $ 8 million. Later that year, a megaton deal came to light: Weisselberg revealed that Trump had sold a house there for $ 28 million.
Only most of them did not happen. Trump did not actually have 75 plots, he had 36, plus two other plots of land that had not yet been approved for development. One plot is still stuck in the approval process, two decades after Trump bought the property. The second is now a driving field – and the subject of James’s research.
But what about the supposed sales? Land buyers never paid $ 8 million – or anything like that – according to property records.
Trump got rid of two of his best plots for about $ 4 million each in 2007, near the peak of the real estate bubble, but did not sell the rest for several years, earning less than $ 2 million for each of most from them. There was also no sale of a $ 28 million mansion.
Real estate records show that Trump built and sold half a dozen homes in Trump Los Angeles, including four for $ 3.2 million to $ 4.2 million and one for $ 7.2 million.
Its biggest sale, by far: When billionaire Phil Ruffin, a close friend and business associate of Trump, gave $ 12.5 million for a mansion to start selling the property in 2006. Ruffin sold the house nine years later, making a loss of $ 5.8 million. dollars.
The Trump Group did not respond to a request for comment. Trump has filed a lawsuit against the New York attorney general and has criticized her investigation as a partisan “witch hunt.” (James is a Democrat and is running for re-election after a brief campaign for governor of New York).
The lies spread beyond Forbes, apparently to Trump’s creditors and insurers, who received personal balance sheets from the Trump Group. According to the Attorney General of New York, Trump’s balance sheet in 2012 valued the property plots at $ 4.5 million each, although an estimate given by Trump himself for them, he had valued them at a quarter of this price.
In fact, Trump has never been able to sell a single plot of land – not even one of his largest with the best ocean views – for $ 4.5 million, according to property records. The average sale price for a Trump plot in Los Angeles was $ 1.9 million.
He also seems to have misled lenders and insurers about how many plots he had.
A note accompanying Trump’s 2012 balance sheet, which was submitted to Congress in 2019 by his former attorney Michael Cohen, states that the Trump National Golf Club Los Angeles is “currently located for 75 residences,” including “52 homes available for sale” since June 2012 – not to mention that more than half of the property plots were actually years away from being approved for sale or that 16 of them were currently used as a low-probability driveway to never be converted into dwellings.
The real numbers, according to the files: Trump had about 30 plots available for sale at the time, including two completed homes that had not been sold for years.
The 16 plots that Trump never tried to sell are the ones that have become the focus of James’s research. Trump spent years fighting for approval to build homes for them, which did not happen as the site was in danger of another landslide. In the meantime, he got permission to use the area as a golf course and putting green.
It will probably take years and millions of dollars to make the area safe enough to approve housing development. So Trump came up with a different way to cash in on his troubled piece of land: He used it to reduce the taxes he would pay.
In 2014, an agreement was reached with a local environmental protection body. Trump sponsored a contract that facilitated the conservation easement and promised to keep it as a green space instead of trying to turn it into a residence.
In return he could deduct the value of the gift – which he valued at $ 25 million – from his taxes. At the same time, he continued to use this piece of land as a driving space for customers who used it for a fee.
“Some might argue that as long as the golf course continues to operate, it will continue to hold the driveway,” his lawyer, Sherry Dillon, wrote in an internal email that came into James’ possession. “Essentially, U.S. taxpayers are paying him to do exactly what he would have done anyway.”
James, meanwhile, is aiming for a different aspect of the deal: How Trump ended up with $ 25 million for the value of his “gift”. The higher the value of the land that Trump agreed not to use, the more money he could deduct from his taxes.
According to James, the Trump Group and the people the former US president hired to assess his worth used a number of tactics to inflate his estimate, including downgrading the time and cost of doing so. plots safe and the degradation of the value that would keep the driving field.
According to court records, Trump submitted the disputed estimate to the IRS and received more than $ 5 million in federal tax benefits between 2014 and 2018, thanks to the Trump Los Angeles land conservation agreement and a similar agreement he made in a property owned by him in the state of New York.
“Trump is fighting for every dollar,” one appraiser wrote to another, according to court records.
Source: Capital
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