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property – in reality, the club generated annual revenues of less than $25
million and should have been valued at closer to $75 million; and
iii. For his golf course in Aberdeen, Scotland, the valuation assumed 2,500
homes could be developed when the Trump Organization had obtained
zoning approval to develop less than 1,500 cottages and apartments, many
of which were expressly identified as being only for short-term rental. The
$267 million value attributed to those 2,500 homes accounted for more than
80% of the total $327 million valuation for the Aberdeen property on the
2014 Statement.
c. Failing to use basic rules of valuation to ensure reliable and accurate results—
such as discounting revenue or cash flow that might be obtained from a
speculative development far into the future to its present value. For example, a
series of high-value properties estimated the profits from developing and selling
homes without accounting for the years it would take to plan, build, and sell the
homes and instead operated under the impossible and thus false premise that the
homes could be planned, built, and sold instantaneously.
d. Using an inappropriate valuation method for a given category of assets. For
example, for the period 2013 to 2020, Mr. Trump’s golf course in Jupiter, Florida
was valued using a fixed-asset approach even though that was not an acceptable
method for valuing an operating golf course. And the bulk of the value in that
fixed-asset approach was based on the use of an inflated purchase price from the
purported assumption of “refundable” membership liabilities. Mr. Trump
claimed to have paid $46 million for the club, consisting of $5 million in cash he
actually paid and $41 million in assumed membership liabilities. In the
Statement Mr. Trump did not disclose the inclusion of those inflated liabilities in
the price of the club and in fact took the opposite position, stating that his
potential liability for those membership deposits was zero.
e. Increasing the value of golf clubs to incorporate a “brand premium” despite
expressly advising in the Statements that brand value was not included in the
figures and despite GAAP rules prohibiting inclusion of internally-generated
intangible brand premiums. For example, in the 2013 Statement, the value of Mr.
Trump’s golf course in Jupiter, Florida was further inflated by fraudulently
adding 30% for the Trump “brand.” Combining the inflation from using the
fixed-asset approach with the 30% brand premium, Mr. Trump claimed that a
club he purchased for $5 million in 2012 was worth more than $62 million in
2013. The 2013 Statement included the same fraudulent 30% brand premium for
six other golf clubs.
f. Using inflated net operating income (“NOI”) figures and arbitrarily low
capitalization rates to calculate valuations using the income capitalization
method, where value is derived by dividing NOI by a capitalization rate. For
example, in some instances the NOI for Trump Tower relied on favorable
numbers by mixing time periods, using future income that exceeded the Trump
CAUTION: THIS DOCUMENT HAS NOT YET BEEN REVIEWED BY THE COUNTY CLERK. (See below.) INDEX NO. UNASSIGNED
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 09/21/2022
This is a copy of a pleading filed electronically pursuant to New York State court rules (22 NYCRR §202.5-b(d)(3)(i))
which, at the time of its printout from the court system's electronic website, had not yet been reviewed and
approved by the County Clerk. Because court rules (22 NYCRR §202.5[d]) authorize the County Clerk to reject
filings for various reasons, readers should be aware that documents bearing this legend may not have been
accepted for filing by the County Clerk.
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