Former President Donald Trump and two of his sons have criticized a New York judge for suggesting his Mar-a-Lago Palm Beach resort is worth between $18–28 million.
Judge Arthur Engoron implied the market value of the property in a Sept. 26 summary ruling that found President Trump’s business empire liable for fraudulently inflating property values in loan paperwork. He revoked the Trump Organization’s business licenses in the state and ordered it dissolved.
President Trump’s lawyers argued that the banks providing the loans didn’t care about the valuations produced by the company because they do their own. All the loans have or are being properly repaid with interest, they noted. The judge ruled, however, that under New York law the state can sue for inflated property values even if nobody was harmed by them.
There are problems with using either of the valuations.
Meanwhile, the SFCs include a disclaimer that the asset values are “determined by Mr. Trump in conjunction with his associates and, in some instances, outside professionals” and “the estimates presented herein are not necessarily indicative of the amount that could be realized upon the disposition of the assets or payment of the related liabilities.”
President Trump referred to the disclaimer as a “worthless clause,” saying it indicated to him that the documents were more an enumeration of his assets, rather than their actual market valuation.
The judge rejected that reasoning, arguing the disclaimer is itself “worthless” as a defense because it “does not use the words ‘worthless’ or ‘useless’ or ‘ignore’ or ‘disregard’ or any similar words.”
The actual market value of Mar-a-Lago is unclear.
President Trump’s lawyers presented a real estate expert, Lawrence Moens, “who they purport is ‘the most accomplished and knowledgeable ultra-high net worth real estate broker in Palm Beach, Florida,’” the judge said.
Valuing Mar-a-Lago at $425 million–$612 million was “appropriate and indeed conservative,” Mr. Moens told the court. The property is currently worth $1.51 billion, he opined.
The judge rejected the opinion as “speculative” and made “without relying on any objective evidence.”
The property isn't currently for sale and the Trump family has indicated it doesn't plan to ever sell it.
The 62,500-square-foot mansion built in 1927 in the style of Mediterranean palaces with splendid Art Deco interiors sits on 20 acres of pampered property spanning the width of Palm Beach.
President Trump put the resort under a conservation easement in 2002 that prohibits him from further developing it or changing its use from a social club. In exchange, he pays lower taxes on it.
President Trump’s personal valuations of the property didn’t reflect these restrictions the judge argued, without explaining what the property should have been properly valued at, save for the county assessor's reference.
While restricted use may deter some buyers, Mr. Moens told the court that, if for sale, he could “in short order … produce a ready, willing and able buyer who would have interest in securing the property for their personal use as a residence, or even, their own club.”
“I could dream up anyone from Elon Musk to Bill Gates and everyone in between. Kings, emperors, heads of state,” he said.
Moreover, President Trump’s lawyers noted that there are legal avenues for breaking through the restrictions.
The judge picked on Mr. Moens’s word choice, saying that “obviously, this Court cannot consider an ‘expert affidavit’ that is based on unexplained and unsubstantiated ‘dreams.’”
He pointed to real estate listings from the area showing homes ranging 5,000–11,500 square feet and farther from the beach than Mar-a-Lago listed at prices up to $40 million.
The civil suit was brought by New York Attorney General Letitia James targeting the former president as well as his sons Mr. Eric Trump and Mr. Donald Trump Jr.
The judge so far ruled on one part of the suit dealing with allegations of overvalued properties. Other parts of the suit are scheduled for a non-jury trial starting on Oct. 2.
Ms. James is asking for penalties of $250 million, as well as removing the three defendants from their posts in the company and barring them from holding executive posts in New York State.
President Trump as well as his sons denounced the case as politically motivated.
"We have run an exceptional company—never missing a loan payment, making banks hundreds of millions of dollars, developing some of the most iconic assets in the world. Yet today, the persecution of our family continues," he wrote.
President Trump is also facing several other civil suits as well as four criminal indictments in New York, Florida, the District of Columbia, and Georgia.