Expert: Trump's use of Forbes list instead of financial docs may be used to "show intent to deceive"

Former President Donald Trump relied on a Forbes article to “prove” his net worth when placing a bid to buy the NFL's Buffalo Bills – a decade-old business move that came under scrutiny during his New York civil fraud trial on Tuesday.

K. Don Cornwell of Morgan Stanley testified in court that Trump distributed printouts from Forbes regarding the highest-paid entertainers to affirm his financial standing to Buffalo Bills executives after claiming a net worth of over $8 billion in an offer letter. The former president refused to disclose financial statements to bankers involved in his $1 billion bid for the football team in 2014.

The lawsuit brought by New York Attorney General Letitia James accuses Trump of committing massive fraud in New York for years by repeatedly inflating Trump’s wealth by hundreds of millions of dollars to get better terms for loans and insurance policies while building his real estate empire. Cornwell’s testimony offered a glimpse into how the former president has crafted a perception of wealth through his public image.

It goes to show that Trump would go to great lengths to prove his net worth, even if it wasn't an official financial statement, Laurie Levenson, a law professor at Loyola Marymount University, told Salon.

“In fact, it showed that he steered away from personal financial statements and someone has to ask, ‘why?’” Levenson said. “The AG will argue it is because he knew that he had created a reputation about his worth that might not be supported by the actual numbers. So, yes, that might be used to show intent to deceive people by using whatever sources he could to do his transactions.”

Out of the 86 parties that were contacted to potentially bid on the Bills, Trump was one of six who made it to a final bid, according to a Morgan Stanley document shown at trial, ABC News reported. But, when Morgan Stanley attempted a close review of Trump's bid, the former president declined to provide his financial statements. 

“We feel it is premature to sign the consent release forms until such time as we know that Mr. Trump is the final bidder," then-Trump attorney Michael Cohen said in an email shown in court Tuesday.

Instead, Trump, who was the star of NBC’s "The Apprentice" at the time, handed out a Forbes magazine list to support his bid during a management presentation with Bills' leadership, according to Cornwell. Ultimately, Trump lost his bid for the football team to billionaire Terry Pegula, who outbid him by $400 million.

While Cornwell’s testimony may not rise to the level of admissible evidence in terms of demonstrating fraud, it does, however, corroborate the prosecution's position of Trump's motive to inflate his assets, Tre Lovell, entertainment and libel law attorney, told Salon.

“Sending over an article in a magazine would never replace the pre-requisite due diligence required by the banks to review personal financial statements, and thus it would not be reasonable to rely upon the article in making such a determination," Lovel said.

It's “pretty clear” that Trump wanted people to think he was richer than he really was when applying for loans and making proposals for deals so it's not surprising that he would also use articles that appear to verify his wealth, Gregory Germain, Syracuse University law professor, told Salon.

“What the AG needs to present is evidence that someone believed his misstatements, relied on them, was harmed because of their reliance on his misstatements, and that he was unjustly enriched as a result,” Germain said. “Without evidence of reliance, causation and harm, there is no connection between the false information and his alleged unjust enrichment.”

In the cross-examination, Cornwell acknowledged that Trump's prior lawsuit against the NFL and his involvement with casinos stood in the way of his chances of success. In an email he wrote to colleagues in April 2014, then-Morgan Stanley executive said Trump had “little chance” of being approved by the NFL, but his “strong show of support” wouldn’t “hurt” the process.

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Even though Cornwell’s testimony may not be “directly relevant” with respect to the submissions to the banks for loans,” it does support the “prosecution's contention” of Trump's motive to inflate assets, Lovel explained. 

Regarding the fraud allegations, the applications submitted to the bank regarding asset valuations and the custom and practice in the real estate industry with respect to “puffing up” financials are of greater relevance, he added.

But Germain said that developers and promoters “regularly puff their net worth,” and “puffing” does not show fraud.  “Fraud requires reliance, causation and damages, and that evidence is entirely missing so far,” he added.

While Trump's ongoing civil fraud lawsuit unfolds in New York, state courts in Colorado and Minnesota are hearing oral arguments this week from individuals seeking to bar Trump from running for the White House again under the U.S. Constitution’s “insurrection” clause – becoming the only case with the potential to directly shape the 2024 election.