Donald Trump, his companies and some executives have been found to have fraudulently inflated the valuations of non-existent Scottish golf club properties by up to £200m as part of a scheme to dupe banks and others and borrow more at lower rates, it can be revealed.
It comes as it emerged the Aberdeen club's operating company has run at a deficit since it opened in 2012, and has amassed total losses in the ensuing 11 years of £13.025m.
A US judge has found that it had been wrongly stated that 2500 homes had already been built as part of a project associated with the loss-making Trump International Golf Club in Aberdeen. But there was planning permission to build only 500 and no development had taken place.
According to a judge's civil fraud case findings of fact at one point the Trump organisation had valued the 2500-home development at £83,164 when an appraisal it received placed it at less than half that. That put the value of the undeveloped Aberdeen land at £207.9m.
The Trump Organisation had been accused by the New York Attorney General Letitia James of the inflated prices by producing false financial statements that inflated the former president's net worth.
The Attorney General said this was "particularly egregious in light of Mr Trump's decision... to indefinitely postpone all development plans" after the Scottish government approved nearby offshore wind farm plans.
Mr Trump was last week ordered to pay nearly $355m (£281m) to New York state for lying about the values of his properties as part of "material fraudulent misstatements". The judge said those included those relating to the housing development associated with the Trump International Golf Club in Aberdeen.
Mr Trump opened his first golf resort on the Menie estate in 2012 - amid opposition over potential environmental damage - and later tried to stop a wind farm being built off the coast, arguing it would spoil the view.
The Aberdeen case formed part of wider legal action which claims the company lied "by billions" through submitting false financial statements to banks and insurance companies to obtain better rates on loans and insurance coverage.
The New York real estate tycoon escaped having some of his companies dissolved, which could have meant bankruptcy at the end of a civil investigation by the office of the New York Attorney General.
Judge Arthur Engoron also banned him from serving as a company director or taking out loans from banks in the state for three years.
Mr Trump, who is campaigning for a second non-consecutive second presidential term in the 2024 election has said he would appeal and said the ruling was a "political witch hunt".
According to court documents, seen by the Herald the Attorney General that pursued the case, argued that Donald Trump, associated companies and some executives engaged in "numerous acts of fraud and misrepresentation" in official financial statements covering at least the years 2011 through to 2021.
In a statement of fact seen by the Herald, the judge said that in valuing the non-golf course property, initial permission had been to develop only 500 homes as year-round private residences.
But the financial statements from 2014 to 2018 not only valued the area based on permission existing to develop 2500 of the properties - five times as many - "but also as if those residences had already been built".
It also states that despite receiving a July 2017 appraisal by commercial property consultants Ryden LLP valuing the development profit of private homes at Aberdeen at a maximum of £33,296 per home, from 2017 to 2018 the Trump Organization valued them at £83,164 per home. That put the total valuation at £207.9m.
In 2019, the Trump Organization began valuing each home at £106,969, more than triple the original value, while the supporting information said the Trump Organization had permission to build 2035 private residences. That put the total valuation at £217.63m.
According to the findings, by 2020 and 2021, the Trump Organization the valuations had dipped to £68,781 per home while it said the permission was to build 1200 private residences. That brought the total valuation down to £82.537m.
According to the judge's findings, Mr Trump was questioned about Aberdeen, and whether he was aware that financial statements for 2014 to 2018 valued the property as if the Trump Organization could build 2500 year-round private residences, when in fact, they had received permission to build only 500,
He said “I don’t know, but it could very well be. It’s sort of like a painting. You could do pretty much what you want to do. The land is there. You could do what you want to do. So you could do either one of them, actually.”.
The judge's findings say that he was confronted with evidence that, in 2014, the Trump Organization had submitted a statement to UK regulators stating that it did not intend to develop the Aberdeen property any further because of Donald Trump’s opposition to wind farms.
Mr Trump said in response to the court: “At some point that will be developed into a magnificent job. I just don’t want to do it now.”
The judge said: "Notwithstanding the foregoing, the 2014-2018 [financial statements] valued Aberdeen not only as if Donald Trump had permission to develop 2500 private year-round residences, which he did not, but also as if those residences had already been built, and the [financial statements] and supporting data failed to account for any development costs associated with making the hypothetical residences a reality."
Mr Trump's empire was spared from one of the worst potential outcomes - the cancellation of its business licences, known as the corporate death penalty.
Instead, the judge ordered two tiers of oversight - an independent monitor to report to the court for up to three years and a separate independent director of compliance to be installed.
The judge is also requiring Mr Trump pay interest on the profits he made by committing the fraud (known as 'prejudgment interest'), which could bring the final amount penalty total to around $450m (£354m),
Along with what Mr Trump has been ordered to pay, his two sons and co-defendants, Donald Jr and Eric, must each pay $4m ( (£3.1m) They are barred for two years from doing business in New York.
Another co-defendant, Allen Weisselberg, the former chief financial officer of the Trump Organization, has been ordered to pay $1m (£793,600).
Mr Trump, his company, and its affiliates cannot apply for loans in New York for three years.
"There is overwhelming evidence that each of these defendants made or participated in making a false statement in the business records of an enterprise, with the intent to defraud, the judge stated.
He said Mr Trump was "aware of the key facts underpinning "various material fraudulent misstatements" in the [financial statements] and then listed a series of matters including it was represented that he had permission for 2500 residences in Aberdeen when there was permission to build only 500.
Video: Trump International Golf Links, Scotland 2023 TV Commercial
The stiff penalty was a victory for Ms James, a Democrat who sued Mr Trump over what she said was not just harmless bragging but years of deceptive practices as he built the multinational collection of skyscrapers, golf courses and other properties that catapulted him to wealth, fame and the White House.
She described it as an "inflated home sale" and that the development should have been valued using an income-based approach rather than a fixed-assets approach - described as basing the value on Mr Trump's capital contributions and adjusting by a "multiplier".
The Attorney General said the Trump Organisation confirmed in a public, audited financial statement shortly before finalizing Mr. Trump’s 2014 Statement that it did not intend any residential development on the property for the foreseeable future in the wake of his opposition to a proposed wind farm in Aberdeen Bay.
In testimony to the Scottish Government in April 2012 Mr Trump said that he “cannot proceed with [the development] if the hotel is going to be looking at industrial turbines, and no one here would do so if they were in my position.”
The Trump Organization also challenged the Scottish Government’s approval of the wind farm through litigation and lost one challenge in February, 2014.
The billionaire property developer had alleged that Alex Salmond, then Scotland's first minister, had secretly interfered in the decision to approve the 11-turbine European offshore wind deployment centre site (EOWDC) in Aberdeen Bay – a claim rejected in court by Lord Doherty.
The Attorney General had argued that up to 2018 when Mr Trump had "apparently reversed" his position and applied for a reduced development, neither Mr Trump or his company factored into the valuation the indefinite postponement of any development plans.
Mr Engoron concluded that Mr Trump and his co-defendants “failed to accept responsibility” for their actions and that expert witnesses who testified for the defence “simply denied reality”.
The judge called the civil fraud at the heart of the trial a “venial sin, not a mortal sin”.
“They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff.
“Yet, defendants are incapable of admitting the error of their ways,” said Mr Engoron.
He said their “complete lack of contrition and remorse borders on pathological.”
“The frauds found here leap off the page and shock the conscience,” the judge added.
Mr Trump’s lawyer Alina Habba called the verdict “manifest injustice” and “the culmination of a multi-year, politically fuelled witch hunt”.
Judge Arthur Engoron issued his decision after a two-and-a-half-month trial, which saw the Republican presidential front-runner bristling under oath that he was the victim of a rigged legal system.
Mr Trump called the verdict a “complete and total sham”.
He wrote on his Truth Social platform that the Attorney General “has been obsessed with ‘Getting Trump’ for years” and that Mr Engoron’s decision was “an illegal, un-American judgment against me, my family, and my tremendous business”.
During his campaigning, he described the decision as “a lawless and unconstitutional atrocity that sets fire to our laws like no one has ever seen in this country before”.
He called the judge in the case, Arthur Engoron, “crooked”, and Ms James, who brought the case, a “lunatic”.
Ms James said “justice has been served” and called the ruling “a tremendous victory for this state, this nation, and for everyone who believes that we all must play by the same rules — even former presidents”.
“Now, Donald Trump is finally facing accountability for his lying, cheating and staggering fraud. Because no matter how big, rich or powerful you think you are, no one is above the law,” Ms James said.
Mr Trump’s lawyers had said even before the verdict that they would appeal.
The judge decided on the case because juries are not allowed in this type of lawsuit and neither Ms James’ office nor Mr Trump’s lawyers asked for one.
The suit is one of many legal headaches for Mr Trump as he campaigns for a return to the White House.
He has been indicted four times in the last year — accused in Georgia and Washington DC of plotting to overturn his 2020 election loss to Democrat Joe Biden, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid to porn actor Stormy Daniels on his behalf.
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