Donald Trump's Ex-Accounting Firm 'Valuable Source' to Fraud Investigations—Legal Experts

Donald Trump's legal woes have been further exacerbated after his longtime accounting firm cut ties with his company and may even prove to be a "valuable source" to the joint investigations into his business, legal experts have warned.

On Monday, Mazars announced that it can no longer work for the Trump Organization as a decade's worth of financial statements cannot be "relied upon."

In a February 9 letter to Trump Organization attorney Alan Garten, the company also included a Bates number reading 00525838—a legal term which suggests Mazars has handed over at least 525,838 pages of material to prosecutors.

The statements of financial condition from June 30, 2011 to June 30, 2020, which Mazars has essentially withdrawn, are a key part of New York Attorney General Letitia James' investigation into allegations Trump inflated the value of some New York properties to obtain better bank loans and other financial benefits.

Speaking to Newsweek, Barbara McQuade, a University of Michigan law professor and former U.S attorney for the Eastern District of Michigan, described the news that Mazars has cut ties with the Trump Organization as a "very significant" development to the investigation.

"For Mazars to walk away from its prior opinions suggests that it found something about them that it thought was no longer valid," McQuade said.

"It may be, for example, that it relied on representations made by the Trump Organization that it has now learned was false. The phrase 'garbage in, garbage out' comes to mind."

McQuade added the apparent "split" between Mazars and the Trump's company could also be taken advantage of by the Manhattan District Attorney Alvin Bragg's office, who are running a parallel investigation of alleged felony tax fraud by the Trump Organization and its longtime CFO Allen Weisselberg, who denies the charges against him.

"Mazars could be a valuable source of information to criminal investigators at the Manhattan DA's office," McQuade said. "They are also looking into financial dealings at the Trump organization, and it would appear that Mazars has information about irregularities in the numbers."

Neama Rahmani, a former federal prosecutor, also said the Mazars announcement is significant as it seems to suggest the Trump Organization "lied" to the accounting firm and that Mazars is cooperating with the New York Attorney General's Office as there are no more conflicts of interests or client privileges preventing it from doing so.

"It has already produced hundreds of thousands of pages of documents in response to government subpoenas or search warrants, which it is required to do by law because there is no applicable privilege," Rahmani told Newsweek.

Speaking to CNN on Monday, George Conway, a lawyer and vocal Trump critic, said having 10 years of financial statements pulled by his accountants is "worse for him than getting impeached twice."

He added: "This is about as calamitous a thing that could happen to a business that you could imagine, other than getting indicted or going bankrupt."

Mazars noted in its letter to the Trump Organization that the firm had not concluded "as a whole" that the financial statements "contain material discrepancies."

The Trump Organization said in a statement Monday that the company was "disappointed" that Mazars has chosen to part ways while reiterating it did not confirm that there were discrepancies in the financial statements.

"This confirmation effectively renders the investigations by the DA and AG moot," the Trump Organization said.

In a lengthy statement attacking James and Bragg on Tuesday, Trump claimed Mazars only left his organization because of "vicious intimidation tactics" from the New York prosecutors.

"Mazars, who were scared beyond belief, in conversations with us made it clear that it was willing to do or say anything to stop the constant threat which has gone against it for years," Trump said. "It was 'broken' and just wanted it all to stop. I wish it had the courage to fight it out, but it didn't, and who can blame it."