Trump’s bankers say his exaggerated net worth has had no impact on the loans

Bankers accused of defrauding Donald J. Trump testified at his civil fraud trial this week that they did not trust his embellished claims to wealth, lending support to the former president’s central defense.

New York Attorney General Letitia James sued Mr. Trump in 2022 for inflating his net worth on his financial statements to receive favorable loans from banks, particularly Deutsche Bank. Before the trial, the judge found that the statements were full of examples of fraud; the trial will determine what consequences the former president may face.

Mr. Trump has protested the premise of the case, insisting that the banks did their own due diligence and that inaccuracies in the financial documents would not have affected the overall terms of the loans. It follows, his lawyers have argued, that the alleged fraud has left no victims.

The bankers who testified this week supported that argument when asked about the lending process.

“We are expected to conduct due diligence and verify the information provided to the extent possible,” David Williams, a banker at Deutsche Bank’s asset management group, said on Tuesday. He repeatedly said the bank had done this due diligence and had taken its own analysis into account in its relationship with Mr Trump.

The attorney general has said the fact that the bankers did their own due diligence is not a defense. Her lawyers argued that to obtain the preliminary ruling, they did not have to show that the fraud had harmed the banks and that Mr. Trump’s exaggerations had been so hyperbolic that they would be “material to any user.” of the financial statements.

But Mr. Williams testified that Deutsche Bank understood that financial statements like Trump’s were based on estimates. As a result, he said, the bank conducted its own “stress test” and revised the numbers downward.

At one point in their lending relationship, Mr. Williams said, Deutsche Bank adjusted Mr. Trump’s net worth to $2.6 billion, up from the $4.9 billion he originally reported. Asked for his reaction to the “magnitude” of that adjustment, Mr Williams was optimistic.

“My response was probably quite measured, as it is not unusual or atypical for client-provided financial statements to be restated at this level or extent,” he said.

Mr. Williams’ testimony and that of his former Deutsche Bank colleague Rosemary Vrablic, who oversaw hundreds of millions of dollars in loans to Mr. Trump before resigning in 2021, will likely be key to any appeal brought by the lawyers of Mr. Trump will be filed after the trial.

Ms. Vrablic, who testified Wednesday, was introduced to Mr. Trump by his son-in-law Jared Kushner, and she worked directly with Mr. Trump’s daughter, Ivanka Trump, to originate several of the loans at issue in the case are. Mr. Trump had built a long relationship with the institution but had damaged it through financial problems and lawsuits. Ms. Vrablic helped smooth over these conflicts by arranging several major loans for Mr. Trump. Eventually she got close enough to him to attend his inauguration.

In old emails shown in court on Wednesday, Ms. Vrablic expressed great excitement about having the Trump family as clients.

“Given the circles this family moves in, we expect to be introduced to the richest people in the world,” she wrote in a 2011 email. In another email that year, she wrote about pursuing the Trumps as customers: “We are whaling.”

Ms. Vrablic testified that she served as an intermediary between Deutsche Bank and the Trumps in a relationship that became profitable for her employer. In 2014, Ms. Vrablic wrote to Ivanka Trump that the Trump family was one of the top 10 customers in her division in terms of revenue generation, and that her immediate boss was enthusiastic about growing their business.

A lawyer from the attorney general’s office, Kevin Wallace, tried to make the case that despite the bank’s rosy assessment, Deutsche Bank had made the loans only because the former president had personally guaranteed them. Ms Vrablic agreed that this was the case.

She also said, in response to Mr. Wallace, that she had not audited Mr. Trump’s financial statements when working out the terms of the loans.

Ms. Vrablic worked at Deutsche Bank for more than 15 years, but was kicked out after an internal investigation found that she had done business with a separate client without properly disclosing it.

Mr. Trump’s lawyers clearly believed that the bankers’ testimony vindicated their client. After Mr. Williams testified on Tuesday, Mr. Trump’s lawyer, Christopher Kise, asked the judge for an immediate ruling in his client’s favor, arguing that Deutsche Bank had conducted significant due diligence and was fully satisfied with the deals she made with Mr. Trump.

The judge, Arthur F. Engoron, said he would hear Mr. Kise’s motion but suggested he was not convinced.

“The mere fact that the lenders were happy does not mean that the statute was not violated,” Judge Engoron said.