The walls seem to be closing in on Donald Trump. It’s not just happening in Washington, with Giuliani reportedly in discussion with the House Select Committee, and the February 16 report that the White House will turn over Trump’s visitors’ logs from January 2021.
The latest development, which potentially has huge ramifications for Trump’s ability to stay financially afloat, is the news that Mazars, his long-time New York accounting firm that kept the IRS at bay so long, just divorced him.
That means that the investigation of New York Attorney General Letitia James and Manhattan District Attorney Alvin Bragg have Trump, and possibly even his protectors, in a squeeze. White collar prosecutors know that the way to a criminal enterprise’s heart is to follow the money.
Signs of Trump’s worry are already showing. More on that in a moment.
Why did Mazars quit? If members of the firm are about to testify against Trump—or already have— they have a conflict of interest that precludes continuing to represent him.
Then there are concerns about their own liability. On February 9, the firm recanted Trump’s financial statements, saying they are not reliable.
The effect on Trump is significant. When your CPA disclaims the veracity of decades worth of financials, it’s no soft punch.
In fact, it could spell immediate trouble for his current loans. Banks’ loan documents often have default clauses for when a borrower loses its accountants’ seal of approval. Those clauses trigger an immediate bank call on the funds the borrower owes them.
That kind of cash is hard to raise.
Mazars’ announcement did add that “[w]e have not concluded that there are material discrepancies.” In other words, “While we don’t stand behind 10 years of financials, we have not concluded that our client is a crook.”
The phrase, “Damning by faint praise,” comes to mind.
Mazars separating itself from Trump follows by a year the similar move of his tax attorneys at Morgan Lewis. In January 2017, Sherry Dillon, the tax partner there vouched that Trump’s businesses would operate completely separately from the White House. It was only later that we learned that their dad, the President, would still be tapping the profits.
That was no blind trust. But it sure seemed like the visually impaired leading the ethically challenged.
A law firm’s resignation and an accounting firm’s renunciation of financial statements’ veracity make getting new bank loans tough.
The base won’t stop giving to Trump. But it takes a lot of $25 clicks to make a hundred million. And he has other expenses like criminal defense lawyers to pay. Then there are the coming lawsuits from the lenders who get stiffed.
The financial headlines were not Trump’s only bad news. A mid-February poll shows 65% of Americans don’t want Trump to run in 2024. It’s not like 2015 when nobody knew what he would do as President.
Last week, there were headlines that he still had “Top Secret” documents at Mar-a-Lago a year after he left office.
And we also recently read more about his habit of illegally destroying official government records. We even heard that he may have flushed presidential records down a toilet.
Of course he denied it. Little alarms him more than headlines that can sink his image.
We’ve seen desperation’s early signals. Late last week, he issued a statement that Hilary Clinton’s 2016 operatives should be given the death penalty for spying on his presidential campaign.
When you’re reaching back six years for headline fodder, the cupboard’s pretty bare. Invoking capital punishment for stale, unfounded claims, especially by someone who had classified government documents stashed in his home, carries an air of a person in distress.
We saw the same in Trump’s contorted explanation of Mazars’ withdrawal. He blamed “vicious intimidation” from the New York investigators that left Mazars “broken” and willing to “say anything” to make the “threat” go away.
So as investigators’ straight-jacket tightens, what might be coming? Trump could accelerate the veiled threats in his January 30 speech in Texas where he said that if the “racist” prosecutors “act illegally,” he would call for the “biggest protest we have ever had.” Might he immediately ask “the Second Amendment people” to “demonstrate” at the NY AG’s office in Albany?
Or perhaps he will call for a visit—“peaceful,” of course—to Mazar’s office. Hell hath no fury like Donald Trump scorned.
It’s too hard to guess what a pressured mind might dream up. We should just be ready for some major flailing about in and around the waters of Mar-a-Lago.