OMG. Trump’s Expert Witness Said Financial Statements Were Like ‘Pack Of Cigarettes’ Surgeon Gen’l Warning

With defense witnesses like this, who needs prosecutors? Once again, somebody in Trump world is sinking its star defendant’s fortunes. This time it’s Eli Bartov, an accounting professor at NYU, who seeks to convince people that accounting is some dark art and not an objective science.

This is as bizarre as Donald Trump’s allegation that a disclaimer clause somehow vitiates all responsibility for figures being accurate. That’s a new concept as well and one that Trump has repeated over and over again. Here’s the cigarette crack and it did not go over well.

And now he is testifying that the information in the accompanying footnotes should be heeded; it’s like a warning from the Surgeon General on a box of cigarettes, he explains. (Comparing the Trump Org. to a box of cigarettes is probably not the analogy the defense wanted.)

— Lisa Rubin (@lawofruby) December 7, 2023

More from Bartov’s testimony and from this morning’s court activity.

Price derived from a market transaction, he says, is the only objective measure of value. Everything else is subjective, and valuation is nothing more than an opinion that can never be anything but subjective.

— Lisa Rubin (@lawofruby) December 7, 2023

When a preparer prepares a statement of financial condition, they must follow Accounting Standard Codified 274, which dictates that the value must reflect estimated current value.

— Lisa Rubin (@lawofruby) December 7, 2023

With respect to financial statements prepared under ASC 274, the standard of “fair value” otherwise applicable under accounting rules does not apply, Bartov explains.

— Lisa Rubin (@lawofruby) December 7, 2023

Hang onto your chair, here comes another whammy.

Damodaran writes, “Valuation is neither the science that some of its proponents make it out to be nor the objective search for the true value that idealists would like it to become.”

— Lisa Rubin (@lawofruby) December 7, 2023

This is another OMG moment, in my opinion. Mathematics is an absolute science, last I knew. As it applies to the marketplace, yes, if we have two cars of the same make and model, for example, but one is in better condition, we may need to modify numbers a bit to account for “fair” condition as opposed to “excellent” but in no way is a 2008 Honda Accord going to be worth $6,000 to one person and $50,000 to another. But unless I’m misunderstanding this guy, that’s what he would have you believe.

This is as much of a sophist argument as when Trump was debating the way in which square footage was measured, when he was accused of not reporting the correct square footage of his Trump Tower penthouse. It’s length and width of the rooms, Donald, that’s how it’s done. And unless you’ve got walls that are moving interdimensionally and that affects the measurements, it’s always going to be length and width.

Damodaran further explains that even if the models used for valuation are quantitative, the inputs “leave plenty of room for subjective judgments” and is “colored by the bias that we bring.”

— Lisa Rubin (@lawofruby) December 7, 2023

In Wonderland the words mean what you want them to mean and in Trump world, such things as measurements, valuations, are whatever number you want them to be.

And then here’s where the Surgeon General’s warning on the cigarette pack comment took place and here’s what was said after it.

And indeed, he testifies that if one of his students were to tell him the disclaimer were designed for the perspective of the preparer, he would say that’s “absurd.”

— Lisa Rubin (@lawofruby) December 7, 2023

Then it degenerated into a shouting match.

If you’re looking for a definition of the psychological term “gaslight” I can refer you to no better source than the transcript of this court trial involving the Trump Organization. Wow.