Barrack later pulled out, and Trump obtained financing from Deutsche Bank AG, a frequent lender to the former president. New York Attorney General Letitia James claims the $170 million loan Trump later got was on much more favorable terms than Colony had offered. James alleged Trump defrauded the bank by providing statements of financial condition that were inflated.
While the Colony revelation isn’t a central element of the fraud lawsuit the attorney general filed last year, Barrack’s involvement offered a rare glimpse into Trump’s financing options in the years before he was elected president. The state’s fraud suit doesn’t allege Trump misled Colony, and the former president’s lawyer argued in court the documents weren’t relevant to the case.
But Louis Solomon, an attorney for James, told the judge that the documents showed what Colony thought Trump should pay to finance the Old Post Office project: 5% to 6% above the London interbank offered rate. With the help of an inflated statement of financial condition, Trump was able to get Deutsche Bank to offer 4% above Libor, according to the state.
The Trump Organization “falsely induced Deutsche Bank to make loans that they should not have made at those rates,” which allowed Trump to win the government bid for the project, Solomon said.
The Old Post Office is just one of several Trump properties targeted in the state’s lawsuit against him and his family real estate business. He’s accused of inflating his net worth by as much as $3.6 billion a year to get better terms on loans and insurance, reaping $250 million in “illegal profit” from 2011 to 2021.
The former president has denied wrongdoing and says his net worth was far higher than the state claims.
‘Best Developer’
Barrack confirmed in an interview Wednesday that he and Colony had originally agreed to be a private equity partner on the Old Post Office project, but pulled out long before the US awarded Trump the contract in 2012.
Barrack said he had done business with Trump successfully since 1986 and never asked him for statements of financial condition. After the financial crisis, Trump had a harder time borrowing money and Colony agreed to finance the Old Post Office project. As it moved forward, Trump found cheaper sources of capital and Colony couldn’t compete with those rates, so it decided to walk away, Barrack said.
“My experience with him is that I never asked him for a financial statement for the three or four projects we did together,” Barrack said. “They were perfect. We never had any disagreements, never a hiccup in financing or terms. I always viewed him as the best developer in New York City.”
‘Disastrous’
Barrack worked with Trump for decades, campaigned for him in 2016 and served as his inaugural committee chair. But Trump’s presidency proved “disastrous” for him and his business, he testified at his trial last year on charges that he acted as an agent of the United Arab Emirates. Barrack was found not guilty.
Shares of Colony collapsed during the Trump administration despite a bull market in stocks. Barrack stepped down, first as chief executive officer in 2020 and then as executive chairman in 2021. The company was renamed DigitalBridge Group Inc.
Barrack said Trump should be credited for his successful conversion of the historic Old Post Office building in 2016. The former president sold it in May 2022 for $375 million to CGI Merchant Group.
But James alleges more than $100 million in net profit on the sale of the Old Post Office was due to Trump getting a loan he obtained by using his false and misleading statements.
Ivanka Trump was questioned Wednesday about her role in the redevelopment of the historic federal building. She was the last witness in the case presented by the state at the trial, which began more than a month ago. Trump’s defense team will begin presenting its own witnesses Monday.
The case is New York v. Trump, 452564/2022, New York State Supreme Court (Manhattan).