Being a manager and the Trump boys

This week’s fraud trial appearances by the Trump boys, Don, Jr. and Eric, Executive VP and Executive VP of Development and Acquisitions respectively in the Trump Organization, caused me to reflect on the duties of a manager.

“As he [Eric] started his testimony, he said he “never had anything to do with the statement of financial condition,” didn’t believe he’d ever seen one, “was not personally aware” of the document and ”didn’t know anything about it, really, until this case came into fruition.”’1

In my experiences in the manufacturing world, when you got to senior-level management positions, you met with other top managers monthly, or at least quarterly, to review your business’s income statement and balance sheet. The income statement shows the income, expenses, and net profits for a period of time, usually compared against the budget that you had projected at the beginning of the year and sent off to corporate headquarters. This was essentially a set of promises for the year and a performance statement to date. Needless to say, we paid a lot of attention to the income statement. How were sales doing, any surprises in expenses, net profits? How did this compare to our budget projections, our promises to corporate headquarters?

The balance sheet showed a statement of our assets and liabilities at a moment in time. In the manufacturing world, we mostly paid attention to the inventory levels, both for raw materials that went into our products and finished goods inventory. Secondarily we would note the levels of accounts receivable (an asset) and accounts payable (a liability).

As a group, we reviewed both statements in detail. The CFO (Chief Financial Officer) led the discussion, but everyone was involved, particularly for the elements of each statement that their management responsibilities touched on. Based on these discussions, individual managers would be charged with taking specific actions to improve the results for next reporting period.

In the case of the Trump Organization, the elements of the income and balance sheet that they would pay attention to would be quite different. Since this business is all about real estate assets, present and in development, I imagine their monthly and quarterly review of the numbers would focus on different elements. For example, a manager with the title of Executive VP of Development and Acquisitions would be very tuned into the real estate market activities in the areas where the business played. It is not credible to believe that when looking at the balance sheet that an Executive VP of Development and Acquisitions would not instantaneously note that the assets column was completely bonkers with valuations two and three times what they would know to be the likely values in the market. Nor would any manager ever say, “Well, that must be correct because the accountants said so.” Accounting plays a central role in any business, for-profit or non-profit. Accounting’s job is to keep an accurate score of how the game of business is progressing or not. Accounting is also the language used to report results to stakeholders in the market and the government (for tax filings and other regulatory requirements). But, accounting does not make business decisions. That is the job of people with titles like Executive Vice President and Executive VP of Development and Acquisitions.

These responsibilities of management are not some casual affair. The fiduciary responsibilities of managers are deeply embedded in law. In the post-Enron2 era the Sarbanes–Oxley Act (2002) made all sorts of changes in corporate governance and reporting requirements.

So, when the Trump boys claim that they just went along with the recommendations of the accounting folks and their outside “experts”, this is not a credible defense. Either they are grossly incompetent managers or they intentionally turned a blind eye to this multi-year pattern of false valuations. Either way they are guilty.

AND, by the way, the same applies in spades to the President/CEO/Owner of the Trump organization, Donald J. Trump himself.




  1. May not be a credible defense but I dont doubt it.May be one of the few true things out of their mouths.they are dumb as rocks and have no corporate managerial or executive experience other than working for Daddy

    • AnnaMaria, Thanks for the comment. Since I believe that Judge Engeron has handled quite a few white-collar cases, he knows both the long traditions of fiduciary responsibility embedded in management practice and the more recent laws and regulations that make this sort of misbehavior illegal. I must note that the practices of fiduciary responsibility are most sharply focused on information for investors and lenders. It doesn’t necessarily extend to workers and their communities. In fact rarely.

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