The Trump Organisation declined to comment.
The revelations appeared in the new court documents filed by James' office, which is seeking to question Trump and two of his adult children under oath as part of her investigation.
Trump's lawyers had asked a judge to prohibit the questioning, and in response, James' office argued in court papers last month that the company had engaged in "fraudulent or misleading" practices.
Her filing Monday — which marked her latest attempt to press ahead with questioning Trump as well as Donald Trump Jr. and Ivanka Trump — included a copy of the Mazars letter, signed by the accounting firm's general counsel.
The brief letter could bolster James' investigation, which has focused partly on the statements and whether they overvalued former President Trump's various hotels, golf clubs and other properties.
Mazars said it concluded that the statements were no longer reliable based in part on the attorney general's earlier filings, its own investigations and information the accountants received from "internal and external sources." The letter added that Mazars "performed its work in accordance with professional standards."
Because James' investigation is civil, she cannot file criminal charges. But she could sue Trump and his company to seek financial penalties, and could try to shut down certain aspects of Trump's business in New York.
A spokesperson for James declined to comment beyond the filing.
In a statement, the accounting firm said that "under our standards of professional ethics, we cannot comment on any client services or relationships."
It is unclear whether Mazars' break with the Trumps will have any bearing on the DA's criminal investigation into Trump. The firm has been cooperating with that investigation, and Trump's main accountant at Mazars has already testified before a grand jury hearing evidence about Trump.
Alvin Bragg, a spokesperson for the DA, declined to comment.
Both investigations still face obstacles. Although the statements may contain exaggerated estimates of Trump's property values, those same documents also include a number of disclaimers, including acknowledgements that Trump's accountants had neither audited nor authenticated his claims.
Another disclaimer notes that Mazars did "not express an opinion or provide any assurance about" the statements, a common caveat in statements of financial condition. The firm also disclosed that, while compiling the information for Trump, it had "become aware of departures from accounting principles generally accepted in the United States of America."
Trump's lawyers would probably argue that his lenders, sophisticated financial institutions such as Deutsche Bank, would not have relied on the statements when providing him loans.
Still, in her court filing last month, James highlighted potential misleading statements about the value of at least six Trump properties, including golf clubs in Westchester County, New York, and Scotland, as well as Trump's own penthouse home in Trump Tower.
According to that filing, Trump claimed that the triplex apartment spanned 30,000 square feet, giving it an eye-popping value of US$327 million. In truth, the apartment was 10,996 square feet.
Trump's long-serving chief financial officer, Allen Weisselberg, later acknowledged to investigators that the company had overvalued the apartment by "give or take" US$200 million.
(Separately, in the summer, the DA's office indicted Weisselberg and the Trump Organization, accusing them of orchestrating a 15-year scheme to provide certain executives with off-the-books luxury perks such as free cars and apartments. Weisselberg and the company have pleaded not guilty, and the case is tentatively scheduled to go to trial late this summer.)
Both the civil and criminal investigations have examined the underlying information that the Trump Organisation provided Mazars as the accountants compiled the annual financial statements.
Often, Trump's company would estimate the value of its properties based on recent selling prices of comparable buildings, a common real estate valuation method. Authorities have zeroed in on whether the company cherry-picked favourable information to essentially mislead Mazars into presenting an overly rosy picture of Trump's finances.
James has argued that the Trump Organisation misstated the value of the properties to lenders, insurers and the IRS. Many of the statements, she argued in the filing last month, were "generally inflated as part of a pattern to suggest that Trump's net worth was higher than it otherwise would have appeared."
This article originally appeared in The New York Times.
Written by: Ben Protess and William K. Rashbaum
Photographs by: John Taggart
© 2022 THE NEW YORK TIMES
