- The Washington Times - Thursday, January 17, 2002

ASSOCIATED PRESS
Donald Trump's hotel and casino company has been accused by federal securities regulators of making misleading statements in a news release about its earnings in 1999, the government announced yesterday.
The Securities and Exchange Commission said it was its first enforcement case involving the use of a type of financial reporting that can be used to downplay negative results. The SEC, which oversees corporate-accounting practices, recently cautioned companies on their use of "pro forma" financial results, which are a set of hypothetical numbers supposed to focus on the profits and losses of ongoing operations.
Accounting and financial reporting have been brought into the spotlight by the stunning collapse of energy-trading giant Enron Corp. The SEC is investigating Enron and auditor Arthur Andersen LLP's role in Enron's complex accounting, including questionable partnerships that kept about $500 million in debt off the energy company's books. Andersen said Tuesday it is firing a senior auditor who organized a "rushed disposal" of Enron documents last fall after the SEC had requested information about the failing energy company.
In an administrative proceeding, Mr. Trump's company agreed to the SEC's order to refrain from future violations. The company neither admitted nor denied the agency's claims.
No fine was imposed.
The SEC said that Trump Hotels & Casino Resorts Inc., through the conduct of its chief executive officer, chief financial officer and treasurer, violated anti-fraud laws "by knowingly or recklessly issuing a materially misleading press release."
Donald Trump is now the company's chairman and chief executive officer but was only chairman at the time of the possible violations. The CEO was Nicholas L. Ribis. Francis X. McCarthy Jr. was and is now chief financial officer. Mr. Ribis has since left the company and runs competitor Resorts Atlantic City casino.
The company said Mr. Trump "had no knowledge" of misconduct.
"I have great respect for" the SEC and its chairman, Harvey Pitt, Mr. Trump said in a statement issued by the company. "I am very happy that this all worked out."
The company said it promptly corrected the misstatements and put procedures in place to prevent any reoccurrence.
Trump Hotels operates three Atlantic City, N.J., casinos: Trump Taj Mahal Casino Resort, Trump Plaza Hotel & Casino and Trump Marina Hotel Casino.
The SEC said the company, in a press release issued Oct. 25, 1999, cited "pro forma" figures to tout supposedly positive results for the third quarter but failed to disclose that the results were mainly due to an unusual one-time gain. The undisclosed gain of $17.2 million resulted from the termination in September of the All Star Cafe's lease of restaurant space at the Trump Taj Mahal, according to the SEC.
"In this case, the method of presenting the 'pro forma' numbers and the positive spin the company put on them were materially misleading," SEC Enforcement Director Stephen M. Cutler said in a statement.

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