Self-made sham
by Tom Sullivan
“Trump crime family” appears nowhere in the 13,000-word report from the New York Times exposing Donald Trump’s self-made billionaire myth. That message nonetheless runs throughout the massive account of how Fred Trump transferred wealth from his New York real estate empire to his children.
“All of this smells like a crime,” says former chief of investigations for the Manhattan district attorney’s office, Adam S. Kaufmann, about just one method the Trump family used to transfer Fred’s wealth to his children while dodging federal taxes.
The Times bases its findings not only on interviews with Fred Trump’s former employees and advisers, but on 100,000 pages of public filings and tens of thousands of pages of confidential financial records including, the Times reports, “bank statements, financial audits, accounting ledgers, cash disbursement reports, invoices and canceled checks.” So confident is the Times in its reporting that it does not hesitate to use “outright fraud” to describe some of the tax schemes now-President Trump engaged in as part of the family business.
Donald Trump’s real business, Jonathan Chait observes, is not building and investing, but inheriting. The Times documented 295 revenue streams by which Fred Trump transferred his wealth to Donald and his other children over decades.
As for Donald Trump’s carefully crafted image as the consummate deal-maker, self-promotion is the one thing he is good at. The rest is smoke and mirrors. The Times admits its own reporting in the mid-1970s contributed to Trump’s mythmaking. The documents reporters David Barstow, Susanne Craig, and Russ Buettner assembled confirm what Trump claimed as his own successes belonged to his father:
In the chauffeured Cadillac, Donald Trump took The Times’s reporter on a tour of what he called his “jobs.” He told her about the Manhattan hotel he planned to convert into a Grand Hyatt (his father guaranteed the construction loan), and the Hudson River railroad yards he planned to develop (the rights were purchased by his father’s company). He showed her “our philanthropic endeavor,” the high-rise for the elderly in East Orange (bankrolled by his father), and an apartment complex on Staten Island (owned by his father), and their “flagship,” Trump Village, in Brooklyn (owned by his father), and finally Beach Haven Apartments (owned by his father). Even the Cadillac was leased by his father.
“So far,” he boasted, “I’ve never made a bad deal.”
Donald Trump portrays himself as self-made, claiming he turned a “small” $1 million loan from his father (“I had to pay him back with interest!”) into an empire worth billions:
But The Times’s investigation, based on a vast trove of confidential tax returns and financial records, reveals that Mr. Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day.
Much of this money came to Mr. Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Mr. Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings.
The family spent much of the 1980s and 1990s finding ways to launder handouts from Fred as legitimate business expenses that went to his children instead of as outright gifts that would exposed the transfers to a 55 percent estate tax. Lax Internal Revenue Service enforcement of gift tax rules made it easy.
Tax experts the Times consulted believe the Trumps did more than exploit tax loopholes, but engaged in a pattern of deception and obfuscation.
Fred repeatedly propped up Donald’s failing, high-profile ventures with loans totaling $60.7 million, loans Donald never repaid.
Formally forgiving the loans would have incurred tax liability for the future president. In one case, Fred traded the some of the outstanding loans as part of a $15.5 million investment in a 7.5 percent share in Trump Palace, one of Donald’s high-rise condominium projects. Four years later, he sold the shares for $10,000. Records suggest Fred sold the shares back to his son (and no doubt wrote off the gift as a loss on his taxes).
In case after documented case, the Times reports, “father and son were of one mind about rules and regulations, viewing them as annoyances to be finessed or, when necessary, ignored.”
The report based on records of Fred Trump’s business provide little insight Donald’s and his children’s dealings. The Times notes that most of the questionable, if not illegal, tax avoidance schemes cannot be prosecuted. The statute of limitations has run out on criminal prosecution. The family could still face civil fines for tax fraud, the Times notes. The New York state tax department states it is “vigorously pursuing all appropriate avenues of investigation.”
Daniel Goldman, a former assistant U.S. Attorney for the Southern District of New York, told MSNBC Trump and his siblings could still face millions of dollars in back taxes:
“None of this can be charged criminally because it’s statute of limitations, but certainly the IRS could go back and look at it from a civil perspective,” Goldman said.
Trump’s sister, federal Judge Maryanne Trump Barry, was heavily implicated in the Times report, and Goldman said she could face punishment for her alleged role in fraud.
White House press secretary Sarah Huckabee Sanders criticized the Times report as a “misleading attack against the Trump family.” She repeated talking points about the successes of the Trump presidency, complaining the “Times can rarely find anything positive about the President and his tremendous record of success to report.”
The Times’ epic reporting reveal Trump’s image as a real estate tycoon as the sham we already suspected it was. Worse, he and his family have successfully evaded the law for decades and cheated the government of hundreds of millions in taxes if the Times analysis is correct. “He is the crook who got away with it,” writes Chait. Trump may have believed as president, with law enforcement under his control, he might get away with more. With investigations now probing whether the alleged money laundering he learned from his father might underlie his current business dealings with Russia, that remains to be seen. For now, he is now the poster child for a two-tiered system of justice: one that punishes the commoners, and another that protects the wealthy by looking the other way.
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