[The NY AG's office] asks a New York state judge to compel the Trump Organization to provide information it has been withholding from investigators — including a subpoena seeking an interview with the president’s son Eric.
[...]
The filing said that Eric Trump had been scheduled to be interviewed in the investigation in late July, but abruptly canceled that interview. The filing says that Eric Trump is now refusing to be interviewed, with Eric Trump’s lawyers saying, “We cannot allow the requested interview to go forward … pursuant to those rights afforded to every individual under the Constitution.”
WaPo
What rights are those, pray tell?
Fifth Amendment right against self-incrimination?
Last year, The Washington Post reported that Trump had inflated the potential sale value of the Seven Springs property in a “Statement of Financial Condition” — a type of document he sent to potential lenders to demonstrate his wealth.
In 2011, Trump’s statement claimed that the property had been “zoned for nine luxurious homes,” and that the value of those home lots raised the value of the overall property to $261 million — far more than the $20 million assessed by local authorities. Local officials said Trump had received preliminary conceptual approval for those homes, but never completed the process or obtained final zoning permission. The homes were never built.
[...]
Alan Garten, the Trump Organization’s chief legal officer, said in a statement that “The Trump Organization has done nothing wrong.” Instead, he blamed the filing on politics.
The attorney general’s “continued harassment of the company as we approach the election (and filing of this motion on the first day of the Republican National Convention) once again confirms that this investigation is all about politics.”
[...]
This is not Trump’s first fight with the New York attorney general. A previous attorney general, Eric Schneiderman, sued Trump for defrauding students at his “Trump University,” in a case that led Trump’s school to pay $25 million to settle in 2016.
Later, the attorney general’s office sued Trump for misusing donations in his nonprofit, the Donald J. Trump Foundation, to buy art for his clubs, pay off legal obligations for his businesses and to help his own political campaign. That suit ended in November, with a state judge ordering Trump to pay $2 million in damages.
Manhattan District Attorney Cyrus Vance (D) is also leading an investigation into the Trump Organization.
[...]
The scope of Vance’s investigation remains unclear. It began with an inquiry into payoffs made to adult-film star Stormy Daniels — who said she had an affair with Trump — before the 2016 election. But in recent court filings, Vance has suggested that he may be looking into financial practices at the Trump Organization as well.
The Trump criminal organization.
Donald Trump’s massive debts—he owes hundreds of millions of dollars—are the subject of continuous congressional and journalistic scrutiny. But for years, one Trump loan has been particularly mystifying: a debt of more than $50 million that Trump claims he owes to one of his own companies. According to tax and financial experts, the loan, which Trump has never fully explained, might be part of a controversial tax avoidance scheme known as debt parking.
Mother Jones
I'd say that's a safe bet.
Yet a Mother Jones investigation has uncovered information that raises questions about the very existence of this loan, presenting the possibility that this debt was concocted as a ploy to evade income taxes—a move that could constitute tax fraud.
Or that.
On the personal financial disclosure forms that Trump must file each year as president, he has divulged that he owes “over $50 million” to a company called Chicago Unit Acquisition LLC. The forms note that this entity is fully owned by Trump. In other words, Trump owes a large chunk of money to a company he controls.
And just what does this company do, and what did he pay it $50 million to do?
It earns no revenue—suggesting that Trump was not paying interest or principal on the loan—and Trump assigns virtually no value to Chicago Unit Acquisition.
We're generally suspicious of companies that don't do anything.
“We don’t assess any value to it because we don’t care,” Trump said of the loan. “I have the mortgage. That is all there is. Very simple. I am the bank.”
The money laundering bank?
Under basic accounting principles, a firm that is owed money and has no outstanding debt should be worth at least as much as it is owed.
So "we" should assign at least $50 million to it.
The loan has another odd feature: It is identified as a “springing” loan, a type of loan made to borrowers who are viewed as credit risks.
Anything owned by Trump is a credit risk, but isn't that a bit strange? Assessing his own company as a credit risk and then loaning it $50 million? Who does he think he is? Deutsche Bank?
Known sometimes as “bad boy” loans, these agreements allow the lender to impose harsh repayment terms if certain criteria aren’t met. These are not the type of loan terms that someone is likely to impose on himself.
Not anyone who isn't running a scam anyway.
The Trump Organization has consistently refused to answer questions about Chicago Unit Acquisition, a limited liability company it formed in Delaware in 2005, as construction began on the Trump International Hotel and Tower in downtown Chicago. But Trump did tell the New York Times in a 2016 interview that this debt represents a loan he repurchased from a group of lenders. [...] Jason Greenblatt, who was then the Trump Organization’s top lawyer, declined to explain to the Times the reason for the Chicago Unit Acquisition deal. “It’s really personal corporate trade secrets, if you will,” he said. “Neither newsworthy or frankly anybody’s business.”
If it's not legal, it's frankly somebody's business. Enter NYC.
Trump has not publicly identified the creditors from whom he bought this loan.
Perhaps because they don't exist. Or perhaps the loan doesn't exist, except on Donald's crooked books.
But a 2008 lawsuit Trump filed in connection with the Chicago project—a case that produced voluminous records detailing the financing of this venture—suggests two possibilities. The majority of the hotel and tower project was bankrolled by Trump’s lender of choice, Deutsche Bank, which gave him a $640 million loan. Fortress Investment Group, a New York City-based hedge fund, provided Trump an additional $130 million in financing. (Two other firms, Cerberus Capital Management and Dune Capital Management, partnered with Fortress on this loan.) According to court records, these were the only loans associated with the construction and development of Trump International Hotel and Tower Chicago.
Trump’s Chicago project quickly became a financial debacle—hence the lawsuit.
The 2008 financial crisis struck as the project neared completion, and Trump, saddled with nearly $800 million in debt, was in jeopardy of defaulting on a $330 million payment he owed to Deutsche Bank in November that year.
To fend off his biggest creditor, Trump attempted a brazen legal gambit. He sued Deutsche Bank, accusing the firm of causing the housing crisis and economic meltdown that was supposedly inhibiting his ability to sell units in the Chicago project and repay his debts. Eventually, Trump settled his financial differences with Deutsche by repaying some of the money he owed the bank and refinancing the rest through the bank’s private banking arm. [...] That is, Trump took out a new loan through Deutsche’s private bank to cover his debt to the firm’s commercial lending side.
Nice deal if you can get it. Less like robbing Peter to pay Paul, and more like robbing Peter to pay Peter.
This transaction apparently did not involve purchasing any debt, suggesting the debt that Trump claims to have bought could not be from the Deutsche Bank loan. That leaves the Fortress debt.
[...]
Fortress ultimately agreed to accept 50 cents on the dollar—or about $48 million—for the outstanding debt. [...] The question is whether the deal was what’s known as a “discounted payoff”—in which the debt was considered repaid and the loan was canceled by the lender—or whether Trump purchased what remained of the loan. That distinction has enormous implications.
When a lender forgives a portion of a loan, the IRS considers the unpaid portion taxable income. [...] But big-time borrowers have devised a tactic to forestall paying taxes in cases in which they’re able to buy back their debt at a discount. They purchase the debt through a corporation, parking the loan within this entity to temporarily avoid realizing income. Debt parking falls into a legal gray area. “Maybe there are respectable ways that it could work, but I would call it kind of a scam to pretend you haven’t gotten rid of the debt,” says Daniel Shaviro, a professor of tax law at New York University.
Debt parking can be permissible as long as the borrower intends to repay the loan. Parking debt indefinitely with no intention to repay it, however, violates federal tax law, according to tax experts.
And, gee whiz, who can prove you DON'T intend to pay it back?
Trump’s comment to the Times that “we don’t care” about the loan raised a red flag for several tax experts consulted by Mother Jones. They wondered whether this was an admission that he has no intention of repaying the loan—an implication reinforced by Trump’s disclosures showing Chicago Unit Acquisition generates no revenue and has practically no value.
I think we can all agree that we understand Trump's crooked intentions. What does it take in a court of law to prove them?
But the story of Trump’s mystery loan gets even more complicated. According to two sources with direct knowledge of the disposition of the Fortress loan, Fortress did not sell Trump this loan. Instead, according to these sources, Fortress canceled the debt after Trump paid about half of it. “The transaction that Donald Trump did with the lender was a discounted payoff and not a purchase of the loan—I know that for sure,” a person involved with the deal tells Mother Jones. That means there may have been no loan to buy, no debt to park; Trump might have invented a loan—and then parked it.
[...]
Did Trump create a bogus loan to evade a whopping tax bill on about $48 million of income?
Do the Osmonds have teeth?
“When you see it, if you lay all this out, it’s pretty brazen,” says Adam Levitin, a law professor specializing in commercial real estate finance at Georgetown University. “If he didn’t actually buy the loan, this is just garden-variety fraud.”
Donald J Trump himself is a garden-variety fraud.
Most loans are documented in public records, but Mother Jones could locate no documentation of a loan owned by Chicago Unit Acquisition. The Cook County Recorder of Deeds has records concerning the original Deutsche Bank loan for the Chicago project; the Deutsche Bank loan that replaced it; and the Fortress loan. But the Recorder of Deeds has no filings related to Chicago Unit Acquisition.
What a surprise.
Not all loans are tied to property and require registration with local authorities. In those cases, a filing called a Uniform Commercial Code financing statement is typically made. [...] A search of records in New York (where the Trump Organization is based), Illinois (where the hotel is located), and Delaware (where Chicago Unit Acquisition is registered) found no UCC records related to Chicago Unit Acquisition.
Levitin and Steven Schwarcz, a law and business professor at Duke University, say it’s not totally unheard of for a company to skip filing a UCC statement in cases where one branch of a firm is loaning money to another. But Levitin says that submitting a UCC statement is standard practice in most scenarios where there is a large amount of collateral at stake.
[...]
Trump has a track record of pushing the envelope when it comes to paying—or not paying—taxes. In a Pulitzer Prize–winning investigation examining the origins of the president’s fortune, the New York Times reported in 2018 that “President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents.”
[...]
[T]he release of Trump’s returns alone would probably not solve the Chicago Unit Acquisition mystery. Nor would a standard IRS audit.
“It would take a forensic audit,” says Martin Lobel, a prominent tax lawyer based in Washington, DC. “It is very labor intensive, and it takes someone who has years of experience to spot the problem areas.” This type of audit would entail combing methodically through every shred of paperwork underpinning Trump’s financial claims. And Lobel and other tax experts Mother Jones interviewed are dubious that the IRS would mount this type of audit on a sitting president. “The IRS is not going to look too closely at Trump’s tax returns,” Lobel says.
I'm sure somebody would take it on. Perhaps the New York AG or the Manhattan DA. Or, given access to the documents, a band of legal geeks. Or...
[C]ongressional Democrats, if they have their way, intend to do just that. In May, the House Ways and Means Committee subpoenaed the IRS to hand over six years of Trump’s tax returns as part of an investigation into the agency’s presidential audit program. By law, the IRS must annually audit the returns of a serving president and vice president, but, as the panel’s chair, Richard Neal (D-Mass.), wrote in a recent Washington Post op-ed, it’s not clear how much scrutiny these reviews entail. “Neither Congress nor the public knows anything about the scope of those audits and whether the president can exert undue influence on the IRS to affect his or her tax treatment,” Neal wrote. “If, for example, the president is already under audit at the time he or she takes office, what happens to that audit? We don’t know. My committee will consider legislation regarding the mandatory audit program to ensure these audits are conducted fairly and without undue influence from the commander in chief. And, as part of our deliberations, we must review his tax information to better understand the audit program and propose any needed changes.”
[...]
Treasury Secretary Steven Mnuchin, who oversees the IRS, has so far rebuffed the Ways and Means Committee’s efforts to obtain Trump’s returns. In July, the panel sued the Treasury Department and the IRS to force them to comply. In a recent court filing, the committee revealed a tantalizing bit of information about its inquiry: A whistleblower had come forward with “credible allegations of ‘evidence of possible misconduct’—specifically, potential ‘inappropriate efforts to influence’ the mandatory audit program.”
[...]
Following the New York Times investigation of the questionable tax schemes employed by Trump and his family, a spokesperson for the New York Department of Taxation and Finance said the agency was “vigorously pursuing all appropriate avenues of investigation.” New York Attorney General Letitia James has also been scrutinizing the financing of several Trump projects. This investigation was sparked by Michael Cohen, Trump’s former lawyer and fixer, who told Congress earlier this year that Trump had inflated his assets on financial statements used to secure loans.
