New York Times Calls A Fraud A Fraud
STOP THE PRESSES! Donald Trump and his entire family are a pack of cheating grifters!
Okay, that's hardly news to anyone with an IQ above slime mold. But when the New York Times accuses the sitting president of tax fraud on a massive scale -- and doesn't call it, say, "skilled and lawyerly manipulation of a vague tax code" -- you know they've got the receipts. Here's the first line:
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, an investigation by The New York Times has found.
GAME ON! Trump's asshole lawyer Charles Harder -- the one who shut down Gawker for Hulk Hogan and sued the Daily Mail for Melania -- can shout about defamation, and the family can shed crocodile tears about the honor of their dear, sweet, dead relatives.
The president's brother, Robert Trump, issued a statement on behalf of the Trump family:
"Our dear father, Fred C. Trump, passed away in June 1999. Our beloved mother, Mary Anne Trump, passed away in August 2000. All appropriate gift and estate tax returns were filed, and the required taxes were paid. Our father's estate was closed in 2001 by both the Internal Revenue Service and the New York State tax authorities, and our mother's estate was closed in 2004. Our family has no other comment on these matters that happened some 20 years ago, and would appreciate your respecting the privacy of our deceased parents, may God rest their souls."
But Times reporters David Barstow, Susanne Craig, and Russ Buettner got their hands on a whole stack of of Fred Trump's shady books, and they're stabbing a knife in whatever's left of Trump's nonsense about being a financial wizard who built a real estate empire using just his own Big Brain and Very Best Words.
You should read the article for its brilliant takedown of the myth of Donald Trump, Self-Made Billionaire. And Showtime has a documentary on the piece airing Sunday. But let's break down some of the more complicated financial bits here -- because Yr Wonkette is service-y like that.
Behind every great fortune lies a great crime
Or, in the case of the Trumps a whole mountain of small and medium-sized ones. By now we can all recite the bullshit story of Donald Trump receiving a "small, $1 million loan" from his father and building it into a $10 billion fortune. "Repaid with interest!" In reality, he received more than $400 million in loans and gifts from his father, much of which was never repaid. Far from being a self-made genius, Donald Trump was subsidized by his father Fred Trump, who bailed him out at every turn, and Donald Trump would likely be richer had he simply invested the money in an S&P Index fund -- which would have had the additional advantage of being legal!
The twin nemeses of the Trump family, and all ultra-wealthy families, are the gift and estate taxes. During the '80s and '90s, the IRS was entitled to a 55 percent cut of all gifts from Fred Trump to his five children and any assets he had at the time of his death. This created a powerful incentive to hide gifts and dramatically undervalue all transfers to his children. And to some extent, everybody does it. Just like everyone drives 80 on the freeway. But most people don't hit 180 mph, and most people don't scam the IRS out of hundreds of millions of dollars.
The president's parents, Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances.
The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.
The Trumps didn't just break the speed limit. THEY SET FIRE TO THE HIGHWAY. Take for example Sunnyside, a 158-unit apartment building in Queens that Fred Trump bought for his adult children in 1968.
Sunnyside was bought for $2.5 million in 1968 by Midland Associates, a partnership Fred Trump formed with his children for the transaction. In his 1969 tax return, he reported giving each child 15 percent of Midland Associates. Based on the amount of cash put up to buy Sunnyside, the value of this gift should have been $93,750. Instead, he declared a gift of only $6,516.
Normal people might fudge 25 or 30 percent. The Trumps went 93 percent.
'Self-Made Man' repeatedly bailed out by Bank of Dad
There are too many stories in this amazing Times piece to tell you about here. Suffice it to say that Donald Trump would have long ago gone broke and moved to Hoboken if his father hadn't been there to shower him with cash. But here is a perfect example of Fred Trump bailing out his favorite failson Donald and screwing the IRS in the process.
By 1987, Donald owed his father at least $11 million dollars. Canceling the debt outright would have triggered upwards of $6 million in gift taxes. So instead, Fred "traded" the debt for shares in Donald's Trump Tower Manhattan.
In December 1987, records show, Fred Trump bought a 7.5 percent stake in Trump Palace, a 55-story condominium building his son was erecting on the Upper East Side of Manhattan. Most, if not all, of his investment, which totaled $15.5 million, was made by exchanging his son's unpaid debts for Trump Palace shares, records show.
Then in 1991, Fred "sold" his stake back to Donald for a token $10,000 -- Look, Ma, no gift taxes!
Four years later, in December 1991, Fred Trump sold his entire stake in Trump Palace for just $10,000, his tax returns and financial statements reveal. Those documents do not identify who bought his stake. But other records indicate that he sold it back to his son.
Finally, Fred took the $15 million as a "loss" on his tax returns, avoiding $5 million of taxes on other income from that year.
Dollar Dollar Bills, Y'all!
In 1992, Fred Trump was 88 and his health was failing. He was also sitting on tens of millions of dollars of cash in his various businesses. And while you can fudge the valuations on real estate to the IRS, $50 million is $50 million. So the Trump kids cooked up a sham company, All County Building Supply & Maintenance, to bleed their father's business of cash before he died.
The most overt fraud was All County Building Supply & Maintenance, a company formed by the Trump family in 1992. All County's ostensible purpose was to be the purchasing agent for Fred Trump's buildings, buying everything from boilers to cleaning supplies. It did no such thing, records and interviews show. Instead All County siphoned millions of dollars from Fred Trump's empire by simply marking up purchases already made by his employees. Those millions, effectively untaxed gifts, then flowed to All County's owners — Donald Trump, his siblings and a cousin. Fred Trump then used the padded All County receipts to justify bigger rent increases for thousands of tenants.
To be clear, the Trumps inserted a shell company owned by the Trump children between vendors and Fred Trump's real estate empire. It existed solely to get cash off the father's ledger and into the children's pockets by charging a commission on goods and services bought by Fred Trump's company. With the additional benefit of making any rent-stabilized units look like Fred Trump had invested more cash in them, allowing him to hike up the rents.
Take the boilers Fred Trump bought from A. L. Eastmond & Sons in the Bronx, which happens to be the transaction that led the Times reporters to this story.
But as All County paid Mr. Eastmond the price negotiated by Fred Trump, its invoices to Fred Trump were padded by 20 to 25 percent, records obtained by The Times show. This added hundreds of thousands of dollars to the cost of the 60 boilers, money that then flowed through All County to Fred Trump's children without incurring any gift tax.
All County's owners devised another ruse to profit off Mr. Eastmond's boilers. To win Fred Trump's business, Mr. Eastmond had also agreed to provide mobile boilers for Fred Trump's buildings free of charge while new boilers were being installed. Yet All County charged Fred Trump rent on the same mobile boilers Mr. Eastmond was providing free, along with hookup fees, disconnection fees, transportation fees and operating and maintenance fees, records show. These charges siphoned hundreds of thousands of dollars more from Fred Trump's empire.
Then the Trump family used the "increased" costs to justify jacking the rent.
State records show that after All County's creation, the Trumps got approval to raise rents on thousands of apartments by claiming more than $30 million in major capital improvements. Tenants repeatedly protested the increases, almost always to no avail, the records show.
One of the improvements most often cited by the Trumps: new boilers.
OINK OINK OINK.
Death and Taxes
A friendly appraiser is a real estate magnate's best friend. And the Trump family found the friendliest appraiser in all the land! Which is how they wound up with an appraisal valuing Fred Trump's real estate empire of thousands of New York apartments at just $94 million in 1995. With a little more legal magic, they whittled the valuation down to $57 million. So when Fred Trump gifted the real estate to his children in a trust, it triggered just $20.5 million dollars in gift taxes. They did the same trick when Fred Trump's wife Mary died in 2000. And then they sold the whole lot for $900 million in 2003.
Or as Trump put it this morning in his non-denial denial:
We'll give you three guesses who's been gunning to get rid of estate and gift taxes since before the election. But you know what they say ... bears make money, and bulls make money, and PIGS GET SLAUGHTERED. And also, WHERE ARE YOUR GODDAMN TAX RETURNS?
Follow your FDF on Twitter!
This week is going to be UGLY. Wonkette is here to keep you sane-ish. THANK YOU YOU'RE WELCOME.
Liz Dye lives in Baltimore with her wonderful husband and a houseful of teenagers. When she isn't being mad about a thing on the internet, she's hiding in plain sight in the carpool line. She's the one wearing yoga pants glaring at her phone.