No Tax Scam! No Tax Scam! You Are The Easily Disproven Tax Scam Eric Trump Is Pleading The Fifth About!
New York Attorney General Letitia James did not come to play. She's well on her way to taking out the NRA, and yesterday she revealed that she's been hot on the trail of the Trump Organization for over a year now. Which is very good news, because if anyone can get the goods on these slippery bastards, it's AG James.
The investigation was made public yesterday when New York's Office of the Attorney General (OAG) sued to compel testimony by Eric Trump and force the Trump Organization to comply with document requests. Oh, how shocking that the very people who have engaged in four years of trench warfare to keep Trump's tax records under wraps don't want the OAG looking at the details of their business dealings! Said no one ever.
The genesis of the investigation was Michael Cohen's March 2019 congressional testimony where Trump's former fixer alleged that his old boss had systematically over- and undervalued his properties to suit every situation. When Trump wanted a loan, he inflated values astronomically. For tax purposes, he claimed the land was worthless garbage.
To substantiate these allegations, Cohen produced Trump's financial statements from 2011, 2012, and 2013. And these documents, along with Cohen's testimony, formed the basis of the OAG's investigation of the Trump Organization, which operates out of New York.
Because the vast majority of this investigation is happening outside public view, we have no idea how much illegal shit the AG has under her microscope. In fact, even the document numbers, which might provide some clue as to the scope, are redacted in yesterday's filings. And just for the sake of clarity, remember that this is a civil investigation, entirely separate from Manhattan District Attorney Cyrus Vance's criminal inquiry.
But in broad brush terms, the OAG appears to be looking at two categories of illegal conduct: overvaluing properties to maximize the tax benefit of donating them, and failing to pay income tax when a lender forgave Trump Organization debts.
For instance, in 1995, the Trump Organization bought a 212-acre parcel of land known as Seven Springs Estate in Westchester County, New York. If this sounds vaguely familiar, it's because Rachel Maddow did a terrific segment on it last year mocking Trump for claiming in a 2012 proposal to buy the Buffalo Bills that the property was worth $291 million, roughly a twelvefold increase over its assessed value.
For 18 years, Trump tried and failed to turn the land into a McMansion Hellscape or a golf course. When that venture failed, he granted a conservation easement to 158 acres of the lot, a donation his handpicked appraisers valued at $21.5 million. How could Trump get a $21.5 million charitable deduction when the entire property including his giant mansion was valued by the local tax authorities at somewhere south of $25 million? That is a good question! And it's one the OAG has about a similar easement granted by the Trump National Golf Club in Los Angeles as well.
As to the second bucket of transactions, the easiest way to explain this one is with a grossly simplified example. Say that the bank loans you $10,000 on Monday. On Tuesday you come in and convince the bank to reduce your debt to $5,000 for reasons. Maybe there was a hurricane, maybe your dog died, maybe the teller has the hots for you — doesn't matter. The point is that you now have $5,000 of what's known as "imputed income" which you have to both tell the IRS about and pay taxes on.
Now say you're the Trump Organization, and one of your gazillion sub-LLCs owed $150 million to Fortress Credit Corporation. In 2012, you convinced Fortress to accept $48 million to wipe out the entire note because you're such a shit credit risk that they'd rather get 32 cents on the dollar than nothing at all. Allegedly!
In theory, you had $102 million in imputed income which you should have declared to the IRS and paid taxes on. In theory you should be able to prove this quite easily by showing the page on your tax return where you picked up the $102 million in imputed income. And yet the Trump Organization has refused to do so, according to the OAG. They've hidden behind claims of attorney-client privilege to shield the details of multiple loan abatements as well as the appraisals that substantiated those conservation tax deductions. Which is how we arrived at a place where Eric Trump is now refusing to answer questions under oath "pursuant to those rights afforded to every individual under the Constitution."
In case that wasn't entirely clear, Eric Trump is taking the Fifth as regards his family business and transactions Poppy President undertook before 2016. Which is really not a good look.
"How could I ever possibly trust the legitimacy of a subpoena sent by someone who publicly campaigned on taking down my father and using her office to harass our family. She has called his presidency 'illegitimate,'" he whined in a statement published by the Washington Post. "This type of targeting and harassment violates every ethical guideline of a prosecutor. It's wrong."
Which is fucking rich coming from the family that has insisted for years that Donald Trump has the absolute right to initiate Justice Department investigations of his political enemies at will and undermine career prosecutors to help his pals Roger Stone and Michael Flynn. By that logic, Andrew Cuomo is perfectly entitled to use the OAG and the district attorneys to kick the shit out of Trump.
There's also the inconvenient fact that, if there was really nothing to see here, Eric Trump could prove it any day he wants by marching right in to Tish James's office and slapping his tax returns down on the desk to show where he picked up that imputed income. But he's thus far declined to do that, and is so strongly disinclined to discuss the matter under oath that he defied a duly authorized subpoena. So ... draw your own conclusions on that one.
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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.