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What You Need to Know About the New Allegations of Trump's Financial Fraud

A new report shows that the Trump Organization may have committed "versions of fraud" in communications to banks and lenders.

by Harry Cheadle
Oct 16 2019, 7:39pm

Trump and his board in 1987. Photo by Joe McNally/Getty

A trove of recently unearthed documents sheds important new light on Donald Trump's massive, convoluted real estate business. The files, obtained by the investigative outlet ProPublica, point to a series of potentially criminal acts carried out by Trump and his associates.

In multiple instances, Trump's businesses told tax authorities one thing about a building's profitability, but told his lenders another. That’s to say, Trump or his subordinates were either lying to tax collectors to avoid paying the government what they owed, or deceiving financial institutions they were seeking loans from. These are potentially crimes, or "versions of fraud," as one professor of finance and real estate told ProPublica. They are also unsurprising given what we already know about Trump, and what we know about the routine financial misdeeds of the 1 percent.

Trump has been accused of this sort of wrongdoing before

Though these things often get lost in the never-ending churn of Trump-related stories, journalists have been uncovering his vicious and deceptive business practices for years. During the 2016 campaign, USA Today found that Trump routinely underpaid contractors and stole wages from workers. That same year, the Washington Post dug into the activities of Trump's charitable foundation and discovered Trump often spent donations on personal expenses, like buying a giant portrait of himself; in December, amid lawsuits and investigations, the Trump Foundation agreed to dissolve.

Nearly exactly a year ago, the New York Times published a long report on the practices—some of them arguably illegal—that the Trump Organization used to dodge taxes. Authorities in New York, where the Trump Organization is based, vowed to investigate further, and Trump's sister, Maryanne Trump Barry, fully retired from her role as a federal judge after an investigation was launched into her own involvement in her family's potential crimes. More recently, Mother Jones dug into a mysterious $50 million loan Trump owes to a company he owns, which experts say might be another vehicle by which to avoid paying taxes.

The latest report is still revealing

While the Trump family dismissed past evidence of tax cheating compiled by the Times as occurring "some 20 years ago," the ProPublica findings concern much more recent activity. The outlet reports that the two buildings in question were refinanced in 2015 and 2016, during Trump's presidential campaign. One of those buildings was Trump's famous skyscraper at 40 Wall Street, which was struggling financially. Trump sought a loan from Ladder Financial, where the son of his longtime CFO works, and, in documents obtained by ProPublica, claimed that the building was improving its occupancy rate from 59 percent in December 2012 to 95 percent by 2016—a sign of "leasing momentum," a positive indicator in real estate circles. But in tax documents, the building was described as being 81 percent rented as of January 2013. Pretending that it was bringing in more tenants over the years rather than being near full occupancy the whole time made 40 Wall Street look like a more attractive property than it actually was.

This video explains how the discrepancies in documents relating to 40 Wall Street helped Trump out:

For years, Trump was widely known for his carnival-barker bluster and habit of exaggerating on subjects ranging from his net worth to the number of floors in his buildings. As he went from being a celebrity to a political figure to the actual president, his looseness with facts has become more of a matter of public concern. But being a blowhard in public is different from giving false financial statements to the tax authorities or banks, which are potentially crimes.

This behavior might be criminal, but it's far from rare

This type of dishonesty is likely very common among Trump's wealthy peers. It's normal practice for rich people and corporations to do whatever they can to avoid paying taxes, and tax evasion costs the government billions and billions of dollars a year. Thanks to years of Republican-led cuts to the IRS—a process that has accelerated under Trump—tax authorities are less equipped than ever to target and audit 1 percenters who use armies of accountants and attorneys to tell complicated lies to the government. (Earlier this month, the IRS admitted that it doesn't have the resources to go after wealthy tax cheats and instead disproportionately audits low-income people who are easier targets.)

By running for and becoming president, Trump drew a lot of attention to himself and his company, and his prominence no doubt encouraged a lot of journalists to dig into instances of potential misconduct. Most wealthy families don't get that level of scrutiny, either from the press or the IRS—but as this year's college admissions scandal shows, rich Americans of all types are often happy to bend or break the rules to get ahead, and unlike poor people who break the law, they have the money to purchase high-priced attorneys and skate away from the consequences.

In response to questions about Trump's alleged tax avoidance, a spokesperson for New York City told ProPublica, "The city is looking into this property, and if there has been any underreporting, we will take appropriate action." Maybe Trump or his associates will be charged or fined. But it stands to reason that there are a lot of other, less-famous rich people who are engaging in the same practices, and getting away with it.

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This article originally appeared on VICE US.

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Politics
Donald Trump
trump organization
money-inequality
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