Trump Accused of Fraud With Two Sets of Books

Yesterday, I reported Trump Wins Round One In Battle Over His Tax Returns.

Q: What Happened?

A: The Supreme Court suspended a House subpoena seeking Trump’s financial records.

However, some documents such as tax appeals are a matter of public record.

ProPublica did an Analysis of Never-Before-Seen Trump Tax Documents obtained by freedom of information requests.

Those documents made Trump’s businesses appear more profitable to lenders and less profitable to tax officials. One expert calls the differing numbers “versions of fraud.”

Documents obtained by ProPublica show stark differences in how Donald Trump’s businesses reported some expenses, profits and occupancy figures for two Manhattan buildings, giving a lender different figures than they provided to New York City tax authorities. The discrepancies made the buildings appear more profitable to the lender — and less profitable to the officials who set the buildings’ property tax.

For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.

Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.

ProPublica obtained the property tax documents using New York’s Freedom of Information Law. The documents were public because Trump appealed his property tax bill for the buildings every year for nine years in a row, the extent of the available records. We compared the tax records with loan records that became public when Trump’s lender, Ladder Capital, sold the debt on his properties as part of mortgage-backed securities.

The two Trump buildings with the most notable discrepancies shared a financial trait: Both were refinanced in 2015 and 2016 while Trump was campaigning for president. The loan for 40 Wall Street — $160 million — was then the Trump Organization’s biggest debt.

Financial information for the Trump International Hotel and Tower raises similar questions. Trump owns only a small portion of the building, which is located on Columbus Circle: two commercial spaces, which he rents out to a restaurant and a parking garage. Trump’s company told New York City tax officials it made about $822,000 renting space to commercial tenants there in 2017, records show. The company told loan officials it took in $1.67 million that year — more than twice as much. In eight years of data ProPublica examined for the Columbus Circle property, Trump’s company reported gross income to tax authorities that was typically only about 81% of what it reported to the lender.

Trump appeared to omit from tax documents income his company received from leasing space on the roof for television antennas, a ProPublica review found. The line on tax appeal forms for income from such communications equipment is blank on nine years of tax filings, even as loan documents listed the antennas as major sources of income.

More Details

The article has many more details and comments. Here’s a short YouTube video analysis.

Kevin Riordan, a financing expert and real estate professor at Montclair State University who reviewed the records offered these comments.

  • “It really feels like there’s two sets of books — it feels like a set of books for the tax guy and a set for the lender.”
  • “What is bizarre is that you have these tax filings that are totally different.” A gap of at least 10 percentage points between the two occupancy reports persisted for the next two years, before the figures in the tax and loan reports synced in January 2016.

Kavanaugh Connection

A politically-connected friend had these comments.

  1. One of the reasons Trump appointed Brett Kavanagh to the Supreme Court was Kavanagh’s views about stopping investigations of Presidents. Kavanagh’s idea is that the President can’t do his job if he is hounded by every local prosecutor in the country.
  2. It would not be too surprising if this kind of tax fraud investigation were stopped by the Supreme Court. But really, this is an investigation of his corporation, not so much him personally.
  3. Trump was never a big time player, certainly not after he lost a good part of his father’s money in the Atlantic City fiasco. He had a bad reputation and his post-Jersey fortune was built on his franchising business. There are legitimate reasons for his not wanting to bare the margins of his entire organization to public scrutiny, but he could have had some partial disclosure of returns that would have shielded that.
  4. Finally, I should add that I very much doubt that Trump personally signed any of these returns.

Senior Ex-Deutsche Bank Exec Linked to Millions in Donald Trump Loans Commits Suicide

Adding to the bizarre nature of all these twists and turns, ZeroHedge reported today Senior Ex-Deutsche Bank Exec Linked to Millions in Donald Trump Loans Commits Suicide.

The University of Boston graduate was most recently Chief Operating Officer of Starwood Capital Group according to his bio: “Bowers is responsible for driving Starwood Capital’s priority strategic initiatives and enhancing the operational effectiveness of the Firm’s public and private operating companies and entities.”

More notably, prior to joining Starwood Capital in 2015, Bowers was Co-Head of Asset and Wealth Management-Americas at Deutsche Bank, where has started in 2005 and was responsible for managing the U.S. and Latin American wealth management businesses, and had joint responsibility for the integration of Deutsche Bank’s wealth and institutional asset management businesses in the Americas. Bowers was also a board member of Deutsche Bank Securities: if anybody knew where the bodies are buried, he would be one of them.

Just as notable is that both Bowers and Broeksmit appear to have held key functions for Deutsche Bank’s US wealth-management division, with Broeksmit operating through the murkier Deutsche Bank Trust Company Americas, or DBTCA.

But what is most remarkable is that according to a March 2019, Bowers was boss to Trump’s personal banker Rosemary Vrablic, who according to the NYT report helped steer more than $300 million in loans to Donald J. Trump in the years before he was elected president.

Hanging suddenly appears to be the suicide method of choice.

Mike “Mish” Shedlock

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NYMinuteman
NYMinuteman
4 years ago

This is why one should never rely on amateurs to analyze specialized tax filings. Property tax filings are very different than income tax filings. If it were not so, all an assessor would have to do would be to require the property’s tax filings to assess income. Also, in assessing a property’s taxes, income is only one part of the equation, often not even relevant – your home produces no income, and yet you pay enormous property taxes, for example. A property that is vacant for part of the year for renovation might lose money – that doesn’t change the value of the property for tax Assessment purposes, and the improvements may increase the value rather than decrease it. There are expenses and capital items that may get treated differently for property tax purposes than for income/corporate taxes. Very different rules apply. Another example might be a rent-regulated building. You might have a big, beautiful building right on Central Park, but if it is mostly filled with rent regulated tenants, it may lose money every year. Try telling that to the tax man. He will assess you based on the location and vacant value. You might be successful in an appeal, but it’s not guaranteed. Or, if you fill it with The property’s owners so the income is low, for property tax purposes, they may require income be calculated based on full market rents.

They’re is absolutely NOTHING in this article that suggests the illegal keeping of different books, or even anything untoward.It just fits into the mold of: Orange Man BAD. You would need much more info to credibly make that kind of accusation.

This is another one of those “exposes” that prove nothing but the ignorance of those reporting to the highly specialized rules of their subject. And the “experts” are talking out their asses. Go talk to a major NYC property tax certiorari expert and see what they have to say,

Herkie
Herkie
4 years ago

I used to work for an independent contractor that built low income housing for recipients of Farm Home loan guarantees, the level of corruption and cheating still amazes me 30 years later when I think about it, the amount of white out alone that was used to get rid of minus signes on tax documents, and the crappy used copier my boss bought? He bought it BECAUSE it was a crappy old copier, he would use the whit out to change numbers and profit loss statements and income sheets then copy them and keep copying the copies till the alterations were not detectable.

The thing is he had two sets of books also, the government books, and the bank books, the government would see one set and the banks/creditors the other. In fact I never knew if there was enough in the accounts to even cover my own paychecks, and seriously I don’t think the boss did either. You would be surprised at how much of American enterprise functions this way.

az_dirt
az_dirt
4 years ago

Every landlord and real estate company in NY (and anywhere else,) does this. Business as usual. It’s not the same thing as Trump using the office of President and Foreign Policy of the US for political gain.

Harbour
Harbour
4 years ago

Really Mish? Conspiracy now? When you have a corporation there is a loss for book purposes and a loss for tax purposes – in Canada the schedule 1 of the corporate return converts between these two different losses.

ksdude69
ksdude69
4 years ago

“feels like”. LMAO. Grasping straws again. Just another tarnish the name episode in an attempt to turn Trump into toxic waste like Hillary.

Wmjack50
Wmjack50
4 years ago

Curious as to where would a “Freedom of Information” be employed to get this information—sounds bogus to me

djhowls
djhowls
4 years ago

Standard

pvguy
pvguy
4 years ago

No surprise here. The company where I worked for many years reported everything as EBITDA even though they were a depreciation heavy chemical plant. And they are in a continuing battle with the local governments over the property tax assessment too.

Situation normal.

stillCJ
stillCJ
4 years ago

A businessman trying to avoid paying maximum taxes? I can’t imagine ! Shocking.
But seriously, do you know anyone who pays taxes that does not try to reduce the tax bill? Not reporting all profitable cash sales of items? Over-reporting church donations? How about those people that work for cash and never file a tax return? Before you throw the first stone I want to see your tax return.

jivefive99
jivefive99
4 years ago

While the Orange Dimwit is no dummy, Im sure he knew that his little plan to get more TV coverage by running for pres couldnt possibly ever work, cause if it did, everyone would find out his comical NY-style sleazy tired business practices. I said it in 2016 and I’ll say it now — this was all gonna be one entertaining fun ride, making people watch the news again. And only America would survive it, cause we werent designed to be run by kings.

Helene84
Helene84
4 years ago
Reply to  jivefive99

Yes, the upside to Trump is he’s got more people paying attention to politics.

I’ve never bought the theory that Trump didn’t want to win. He was doing multiple rallies every day in the last few days before the election, in highly targeted locales in swing states. If he was trying to lose he never told his campaign.

You could make a better case that Hillary threw the election. She took several weeks off in the summer, never went to Wisconsin, wasted a fortune running ads in California, called half the country deplorables, ran on a platform of waging war with half the planet … brazenly bad decisions for the spouse of one of the more gifted politicians of the last century to make.

Clintonstain
Clintonstain
4 years ago

Mish switching to another topic since the China/U.S. Rebalancing hasn’t caused the dire consequences he cried wolf about.

When Trump gets re-elected these people are going to have to double their current intake of Zoloft.

SleemoG
SleemoG
4 years ago

Epstein and Bowers didn’t kill themselves.

JavaMe
JavaMe
4 years ago

“It really feels like there’s two sets of books — it feels like a set of books for the tax guy and a set for the lender.”

No doubt this is true and should be expected. Not a tax accountant here, but even I know there are significant differences between IRS required reporting and GAAP. And Trump’s business is not a publicly traded company so GAAP is not required.

Casual_Observer
Casual_Observer
4 years ago
Reply to  JavaMe

In business school, they still teach to have 2 separate sets of books as part of tax strategies.

Schaap60
Schaap60
4 years ago
Reply to  JavaMe

As a tax attorney, it would be malpractice not to advise a client to have separate tax and accounting records. Banks should know enough to ask for both. I have no idea why that didn’t happen here, or if the story is be slanted by a political bias.

blacklisted
blacklisted
4 years ago

Awards should be given to those that find the best ways to reduce their taxes, and throw in a tax break for helping others do the same thing. Anything that can starve the beast that is destroying society is a winner.

Matt3
Matt3
4 years ago

Who cares?

Bam_Man
Bam_Man
4 years ago

Mish said – “Hanging suddenly appears to be the suicide method of choice.”

Jumping went out with the Charleston and the Lindy Hop.

Evidently, being a member of “The Big Club” can be hazardous.

Tony Bennett
Tony Bennett
4 years ago

Is anyone surprised?

No one (big) ever goes to jail.

Not a soul from Wall Street (who worked at a primary dealer) so much as got indicted, let alone convicted, in last recession’s aftermath.

Above The Law(ness) breeds massive corruption … which taxpayer will find out in spades when current bubbles burst.

MickLinux
MickLinux
4 years ago

Actually, I think we should start keeping a body-count of Trump-related deaths, as we did with Clinton.

That is not to say that either Clinton or Trump killed anyone; it is more an indication of the evil and nefariousness of those tied to the politician –either as friend or enemy.

It’s like looking for smoke, on firewatch.

Casual_Observer
Casual_Observer
4 years ago

Fraud happens in government too but also goes unpunished when politicians are involved. Would the government ever investigate itself ?

shamrock
shamrock
4 years ago

I would point out that at this point there are no investigations. This is some reporters doing investigative journalism and uncovering apparent fraud.

Bam_Man
Bam_Man
4 years ago
Reply to  shamrock

“The Big Club” does not investigate itself.

Jojo
Jojo
4 years ago
Reply to  shamrock

HEARSAY!

stillCJ
stillCJ
4 years ago
Reply to  shamrock

Judicial Watch documents fraud, corruption and law-breaking by politicians and bureaucrats all the time, but it seems to take years for the DOJ to find out about it if they find out about it at all.

Quatloo
Quatloo
4 years ago

Plenty of material here to support a variety of conspiracy theories

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