By A massive investigation by the New York Times has gone in on Donald Trump with both feet, accusing him of "instances of outright fraud" after trawling through tax returns and financial records, and alleges that the enormous fortune he inherited from his real estate tycoon father was built up via dodgy tax schemes and straight-up lying about gifts and loans.
As Trump has repeatedly painted his start in business as an up-by-the-bootstraps, riches-to-slightly-more-riches tale, casting himself as a New York real estate Oliver Twist with only his name and his $1 million loan from his dad to keep him company, this is a massive blow to his mythos. More than that, New York tax authorities say they are looking "vigorously" at the allegations. These are the key points:
Trump was given about $413 million by his dad
That's in today's dollars, but however you count it it's a significant wedge. The report says that Trump was earning about $200,000 a year by the time he was three years old, was a millionaire by eight and at 17 was given part-ownership of a 52-unit apartment block by his dad. That was a pattern: Fred Trump built, managed and oversaw buildings; he then transferred the profits to his kids through a maze of shell companies and partnerships. Trump got $1 million a year after graduating from college, and received more than $5 million a year into his 40s and 50s. He had three trust funds and got $10,000 cheques for Christmas. Altogether, then, a lot more than the $1 million loan he has claimed. Put your abacus away.
Trump got the most handouts because he was the worst businessman
To begin with, the fiddles and cheats were reportedly shared between Fred's children, but, as the NYT says "as Donald Trump careened from one financial disaster to the next, his father found ways to give him substantially more money". Some of that came in loans, and some from the whopping 295 different revenue streams his dad set up to prop up his son's businesses. Trump even tried to have his dad's will rewritten in 1990, with Fred fearing Trump wanted his dad's real estate empire to be used to bail his own businesses out.
This wasn't your average sort-of-legal tax avoidance
The investigation is clear that the Trumps' tax scheming reportedly went some way beyond the usual exploitation of loopholes and offshore accounting which many super-wealthy figures protect their wealth with. Multiple tax experts, the report says, "said the conduct described here represented a pattern of deception and obfuscation, particularly about the value of Fred Trump’s real estate, that repeatedly prevented the IRS from taxing large transfers of wealth to his children".
The schemes they cooked up were frankly ludicrous
For instance, in 1990 Trump was about to default on a bond payment. So, his dad allegedly sent a company bookkeeper to pick up $3.35 million in Trump Castle casino chips, which the family kept, to avoid drawing attention to what would have been an illegal loan. Trump ended up paying a $65,000 fine. On another occasion, Trump is said to have given his dad a $15.5 million share of the Trump Palace condo skyscraper in New York to square off some of the debts from his loans. Sounds fair. But then Fred sold the shares back to Trump four years later for $10,000, making the whole exchange a $15.49 million taxable gift. Fred never declared it as such.
The Trump kids followed their dad's example
They "set up a sham corporation to disguise millions of dollars in gifts from their parents," the report says, and Trump himself helped his dad to take improper tax deductions which kept even more cash for the family. The children also allegedly cooked up a plan to undervalue their dad's real estate empire when they took over in November 1997 so they could dodge more taxes that way.
What happens now?
Not a lot. Most of the alleged fraud happened too long ago for any prosecutions to be brought, so it's unlikely any real legal difficulties will come up. There may be civil suits which could end in fines and damages, but it's unclear at the moment.
At any rate, Trump's attorney Charles J Harder has denied the allegations. "The New York Times’s allegations of fraud and tax evasion are 100 percent false, and highly defamatory," Harder said in a statement. "There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate."
