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Dodgy Bookkeeping Is a Trump Family Tradition

Timothy L. O'Brien

(Bloomberg Opinion) -- Thanks to some inspired digging from ProPublica reporter Heather Vogell, it appears the Trump Organization has been massaging reported profits, expenses and occupancy rates at a pair of its Manhattan properties to make them look robust to lenders, but much less so to authorities who assess property taxes.If this means that President Donald Trump’s company keeps two sets of books, it may be an attempt to secure lower interest rates on borrowings while keeping tax expenses down. A dozen real estate experts Vogell contacted couldn’t explain “multiple inconsistencies” in Trump Organization documents she showed them. The variations are “versions of fraud,” Nancy Wallace, a finance and real estate professor at the Haas School of Business at the University of California-Berkeley, told Vogell. “This kind of stuff is not OK.”No, it’s not. It may amount to the same kind of financial fraud that sent two former Trump advisers, Paul Manafort and Michael Cohen, to prison. Cohen, in congressional testimony in February, accused Trump of falsifying records he provided to banks in 2011, 2012 and 2013.“It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed among the wealthiest people in Forbes, and deflated his assets to reduce to real estate taxes,” Cohen said, essentially portraying the president as a serial grifter.The problems Vogell uncovered pertain to two signature Trump properties in Manhattan — 40 Wall Street and Trump International Hotel and Tower — and involve transactions and records she examined dated from 2012 to 2018. The Trump Organization, its lawyers and its accountants declined to respond on the record to Vogell’s detailed questions about the irregularities.The Trump Organization has been at this game for a long time. When I interviewed its chief financial officer, Allen Weisselberg, in 2005 for a biography I wrote, “TrumpNation,” he told me that Trump valued 40 Wall Street at $400 million — at a time when it was assessed for property tax purposes at only $90 million.Trump unsuccessfully sued me in 2006 for libel, arguing that “TrumpNation” damaged his reputation by including unflattering assessments of his business record and unfair speculation that he had spent decades inflating his wealth. Trump lost the suit in 2011, and during the litigation was forced to turn over his tax returns to my lawyers.Fred Trump, the president’s father, taught his son the art of dodging assessments, taxes and record keeping.In 1954, Fred was called before the Senate to testify about overcharging the federal government millions of dollars by inflating costs associated with a taxpayer-subsidized, Trump-owned housing development in Brooklyn. The government then banned Fred from bidding on federal housing contracts — the foundation for his family’s wealth. So he turned to state-subsidized developments. By 1966, a New York investigations board called him into embarrassing public hearings to explore how he had overbilled the state for equipment and other costs. Although he was never charged with wrongdoing, those hearings marked the end of Fred’s career as a major developer of publicly subsidized housing.A devastating account of the Trump family’s finances and tax maneuvers that the New York Times published in 2018 revealed that Fred and his wife, Mary, structured their estate and the income it generated in ways both illegal and dubious. They ultimately transferred “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 Times reported. Instead, the Trumps paid $52.2 million in taxes, a rate of about 5%.

The Times also reported that Trump “received the equivalent today of at least $413 million from his father’s real estate empire.” It added that those riches flowed more fully due to “dubious tax schemes [Trump] participated in during the 1990s, including instances of outright fraud.” The Trumps did this, in part, by “grossly undervaluing” the properties they intended to pass on to their children. (A lawyer for Trump told the Times that the president, his parents and his siblings relied on outside advisers for tax planning purposes and that nothing they did was fraudulent.)Weisselberg was Fred’s accountant as well as Donald’s CFO, and he has an intimate familiarity with the details of all of this. He cooperated with federal prosecutors in their investigation of Cohen’s dealings, and Vogell’s reporting is bound to renew interest in him. Vogell noted that Weisselberg’s son, Jack, was an executive at Ladder Capital, an institution that loaned money to Trump for 40 Wall Street.The Manhattan district attorney’s office is currently battling Trump and the U.S. Justice Department for access to the president’s tax records as part of a criminal fraud investigation. Congressional committees have also subpoenaed Trump for his tax records, one of many requests he has refused to comply with. Vogell has given prosecutors and legislators more ammunition. As she observes in her ProPublica article, “New York City’s property tax forms state that the person signing them ‘affirms the truth of the statements made’ and that ‘false filings are subject to all applicable civil and criminal penalties.’”Those battles are playing out, of course, amid an impeachment inquiry that has put the president in a tight corner in Washington. Given how investigations are proceeding around his businesses, he’s unlikely to find much wiggle room in New York, either.

To contact the author of this story: Timothy L. O'Brien at tobrien46@bloomberg.net

To contact the editor responsible for this story: Mary Duenwald at mduenwald@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Timothy L. O’Brien is the executive editor of Bloomberg Opinion. He has been an editor and writer for the New York Times, the Wall Street Journal, HuffPost and Talk magazine. His books include “TrumpNation: The Art of Being The Donald.”

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