The New York Times just released an extremely long and extensively reported exposé detailing multiple tax-and-wealth-related shenanigans and crimes committed by the family of President Donald Trump–up to and including Trump himself. (In fact, the president particularly so.) These wealth protection methods were apparently so brazen, untoward and rock-solidly documented that the Times’ own typically cautious lawyers felt comfortable with categorizing them as “instances of outright fraud.”
Here’s what you need to know about the deepest dive yet into President Trump’s wealth.
1. Donald Trump is the farthest thing from self-made you could possibly imagine.
The Times story notes, “By age 3, Mr. Trump was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. By the time he was 17, his father had given him part ownership of a 52-unit apartment building. Soon after Mr. Trump graduated from college, he was receiving the equivalent of $1 million a year from his father. The money increased with the years, to more than $5 million annually in his 40s and 50s.”
This scale of wealth is in direct contrast with Trump’s oft-repeated line that he attained his wealth and success after receiving a small $1 million loan from his father. “It has not been easy for me. And you know I started off in Brooklyn, my father gave me a small loan of a million dollars,” Trump apparently lied in October of 2015. He repeated the apparent lie a few months later.
“I got a very, very small loan from my father many years ago. I built that into a massive empire,” Trump said at a press conference in February 2016. According to CNBC’s math based on the Times story, the total amount of loans Donald Trump received from his father Fred Trump totaled some $60.7 million.
2. Fred Trump got wealthy due to welfare and likely broke the law passing that wealth on.
“Although Fred Trump became wealthy with help from federal housing subsidies, he insisted that it was manifestly unfair for the government to tax his fortune as it passed to his children. When he was in his 80s and beginning to slide into dementia, evading gift and estate taxes became a family affair,” the Times notes.
To that end, Fred Trump “made Donald not just his salaried employee but also his property manager, landlord, banker and consultant. He gave him loan after loan, many never repaid…He gave him three trust funds. He gave him shares in multiple partnerships. He gave him $10,000 Christmas checks.” And, according to the tax experts relied on to verify such transactions, much of this giving “was structured to sidestep gift and inheritance taxes using methods [known to be] improper or possibly illegal.”
3. The Trump family alleged tax-dodging scheme wasn’t just a clever use of tax loopholes.
The Times makes pains to note that many wealthy Americans employ their wealth to protect their wealth by exploiting intricacies in tax law that only the rich can afford to discover or access in the first place. But the Times exposé also makes clear this is decidedly not what the Trump family is alleged to have done.
The article continues, “the Trumps appeared to have done more than exploit legal loopholes. [Multiple experts] 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 I.R.S. from taxing large transfers of wealth to his children.”
In one case, a company formed by the Trump family was legally designated as a purchasing agent for all of the Trump family buildings. In reality, the company is alleged to have actually just inflated the price of preexisting purchases to the tune of millions of dollars over the years. Those mark-ups, putative building improvements, allegedly functioned both as: (1) a way of giving un-taxed gifts to the Trump clan; and (2) were also used to justify rent increases on Trump’s thousands of tenants.
4. Donald Trump got the most from his dad because he was apparently spectacularly bad at business.
The Times notes that, initially, Fred Trump’s myriad methods of cheating the tax man were evenly distributed to each of his five children. Soon, however, Donald Trump’s business acumen necessitated an intervention from the racist patriarch. The story notes that eventually Fred Trump got fed up with it:
The Times documented 295 streams of revenue that Fred Trump created over five decades to enrich his son….over time, as Donald Trump careened from one financial disaster to the next, his father found ways to give him substantially more money, records show. Even so, in 1990, according to previously secret depositions, Mr. Trump tried to have his father’s will rewritten in a way that Fred Trump, alarmed and angered, feared could result in his empire’s being used to bail out his son’s failing businesses.
5. There’s some documented alleged illegality and the authorities are already taking notice.
Most of the Times exposé focuses on instances of legally dubious methods to protect wealth and long-since-passed episodes of arguably comical criminality. For example, as Donald Trump was about to default on a bond payment in 1990, his father sent a bookkeeper to purchase $3.35 million in casino chips which were then apparently pocketed by the Trump family. This alleged illegal loan, under the laws of New Jersey, resulted in Trump paying a $65,000 fine.
In another instance, it appears that millions of dollars worth of unpaid loans (from Fred to Donald) were exchanged for a $15.5 million share in the Trump Palace. Four years later, Fred apparently sold his shares back to his son for $10,000. The Times notes, “Under I.R.S. rules, selling shares worth $15.5 million to your son for $10,000 is tantamount to giving him a $15.49 million taxable gift. Fred Trump reported no such gift.”
But New York tax authorities aren’t sitting this one out. A spokesperson with the New York State Department of Taxation and Finance said, in a statement released to CNBC, “The Tax Department is reviewing the allegations in the NYT article and is vigorously pursuing all appropriate avenues of investigation.”
[image via Saul Loeb, AFP/Getty Images]
Follow Colin Kalmbacher on Twitter: @colinkalmbacher
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