How Donald Trump Might've Cooked the Books...While Running for President
One year after the New York Times published its investigation into Donald Trump's decades-long history of tax avoidance schemes—some of which the Times referred to as "instances of outright fraud"—a new report from ProPublica suggests that the president also didn't give up on the practice. ProPublica's review of Trump Organization records indicates that for certain buildings, the company appears to have maintained one ledger with inflated profitability metrics to show to lenders, and another ledger with deflated profitability metrics to show to tax authorities. In other words, when Trump needed more money, he claimed to be making plenty of it; when the tax bills came due, he claimed there was little.
For example, in 2017, the Trump Organization told lenders that in the space it owns at the Trump International Hotel and Tower on Columbus Circle, the company collected $1.67 million from a pair of commercial tenants; to tax officials, it disclosed earnings of about $822,000—a discrepancy of $848,000. Reporting more bullish earnings numbers to lenders, in theory, would allow Trump to obtain financing on more favorable terms for his other business ventures, since a track record of steady rental income would indicate to underwriters that he's less likely to default. Reporting less income to the government, of course, would ensure that the company pays less in taxes than it would otherwise owe.
The experts with whom ProPublica consulted cautioned that there are legitimate reasons that property tax records and loan filings might not be exact matches of one another. But these particular irregularities, opined UC-Berkeley professor Nancy Wallace, echoing the Times' conclusions, amount to "versions of fraud." New York University School of Law professor and former New Jersey attorney general Anne Milgram told ProPublica that if she were still a prosecutor, she would "want to ask a lot more questions."
Two details of ProPublica's work stand out here. First, the method by which it obtained the documents in question: There were no anonymous leaks, no courageous whistleblowers, no mysterious sources, no dramatic excerpts of testimony on Capitol Hill. The documents, instead, were public records, freely available to anyone who asked for them.
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 other noteworthy aspect of ProPublica's findings is their recency. The Times focused mostly on the 1990s, when Trump used financial sleights-of-hand to avoid the most serious consequences of his many bankruptcies. But today's report exposes shady maneuverings from this decade, well into the period when Trump began seriously chasing a career in politics. "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," ProPublica writes. The hotel income figures discussed above are from 2017, when he was already sitting in in the White House.
There are simple, common-sense steps the president could have taken to conceal this practice: He could have elected not to dispute his tax bills every year, which is the act that made the associated paperwork a matter of public record. Or, considering the intense scrutiny that all White House contenders must endure, he could have quietly put an end to this alleged book-cooking when he was considering running for president in 2011, or when he actually decided to do so in 2015, or when he became the Republican Party's nominee in 2016, or when he took the oath of office in 2017. There are perhaps corners one can get away with cutting as a bombastic reality television host that are far riskier for a major-party presidential candidate.
Trump did none of these things, though, perhaps because he couldn't imagine that what he was doing was wrong; tax avoidance schemes, legal or illegal or somewhere in between, are just a routine part of what many rich people do to get and stay rich. Even when these practices meander into legal gray areas, the people who engage in them do so knowing that prosecutions of white-collar crime are plummeting, and understaffed administrative agencies lack sufficient resources to audit the wealthy people who are likely to take advantage.
As former Trump lawyer Michael Cohen explained earlier this year, sometimes, the motivation to lie isn't even strictly a financial one. "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," Cohen told Congress in February, "and deflated his assets to reduce his real estate taxes." When it comes to doing whatever is necessary to maximize his personal wealth, it's hard to say that Donald Trump gets "caught," really. For the most part, he doesn't try to hide in the first place.
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Originally Appeared on GQ
