'This Smells Like a Crime': NYT Probes How Trump Got Rich - Page 2
Investigation finds alleged tax avoidance and fraud
- Phony invoices: The Trumps formed All County Building Supply & Maintenance in 1992 to buy everything from cleaning supplies to boilers for Fred's buildings. But according to the Times, the company marked up invoices from legitimate purchases billed to Fred's empire—sometimes more than 50%. Those extra millions then flowed through All County to Trump and his family members, free of any gift tax. The invoices were also used as evidence of capital improvements to justify rent increases in rent-regulated buildings.
- GRATs: With Fred's health weakening in 1995, the Trump family moved much of his real estate empire to so-called GRATs—"numbingly complex" trusts often used by the ultrawealthy to avoid taxes when passing on assets to their families, per the Times. According to a Fred Trump gift tax return, the properties including 25 apartment complexes were valued at $41.4 million, but in 2004 banks valued them at almost $900 million. They were later sold off.
- Financial alchemy: Key to the plan was using a property assessor who allegedly undervalued the buildings. Then the Trumps moved the property deeds to LLCs and shifted nearly half the shares to GRATs owned by Fred and his wife Mary. That allowed the Trumps to further reduce the assessor's value, claiming Fred and Mary were minority owners and the buildings couldn't be easily sold as a share of stock. The Times calls it "legally dubious."
- Bailouts: When big Trump investments (like the Trump Shuttle, the Plaza, and his Atlantic City casinos) began going bust in the late 1980s, Fred bailed him out, creating four entities that gave his son $8.3 million in today's dollars. Fred also extracted massive sums from his business in 1990, paying himself over $49 million, likely to help his son's faltering enterprises.
- The empire: Yet in 1990 Trump tried having his dad's will rewritten to make him sole executor of his father's estate. Fred seemed shocked: "Protect assets from DJT, Donald's creditors," he told his new estate lawyers. After Fred died in 1999, Trump and his siblings sold off the empire that his father spent 70 years building and hoped would stay in the family. Trump's share: today's equivalent of $236 million.
- Trump's reaction: "The New York Times’ allegations of fraud and tax evasion are 100% false, and highly defamatory," says Trump's lawyer, Charles Harder. "There was no fraud or tax evasion by anyone."
- New York's: "The Tax Department is reviewing the allegations in the NYT article and is vigorously pursuing all appropriate avenues of investigation," a New York tax department spokesman tells CBS News.
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