President Donald Trump‘s vast accumulation of wealth was made possible through numerous efforts by his father to steer resources into his son’s hands by vastly undervaluing real estate values, obscuring gifts, and avoiding taxes, according to a bombshell investigation.
A trove of documents including Fred Trump’s tax returns show countless efforts to enrich Donald Trump and set him up to be the successful businessman and public figure and politician that he became.
Many of the transfers were made in secret, often in advantageous ways that saved Trump and his siblings hundreds of millions of dollars, according to a deeply reported New York Times analysis.
In just once example, sourced to the 1995 tax return of Fred Trump, a successful developer of large-scale housing construction projects, Donald Trump and his sibling claimed 25 apartment complexes with 6,988 apartments were worth only $41 million. Less than a decade later, in 2004, banks valued them at $900 million.
Trump was able to ban a total of $413 million from father’s empire partly through tax ‘dodges,’ according to the bombshell analysis.
At the tender age of three, Trump was earning $200,000 a year in 2018 dollars from his dad’s business empire, becoming a millionaire by age 8, according to the report.
By the time he graduated college (Wharton as Trump likes to point out) Trump was getting $1 million a year in today’s dollars – an amount that would jump to $5 million a year by the time he hit his 40s.
The transfers and undervaluations had the effect of allowing the Trump children avoid potential gift taxes as well as estate taxes on the full value of assets.
Responded Trump lawyer Charles Harder: ‘Should The Times state or imply that President Trump participated in fraud, tax evasion or any other crime, it will be exposing itself to substantial liability and damages for defamation.’
Harder distanced Trump and pointed the finger at lawyers and accountants. ‘President Trump had virtually no involvement whatsoever with these matters. The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.’
In just some of the other revelations:
– Trump collected laundry revenue from apartment buildings in his dad’s portfolio;
– His share was $177 million when the Fred Trump empire was sold off in 2004;
– Fred Trump transferred eight buildings with 1,032 apartment units to his kids;
– Fred and Mary Trump transferred more than $1 billion in wealth to their kids, the Times found, which would have brought $550 million in taxes if they paid the full 55 per cent gift and inheritance tax at the time’
– They paid a total tax of just $52.2 million;
– Fred Trump gave his son three trust funds;
– In 1962 Fred transferred land in Queens to his children, then build an apartment building there and gave them the revenues and ownership;
– Seven apartment buildings were transferred to children with no apparent gift taxes;
– Donald Trump received air conditioner rental income from units in building his father and the government financed for seniors in East Orange, New Jersey;
– Trump drew a salary from his dad into the 1980s of $260,000 in today’s dollars; and
– Trump borrowed more than $2 million in 1979 from Fred Trump and his companies, according to New Jersey casino records.
Trump has not released his personal tax returns, despite repeated calls by rivals for him to do so during the campaign, as has been the tradition for nominees going back decades.
He signed into law a tax cut that doubled the estate tax exemption to $10 million and indexed it to inflation.
When big projects went bust, Trump used his father’s empire to secure loans to sustain his business.
In 1990, he used the East Orange senior high rise to get a $65 million loan.
At a time when he was facing down creditors, Trump also took steps to modify his father’s will by presenting him with a codicil that would have strenghened his hand sole executor of Fred Trump’s estate.
It also protected Donald Trump’s inheritance from creditors and his looming divorce from Ivana Trump, according to the Times.
But Fred Trump chafed at his son’s presentation – which included no advance consultation, and was prepared with Trump’s own lawyers.
Maryanne Trump Barry, Trump’s sister, described her father’s reaction in a deposition.
‘This doesn’t pass the smell test,’ she says he told her.
Barry added: Donald was in precarious financial straits by his own admission, and Dad was very concerned as a man who worked hard for his money and never wanted any of it to leave the family.’
Eventually, Trump heirs, including Donald, along with Fred Trump worked to rewrite Fred Trump’s will with an eye toward avoiding steep taxes.
According to the Times they relied on methods that that were ‘legally dubious and, in some cases, appeared to be fraudulent,’ a Term Trump’s lawyer denied.
The investigation focuses on All County Building Supply & Maintenance, a Trump company incorporated in 1992. The set-up allowed Fred Trump to make gifts to his children that were made to look like business transactions, thereby avoiding the 55 per cent estate tax at the time.
The company spent millions on equipment to maintain Fred Trump’s sprawling empire of apartment complexes. Invoices got ‘padded,’ and Trump’s children split the profits. Sometimes invoices were marked up as much as 50 per cent.
Robert Trump took a $500,000 salary, but a Trump nephew, John Walter, generated the invoices.
Thousands of pages of documents reviewed by the paper showed that Fred Trump’s costs went up once the company was on the scene.
Walter was once asked during a deposition why Fred Trump didn’t make himself an owner.
“He said because he would have to pay a death tax on it,’ he said.
The company also used padded invoices as a way to justify rent increases with regulators, passing them on to tenants based on false costs of doing business.
‘The higher the markup would be, the higher the rent that might be charged,” Robert Trump said.
Fred Trump began transferring the bulk of his empire to his kids at the age of 90 using a trust vehicle known as a GRAT.
Assets were split between Fred and Mary Trump, who shifted two-thirds of assets to the children, who then paid the balance by making annuity payments. The ownership was nearly free and clear three years later, by 1997.
Trump avoided hundreds of millions in taxes through low-ball evaluations, according to the report.
Donald Trump participated in the sessions where the plans were conceived.
An appraisal by Robert Von Ancken put the empire’s value at $94 million. But buildings in the same neighborhood sold for considerably more than Van Ancken said Trump’s properties were worth.
In one appraisal that appears to defy normal New York real estate logic, Von Ancken assessed the value of 886 Trump Village apartments on Coney Island as being worth negative $5.9 million.
But local tax assessors valued them at $38 million, and in 2004, when the real estate market had risen, they were valued at $107 million by a bank.
The Trump family effectively took a write-down in the valuation for the empire by ascribing Fred Trump a minority ownership to a firm that by the examination of the books he did own.
By dividing firms into minority shares and claiming other write-downs, an empire that would later go for $900 million got a value for tax purposes of $41.4 million.
The IRS appears to have fought back against the valuations on a 1995 gift tax return, but managed to claw back only an additional $5 million in value.
Fred Trump’s final estate tax return showed he had just $1.9 million, a tiny fraction of the wealth he accumulated over a lifetime.
The story mentions a family meeting after Fred Trump’s death where Trump was accompanied by Trump Organization executive Allen Weisselberg.
Weisselberg reportedly got a limited immunity deal from prosecutors in connection to Michael Cohen’s guilty plea on tax and campaign finance violations.
Trump has repeatedly referenced an initial $1 million loan, but the Times found Fred Trump loaned his son a collective $61 million.