Two separate New York State fraud investigations against President Trump and his companies, one criminal and one civil, have been expanded to include millions in tax write-offs on advisory fees, some of which are reported to have gone to Ivanka Trump with knowledge of the matter.
The investigation – a criminal investigation by Manhattan District Attorney Cyrus R. Vance Jr. and a civil investigation by Attorney General Letitia James – is being conducted independently. But both offices have issued subpoenas to the Trump organization for a record of the charges in the past few weeks, people said.
The subpoenas were the final steps in the Trump Organization’s two inquiries and underscore the legal challenges the president expects if he leaves office in January. There is no evidence that his daughter is the focus of either investigation that the Trump organization has derided as politically motivated.
The trend follows a recent New York Times investigation of more than two decades of Mr. Trump’s tax records, which found that he had paid little or no federal income tax for most of the years, largely due to his chronic business losses.
The revelations included Mr. Trump reducing his taxable income by deducting approximately $ 26 million in fees to unidentified consultants as business expenses on numerous projects between 2010 and 2018.
Some of these fees appear to have been paid to Ms. Trump, The Times noted. In a 2017 disclosure she filed as an adviser to the President at the White House, she said she received payments from a consulting firm totaling $ 747,622, the exact same amount as consulting fees charged by Trump Organization tax deductible for hotel projects in Hawaii and Vancouver, British Columbia.
The subpoenas centered on fees paid to the company, TTT Consulting LLC, for their disclosures, and, according to one knowledgeable person, represented only part of the $ 26 million. The company’s name seems to be a reference to Ms. Trump and others To be members of their family.
Ms. Trump was a senior executive with the Trump companies who made the payments, which means she was apparently treated as a consultant while also working for the company. While corporate fees are deductible, the Internal Revenue Service requires that consultancy arrangements be market-based, appropriate, and “normal and necessary” for running a business.
Alan Garten, General Counsel of the Trump Organization, said in a statement that “this is just the latest fishing expedition to harass the company.”
“Everything was done in strict compliance with applicable law and under the advice of advisors and tax experts,” he added. “All applicable taxes were paid and neither party received an undue advantage.”
The IRS has sometimes declined attempts to write off advisory fees when they were supposed to avoid taxes and did not reflect doing business on market terms. It is unknown if the IRS ever consulted the Trump Organization about this practice. Mr. Trump’s tax break from deducting fees on his companies’ federal returns would also be reflected in his New York returns, potentially making him of interest to the state.
A tax advisor who worked with the Trump organization said such consulting fees are not uncommon.
The District Attorney General and Attorney General’s offices declined to comment. Ms. Trump’s attorney did not return calls regarding the inquiries.
Few details have been publicly disclosed about the District Attorney’s investigation, the only known active criminal case against Mr. Trump. Mr Vance’s office began the investigation more than two years ago, initially focusing on the Trump Organization’s role in the hush money paid to Stormy Daniels, a pornographic film actress who claimed to be having an affair with Mr Trump, during the 2016 presidential campaign to have had.
The investigation has been suspended since last fall after the president filed a lawsuit to block a subpoena for his tax returns and other financial records.
The litigation takes place for the second time in the United States Supreme Court. A decision is expected shortly. Prosecutors have indicated in court records that their investigations have gone well beyond hush money and focused on a range of potential financial crimes, including insurance and banking fraud, tax evasion and grand theft.
Mr Trump has said the investigation is part of “the greatest witch hunt in history”. Both Mr. Vance and Mrs. James are Democrats.
Ms. James’ civil investigation is centered on the Trump Organization’s business practices, though she can make a criminal referral and seek the authority of Governor Andrew M. Cuomo or the state auditor to bring charges on her own.
Their investigation began in March last year after Michael D. Cohen, the president’s former attorney, told Congress that Mr Trump had inflated his financial statements to secure bank loans and underestimated elsewhere for his own Reduce the tax burden. In August, the Attorney General’s office asked a judge to compel the President’s son, Eric Trump, to testify on the investigation, and he did so last month. Eric Trump is Executive Vice President of the Trump Organization and directs its day-to-day operations.
Investigators in Ms. James’ office have examined a growing number of transactions. One of these is a financial restructuring of the Trump Hotel & Tower in Chicago in 2010 when Fortress Credit Corporation forgave more than $ 100 million in debt. The attorney general said in court documents filed in August that the Trump Organization thwarted efforts to determine how this money was reflected on its tax returns and whether it was being declared as income, as the law requires in most cases. The Times’ analysis of Mr. Trump’s financial records found that he had avoided federal income tax on almost all canceled debts.
The attorney general is also looking into whether the Trump Organization used inflated advice when it received large tax breaks to pledge to preserve land where its development efforts have stalled, including its estate in Seven Springs, Westchester County, NY
“The outcome of the election will not affect our investigation,” Ms. James said in a television interview earlier this month, adding, “Nobody is above the law. We will just follow the facts and evidence wherever they lead us.”
Mr Trump has frequently assaulted Ms. James, the youngest in a line of New York attorney general with whom he has clashed. Ms. James led the final stages of an investigation that led to the closure of his scandalous charitable foundation. It is also trying to disband the National Rifle Association, a key ally of the president.
“They’re suing anything, always looking for a crime,” he tweeted last year, though his own legal battle is legendary. His campaign and allies have filed more than two dozen lawsuits in the past few days to reverse the results of the election he lost this month.
Examining the fees apparently paid to his older daughter is likely to produce even more vitriol for the outgoing president. And it raises questions about whether the payments were a tax-deductible way for him to compensate his children or avoid gift taxes he could incur from property transfers, which Mr. Trump’s father had done through legally questionable plans made by The Times was revealed in 2018.
This is not the first attorney general’s office investigation involving Mr. Trump’s children. As part of the settlement that led to the closure of the President’s charitable foundation, Ms. Trump and her brothers, who served on the board of directors, were to “receive training on the duties of charity officials and directors so they could not allow the illegal activity they were overseeing.” Trump Foundation in order to be able to take place again ”, so the terms of the agreement.
In September, after a state judge dismissed arguments by Trump attorneys to further delay Eric Trump’s filing, the president’s son called the investigation “ongoing political revenge.”