It’s now a family affair!

While the criminal case is tightly focused on executive compensation, the civil case accuses the company and the Trumps of a longstanding effort to manipulate property valuations in an attempt to reduce their tax liabilities and gain more favorable banking terms. The suit is seeking $250 million in penalties and future restrictions on Trump business activities in New York. Imagine that world.

As an example of the type of fraud at the center of this lawsuit, the “Trump Building” at 40 Wall Street was valued at $527 million to lenders, but was only valued at $16.7 to tax officials. Valuing the property is that manner reduces the Trumps’ tax liabilities, while opening them up to much more favorable banking terms.

To put that in perspective, the median home price in the US is hovering around $400,000 right now, and the replacement cost for a roof on that home is in the neighborhood of $20,000. If a storm destroys your roof and your homeowners policy is going to cover the cost of replacement, this would be the equivalent of seeking a $100,000 payout from your insurance company, (based on your stated home valuation of $2 million); but only paying property taxes on a home you value at $63,000. That’s fraud.

Some other example properties:

  • A California golf club, valued at both $900,000 and $25 million
  • A suburban estate in New York, valued at both $56 million and $291 million

The NY Attorney General asserts that Trump has “wildly exaggerated his net worth by billions of dollars.” Billions. Trump reportedly has a net worth of $3 billion. If he’s misstated his net worth by billions, what is he actually worth?

Billion sounds like a lot until you consider that Trump received a roughly $413 million inheritance in the 1990’s, and prior to that, he was given millions of dollars every year of his adult life. Due to the time value of money, that means his annual rate of return on the money that was just given to him could be as low as 3-4 percent! He literally could have dumped his money into an S&P 500 index fund and he would be $10 billion wealthier right now. Yet we’re to believe he’s some savvy real estate genius. Fuck outta here.

I’m so far off topic here. Bottom line: all of our favorite Trumps have entered the chat.

Update November 2021: a request was approved for an independent monitor to prevent future fraud by the Trump organization, requiring court approval before any assets are sold or transferred. Attorney General James found that days before the civil suit was filed, Trump created a new corporation — Trump Oganization II, how clever — possibly to be used to protect Trump’s assets from a financial judgment.

Photo by Aditya Vyas on Unsplash