The Saga of Clarence Thomas and His Luxury RV Takes a Disturbing Turn
Greg Sargent – May 16, 2024
Faced with a barrage of ethics scandals that have tarred the Supreme Court as riddled with corruption, Justice Clarence Thomas has sought to cast them as merely an outgrowth of politics in Washington, D.C. “It’s a hideous place,” Thomas said recently of the nation’s capital, in some of his most extensive remarks about his ethical lapses, noting that he’s been subject to “nastiness” and “lies.” Thomas added, “It’s one of the reasons we like R.V.ing.”
So it’s fitting that the latest sordid turn in these sagas involves none other than Thomas’s recreational vehicle, that symbol of his yearning to escape Washington to mingle with reg’lar folk who don’t subject each other to the viciousness he faces in the capital.
Thomas is still refusing to reveal whether he repaid the principal on the $267,000 loan that he received from Anthony Welters, a wealthy health care executive and personal friend, to purchase his R.V. in 1999, according to a letter that Senators Ron Wyden and Sheldon Whitehouse have sent to an attorney for Thomas.
Thomas also has yet to say whether the loan’s principal was forgiven by the lender, the Democrats argue in the letter, which was obtained by The New Republic. If it was forgiven all or in part, the senators say, it could constitute “a significant amount of taxable income” that should be reported on federal tax returns.
“Your client’s refusal to clarify how the loan was resolved raises serious concerns regarding violations of federal tax laws,” the senators write. Wyden chairs the Finance Committee, and Whitehouse chairs the Judiciary Committee’s panel on federal courts, both of which are spearheading an investigation of Supreme Court ethics scandals.
The tale involving this R.V. constitutes one of the higher-profile instances of Thomas potentially accepting a form of income from wealthy benefactors, resulting in a drumbeat of stories that have shaken the court. Though Thomas’s frequent depiction of his Prevost Marathon R.V. (which he purchased used) as a sign of his affection for salt-of-the-earth leisure activities appears sincere, it’s also a luxury vehicle and an extremely pricey asset, perhaps comparable to a medium-size yacht.
The whole saga began when The New York Timesrevealed last summer that Thomas had purchased the R.V. in 1999 for $267,230 with financing from Welters that Thomas almost certainly could not have obtained from a bank, as experts told the Times.
In response to the paper’s questions, Welters—a longtime friend who grew up poor, as Thomas did, and went on to amass a reported $80 million fortune in the health care industry—would say only that the loan was “satisfied.” As the Times noted, this doesn’t mean the loan was paid back.
Thomas also has not been forthcoming, the Democrats say. Since the Times story broke, Wyden’s Finance Committee has sought information about the loan and, through Welters’s cooperation, has obtained a limited number of documents related to it. As the committee announced last fall, those materials showed only that Thomas had paid back some of the interest and appeared to reveal that, in 2008, Welters forgave most or all of the principal of the loan.
But Thomas did not report this on his 2008 Financial Disclosure Report, the committee said, and in response to the committee’s questions, he has not clarified whether he reported any of that money as income on tax filings.
Which brings us to the present. The senators have been pressing Thomas’s lawyer, Elliot Berke, to provide additional detail on the forgiven loan, and last month, Berke responded with a letter. But once again, the letter—which TNR viewed—offered little additional clarity. It said Thomas “made all payments” on a “regular basis until the terms of the agreement were satisfied in full” and that he’s complied with judicial disclosure requirements.
That avoids detailing what those terms were, whether the payments were merely for interest—as opposed to paying off the loan’s principal—and whether the arrangement ended up forgiving much or all of that principal. If so, it would functionally constitute a large chunk of taxable income, Wyden argued.
“This raises the question of whether this justice is in compliance with federal tax law, which requires a disclosure of forgiven debt and taxable income,” Wyden told me. “The central question is: Did he ever repay the principal?”
The senators’ new letter demands more information on all those fronts. Berke, Thomas’s lawyer, didn’t respond to a request for comment.
This raises important issues even if there is no suggestion whatsoever that this particular money impacted any Thomas rulings or that Welters himself had any business before the court. We should expect such transparency from judges because we deserve to know what sort of financial interests could conceivably motivate those who issue rulings that shape our lives, and because judges should serve as models of upholding rules and laws upon which the integrity of the system rests, notes Stephen Vladeck, a law professor at the University of Texas at Austin.
“We subject all federal judges—including the justices—to financial disclosure rules because we are worried about even the appearance that they are deciding cases in ways that are consistent with their financial interests,” Vladeck said, stressing that the Democrats are raising legitimate questions about Thomas.
“We want judges and justices who are participating in the system and not subverting it,” Vladeck added, and thus “lead by example.”
After ProPublica revealed that Thomas accepted an extraordinary array of luxury trips and vacations from billionaire and Republican megadonor Harlan Crow without disclosing them, Thomas defended his conduct. He claimed that “colleagues” advised him that “hospitality from close personal friends” is “not reportable,” but ethics experts sharply dispute this and insist such disclosure is required.
That aside, as The New Republic’s Matt Ford argues, Thomas has made it clear he views all this mainly as a public relations problem and demonstrates little concern for any need to demonstrate ethical propriety, thus making him partly responsible for the questions and the “nastiness” that continue to dog him.
Wyden seconds the point. Thomas could simply be more forthcoming about the R.V. loan, he says, thus demonstrating both that he respects the need to maintain appearances and that he’s in compliance with income tax filing requirements.
“We’re giving the justice the opportunity to clear this huge mess up,” Wyden told me. “Nobody in this country is above the law. Not even Supreme Court justices.”
Lauren Boebert Admits Exactly Why Trump Stooges Descended on Trial
Talia Jane – May 16, 2024
Representative Lauren Boebert admitted exactly why she and her conservative coterie appeared at Manhattan Criminal Court on Thursday for Donald Trump’s hush-money trial: to help him circumvent his gag order.
The firebrand representative of Beetlejuice fame immediately took to X (formerly Twitter) to denigrate lead witness Michael Cohen and Judge Juan Merchan’s daughter on Trump’s behalf.
Boebert seemed to acknowledge that she was acting as a surrogate to violate Trump’s gag order, writing on X, “They may have gagged President Trump. They didn’t gag me. They didn’t gag the rest of us.”
“I wonder if I’ll run into Judge Merchan’s daughter here in court today,” Boebert wrote, accusing her of “being paid millions and millions of dollars by Democrat campaigns all across the country.”
Boebert also threw some barbs at key witness Michael Cohen, asking, “Why is that fraud Michael Cohen allowed on TikTok with a shirt of Trump behind bars but Trump can’t speak out?”
Conservative attacks against Merchan’s daughter—an attorney who operates a progressive political consulting firm—have raged on for weeks, spearheaded by Trump in an effort to remove Merchan from overseeing the case. Trump’s attacks have led to threats against family members of prosecutors overseeing the case. Merchan criticized the behavior as an effort to impede the rule of law.
Merchan’s gag order prohibits Trump from speaking about people participating in his hush-money trial, save for Manhattan District Attorney Alvin Bragg and Merchan himself. The order also bars Trump from speaking about the judge’s and prosecution’s family members. Trump is similarly prohibited from tapping surrogates to speak on his behalf.
While none have yet explicitly acknowledged they’re acting as surrogates for Trump, multiple conservative politicians have criticized the gag order while making denigrating statements in line with Trump’s against those Trump is prohibited from speaking about. Earlier this week, Senator Tommy Tuberville admitted he went to the trial to help Trump “overcome his gag order.”
When asked on Tuesday if Trump was using people to speak on his behalf, Trump declared, “I do have many surrogates, and they’re all speaking very beautifully.”
Merchan previously noted that, as Trump has violated his gag order 10 times, he may have to consider jail time should he violate it again. For Merchan to take action on surrogates, there would need to be proof that Trump directed them to speak. With these blabbermouths, direct admission seems to be just a matter of time.
Maddow Blog | Facing a tough race, Ted Cruz makes a new and implausible pitch
Steve Benen – May 14, 2024
Chip Somodevilla
To know anything about Sen. Ted Cruz is to know that he’s never been especially popular on Capitol Hill. To appreciate just how disliked the Texan is among his colleagues, consider a joke Republican Sen. Lindsey Grahamtold in 2016: “If you killed Ted Cruz on the floor of the Senate, and the trial was in the Senate, nobody would convict you.”
The South Carolinian was making a bipartisan assessment at the time. Over the course of his tenure, GOP senators have come to see Cruz as a tiresome, grandstanding blowhard who causes more problems for the party than he solves. Former House Speaker John Boehner went so far as to refer to Cruz as “Lucifer in the flesh,” adding, “I have never worked with a more miserable son of a bitch in my life.”
Among Democrats, the Texas Republican’s reputation is vastly worse. Cruz, in Democrats’ estimation, is a toxic, far-right election denier, far more interested in partisan podcasting than governing, who cannot be trusted, liked, or respected.
For years, Cruz made little effort to deny his unpopularity among his colleagues. In fact, he embraced it, effectively bragging about his I’m-not-here-to-make-friends approach to Senate work.
But after more than a decade in Congress, as he prepares for a potentially competitive re-election fight, the senator is trying something new, unexpected, and implausible for those who’ve followed his career: Ted Cruz is encouraging voters to see him as a figure capable of bipartisan cooperation. The Texas Tribune recently reported:
The Wall Street Journal soon after published a related report, noting that Cruz is “rolling out a softer, bipartisan side,” and taking steps to “recast his image as a dealmaking lawmaker.”
The article added, “His campaign even shot ads featuring ‘Democrats for Cruz.’”
A week later, The Washington Post noted the Texan’s role in shepherding a bill that he’d co-authored overseeing the Federal Aviation Administration. “It’s been a whiplash moment for his colleagues, Republicans and Democrats alike, who have rarely seen Cruz take his Ivy League intellect and channel it into something so … bipartisan,” the article said.
Stepping back, there are a couple of questions hanging overhead.
The first, of course, is why he’s doing this. I won’t pretend to know what the senator is thinking, but there are a handful of possibilities to consider.
It’s possible, for example, that Cruz, after more than a decade of accomplishment-free grandstanding, has finally come to realize that he can use his position to advance policy goals. Or put another way, perhaps it’s finally dawned on the Texas Republican that he can be more productive if he tries acting less like a mindless partisan and like an actual senator.
It’s also possible that Cruz is truly worried about his re-election prospects and he’s toying with a political rebrand in the hopes of expanding his electoral appeal. Let’s also not forget that the senator has presidential ambitions, and his interest in a future national race might help explain his latest shifts.
All of which leads to the second question: How long will this “rebranding” initiative last?
Time will tell, of course, but given everything we’ve seen from Cruz throughout his career, it’s difficult to imagine his alleged interest in bipartisanship extending beyond Election Day 2024.
Chiefs Kicker Goes Wide Right In Blasting Joe Biden On Abortion In Graduation Speech
Ron Dicker – May 14, 2024
Kansas City Chiefs kicker Harrison Butker launched a right-wing screed at President Joe Biden during Saturday’s commencement at Benedictine College (Kan.). (Watch the video below.)
Butker targeted Biden’s support of abortion rights and railed at “degenerate cultural values,” “dangerous gender ideologies,” and the “tyranny of diversity, equity, and inclusion” on a platform he said was given to him by God.
The guest speaker, whose game-tying field goal extended the recent Super Bowl to overtime, where the Chiefs eventually beat the San Francisco 49ers, tried to score points with his conservative audience at the liberal arts Catholic school.
“Our own nation is led by a man who publicly and proudly proclaims his Catholic faith, but at the same time is delusional enough to make the sign of the cross during a pro-abortion rally,” he said, referring to Biden’s gesture last month that seconded a Democratic official’s criticism of Florida’s six-week abortion ban.
“He has been so vocal in his support for the murder of innocent babies that I’m sure to many people it appears that you can be both Catholic and pro-choice,” Butker continued.
Butker had already gone further afield, appearing to criticize Dr. Anthony Fauci’s COVID-19 response while voicing other conservative objections.
“Bad policies and poor leadership have negatively impacted major life issues,” he said. “Things like abortion, IVF, surrogacy, euthanasia, as well as a growing support for degenerate cultural values and media, all stem from the pervasiveness of disorder.”
HuffPost reached out to the Chiefs for comment on Butker’s remarks.
Fast-forward to 1:20 for many of Butker’s remarks aimed at Biden and culture-war points of contention:https://www.youtube.com/embed/-JS7RIKSaCc?rel=0
Chiefs kicker Harrison Butker bashes Pride Month, tells women to stay in the kitchen
Doug Farrar – May 13, 2024
There are some times when maybe, just maybe, one should actually stick to sports.
Kansas City Chiefs kicker Harrison Butker has been tremendously successful in his chosen profession over the last few years; the 1027 seventh-round pick out of Georgia Tech has helped his team win three Super Bowls, and in the 2023 season, he made 94.3% of his field goals in the regular season (a career high), and he went 11-fot-11 in the postseason.
Butker’s legacy of tolerance is a bit more complicated.
Butker recently delivered the commencement address at Benedictine College, a liberal arts institution in Atchison, Kansas. This is the same college that once forced out gay basketball player Jallen Messersmith to remove a rainbow flag from his dorm room window.
It would seem that Butker felt right at home.https://www.youtube.com/embed/-JS7RIKSaCc?version=3&rel=1&showsearch=0&showinfo=1&iv_load_policy=1&fs=1&hl=en-US&autohide=2&wmode=transparent
After delivering some incendiary comments about Covid and President Biden, Butker got around to what he perceives as a woman’s ultimate and rightful place: the kitchen.
“I think it is you, the women, who have had the most diabolic lies told to you. Some of you may go on to lead successful careers in the world but I would venture to guess that the majority of you are most excited about your marriage and the children you will bring into this world.
“I can tell you that my beautiful wife Isabelle would be the first to say her life truly started when she started living her vocation as a wife and as a mother. I’m on this stage today, able to be the man that I am, because I have a wife who leans into her vocation.
“I’m beyond blessed with the many talents God has given me, but it cannot be overstated that all my success is made possible because a girl I met in band class back in middle school would convert to the faith, become my wife, and embrace one of the most important titles of all. Homemaker.”
Then, Butker got to what he termed the dangers of the “church of nice.”
“The world around us says that we should keep our beliefs to ourselves whenever they go against the tyranny of diversity, equity and inclusion,” Butker said. “We fear speaking truth, because now, unfortunately, truth is in the minority.”
Then, on to Pride Month, which takes place in June.
“Not the deadly sins sort of Pride that has an entire month dedicated to it, “but the true God-centered pride that is cooperating with the holy ghost to glorify him.”
Butker has every right to say whatever he wants at such an address, but he also deserves the flak he’s going to get over it. Most likely, he’ll take it as one for the team in the fight against, as he put it,
Ukrainian attacks on Russian oil refineries may be proving the Biden Administration wrong, experts say
Nathan Rennolds – May 11, 2024
Ukrainian attacks on Russian oil refineries may be proving the Biden Administration wrong, experts say
Ukraine has been targeting Russian oil refineries in recent months.
The Biden Administration has criticized the strikes, warning of global energy price rises.
However, some experts say Ukraine should continue the attacks. Here’s why.
Ukraine has been ramping up attacks on Russian oil refineries in recent months as it seeks to hamper Russian export revenues and curtail fuel supplies to Russian President Vladimir Putin’s forces.
In one of the latest attacks, Ukrainian drones struck an oil refinery in Russia’s Kaluga region, setting it on fire, the RIA state news agency reported on Friday, per Reuters.
Ukraine also hit Gazprom’s Neftekhim Salavat oil refinery, one of Russia’s largest oil refineries, earlier this week, Radiy Khabirov, the head of Russia’s Republic of Bashkortostan, said in a post on Telegram.
However, the Biden Administration has previously slammed such tactics, with Defense Secretary Lloyd Austin saying in April that it risked impacting global energy markets and urging Ukraine to shift its focus onto military targets.
“Those attacks could have a knock-on effect in terms of the global energy situation,” Austin said. “Quite frankly, I think Ukraine is better served by going after tactical and operational targets that can directly influence the current fight.”
But some experts believe such criticism is misguided.
Writing for Foreign Affairs magazine, Michael Liebreich, the founder of Bloomberg New Energy Finance, Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, and Sam Winter-Levy, a doctoral candidate in political science at Princeton University, argued that Ukrainian strikes on Russian refining facilities would not lead to spikes in global energy prices.
The experts said that Ukrainian attacks on oil refineries would only hinder Russia’s ability to turn its oil into refined products such as gasoline and would not impact the volume of oil it can extract or export.
“In fact, with less domestic refining capacity, Russia will be forced to export more of its crude oil, not less, pushing global prices down rather than up,” they added.
And such strikes will likely continue to affect those within Russia, where prices for refined products like gas or diesel are soaring — meaning Ukraine’s attacks are achieving the aims of failed Western economic sanctions, they continued.
The West has attempted to impose a number of sanctions on Russia to limit its income from energy, with the US and the UK banning Russian oil and gas and G7 leaders agreeing to set a price cap on Russian crude oil at $60 per barrel.
But Russia has largely managed to get around such measures, with its Deputy Prime Minister, Alexander Novak, saying in December last year that Russia had shifted almost all of its oil exports to China and India.
Its total oil and gas revenue for the month hit 1.23 trillion rubles, up almost 90% from April last year, per the report.
Reuters reported in April that Russia also appeared to be able to quickly repair some of the key refining facilities affected by Ukrainian strikes, reducing impacted capacity to roughly 10% from nearly 14% at the end of March, per the agency’s calculations.
Ukraine has since launched a series of new attacks on refining sites, however, and it is as yet unclear how these have affected Russia’s repair efforts.
Trump’s Sleazy $1 Billion Shakedown of Oil Execs Gives Dems an Opening
Greg Sargent – May 11, 2024
Ever since Donald Trump descended that golden escalator in 2015, a central tenet of his bond with his supporters has been a simple promise to them: I have seen elite corruption and self-dealing from the inside, and I will put that know-how to work for you.
During that campaign, for instance, Trump could boast that not paying taxes “makes me smart,” knowing supporters would hear it in exactly those terms. More recently he has told the MAGA masses that in facing multiple criminal prosecutions, “I am being indicted for you,” as if he’s bravely journeying into the belly of the corrupt system mainly to expose how it’s victimized them.
A new Washington Post report that Trump made explicit policy promises to a roomful of Big Oil executives—while urging them to raise $1 billion for his campaign—is a powerful story in part because it wrecks what’s left of that mystique. In case you didn’t already know this, it shows yet again that if Trump has employed that aforementioned knowledge of elite corruption and self-dealing to any ends in his public career, it’s chiefly to benefit himself.
That counter narrative is a story that Democrats have a big opportunity to tell—if they seize on this news effectively. How might they do that?
For starters, the revelations seem to cry out for more scrutiny from Congress. Democratic Senator Sheldon Whitehouse of Rhode Island, who has been presiding over hearings into the oil industry as chair of the Budget Committee, says it’s “highly likely” that the committee will examine the new revelations.
“This is practically an invitation to ask more questions,” Whitehouse told me, describing this as a “natural extension of the investigation already underway.”
There’s plenty to explore. As the Postreports, an oil company executive at the gathering, held at Trump’s Mar-a-Lago resort last month, complained about environmental regulations under the Biden administration. Then this happened:
Trump’s response stunned several of the executives in the room overlooking the ocean: You all are wealthy enough, he said, that you should raise $1 billion to return me to the White House. At the dinner, he vowed to immediately reverse dozens of President Biden’s environmental rules and policies and stop new ones from being enacted, according to people with knowledge of the meeting, who spoke on the condition of anonymity to describe a private conversation.
Giving $1 billion would be a “deal,” Trump said, because of the taxation and regulation they would avoid thanks to him, according to the people.
Obviously industries have long donated to politicians in both parties in hopes of governance that takes their interests into account, and they explicitly lobby for this as well. But in this case, Trump may have made detailed, concrete promises while simultaneously soliciting a precise amount in campaign contributions.
For instance, the Post reports, Trump vowed to scrap Biden’s ban on permits for new liquefied natural gas exports “on the first day.” He also promised to overturn new tailpipe emission limits designed to encourage the transition to electric vehicles, and he dangled more leases for drilling in the Gulf of Mexico, “a priority that several of the executives raised.”
“The phrase that instantly came to mind as I was reading the story was ‘quid pro quo,’” Whitehouse told me. He also pointed to a new Politico report that oil industry officials are drawing up executive orders for Trump to sign as president. “Put those things together and it starts to look mighty damn corrupt,” Whitehouse said.
So what would be the legislative aim of a congressional inquiry into all this, and what might it look like? One argument is that knowing what transpired between those executives and Trump could inform an analysis of what’s wrong with our campaign finance laws—and how to fix them, says Noah Bookbinder, president for Citizens for Responsibility and Ethics in Washington.
The rub here is this: It’s likely that what transpired between the executives and Trump is perfectly legal. It may not have risen to a solicitation of something of value directly in exchange for an official act. But determining whether it was as egregious as it seems, and examining how it may be permissible under current laws, would illuminate the gaping problems with them, Bookbinder noted.
“There’s a clear legislative purpose in determining what happened at the meeting,” Bookbinder said. If this really constituted “an attempt to link significant campaign contributions with specific policy promises,” Bookbinder continued, “that suggests a huge loophole that needs to be closed.”
Or, as Fred Wertheimer, the president of the watchdog group Democracy 21, told me, this episode “certainly looks like an offer of an exchange of policy for money.” Given that this was probably legal, Wertheimer added, Congress could “look at this as an example of what kind of corrupt campaign finance system exists today.”
Such a move could have second-order political effects. Republicans understand that when they use their power in Congress to kick up a lot of noise about something, it induces the media to make more of it than they otherwise might. Democrats could apply that lesson here.
Democrats could also highlight this affair as a clear indication of Trump’s broader priorities. This would entail pointing out that Trump has vowed to roll back Biden’s whole decarbonization agenda, meaning he’d cancel billions of dollars in subsidies and tax incentives fueling a manufacturing renaissance in green energy. This boom is happening in red areas, too: As Ron Brownstein reports, new Brookings Institution data shows that counties that backed Trump in 2020 are reaping outsize gains—including investments and jobs—from the transition to electric vehicles.
Yet Trump would like to see all this reversed, and he’s apparently dangling this before fossil fuel donors while demanding enormous campaign contributions from them. Making this all even more sordid, recall that Trump is channeling millions in donor money to high-priced lawyers who are defending him against multiple criminal prosecutions.
“Hundreds of thousands of good clean energy jobs have been announced, and whole communities are being revitalized as factories are being rebuilt,” Jesse Lee, a Democratic strategist who advises various climate groups, told me. “Trump is promising to crush it all in exchange for a $1 billion check from oil companies to pay his legal fees.” Trump also recently promised billionaire donors he’d keep their taxes low at another recent gala.
As The Atlantic’s David Graham details, Trump has long presented himself as an outsider—despite being a billionaire himself—by purporting to speak traitor-to-his-class blunt truths about how the rich buy politicians. This was always a transparent scam. Yet it seems even harder to sustain now that Trump has apparently placed himself at the center of that very same scam so conspicuously, making his own corrupt self-dealing as explicit as one could imagine.
If elected, Trump would throw into reverse our transition to a decarbonized future, one that’s creating untold numbers of manufacturing jobs—including in the very places that Trump has attacked Democratic elites for supposedly abandoning—all in exchange for mega-checks from chortling fat cats right out of the most garish of Gilded Age cartoons. For good measure, some of that loot could help Trump secure elite impunity for his own corruption and alleged crimes. We can’t say we weren’t warned. Trump has told us all this himself.
Report: Trump may face a $100 million-plus tax bill if he loses IRS audit fight over Chicago tower
Josh Boaks – May 11, 2024
Republican presidential candidate former President Donald Trump speaks at a campaign rally on Wednesday, May 1, 2024, at the Waukesha County Expo Center in Waukesha, Wis. (AP Photo/Morry Gash) (ASSOCIATED PRESS)
WASHINGTON (AP) — Former President Donald Trump may face an IRS bill in excess of $100 million after a government audit indicates he double-dipped on tax losses tied to a Chicago skyscraper, according to a report by The New York Times and ProPublica that drew on a yearslong audit and public filings.
The report’s findings could put renewed focus on Trump’s business career as the presumptive Republican nominee tries to regain the White House after losing in 2020.
Trump used his cachet as a real estate developer and TV star to build a political movement, yet he has refused to release his tax filings as past presidential candidates have. The tax filings that the public does know about have come from past reporting by the Times and a public release of records by Democrats on the House Ways and Means Committee in 2022.
Trump’s presidential campaign provided a statement in son Eric Trump‘s name saying the IRS inquiry “was settled years ago, only to be brought back to life once my father ran for office. We are confident in our position.”
The tax records cited by the report indicate that Trump twice deducted losses on the Trump International Hotel and Tower, which opened in 2009 near the banks of the Chicago River that cuts through that city’s downtown.
The report said Trump initially reported losses of $658 million in his 2008 filings under the premise that the property fit the IRS definition of being “worthless” because condominium sales were disappointing and retail space went unfilled amid a deep U.S. recession.
But in 2010, the published report said, Trump transferred the ownership of the property to a different holding company that he also controlled, using the move to save money on taxes by reporting an additional $168 million in losses over the next decade on the same property.
The report did not have any updates on the status of the IRS inquiry since December 2022, but said Trump could owe more than $100 million, including penalties, if he were to lose the audit battle.
Trump, meanwhile, is appealing a New York judge’s ruling from February after a civil trial that Trump, his company and top executives lied about his wealth on financial statements, conning bankers and insurers who did business with him. In early April, Trump posted a $175 million bond, halting collection of the more than $454 million he owes from the judgment and preventing the state from seizing his assets to satisfy the debt while he appeals.
Democrat President Joe Biden has said that Trump largely owes his fortune to an inheritance from his father, rather than through his own financial acumen. Biden has gone after Trump for not wanting to pay taxes, while his administration has increased IRS funding in order to increase audits of the ultra-wealthy and improve compliance with the federal tax code.
Trump May Owe $100 Million From Double-Dip Tax Breaks, Audit Shows
A previously unknown focus of an I.R.S. audit is a dubious accounting maneuver that effectively meant taking the same write-offs twice on a Chicago skyscraper.
By Russ Buettner andPaul Kiel – May 11, 2024
The I.R.S. believes that former President Donald J. Trump violated a law meant to prevent double-dipping on tax-reducing losses.Credit…Jamie Kelter Davis for The New York Times
This article was published in partnership with ProPublica. Russ Buettner of The New York Times has spent years reporting on the former president’s finances, including decades of his tax returns. Paul Kiel of ProPublica has reported on the I.R.S. and the ways the ultra-wealthy avoid taxes since 2018.
Former President Donald J. Trump used a dubious accounting maneuver to claim improper tax breaks from his troubled Chicago tower, according to an Internal Revenue Service inquiry uncovered by The New York Times and ProPublica. Losing a years long audit battle over the claim could mean a tax bill of more than $100 million.
The 92-story, glass-sheathed skyscraper along the Chicago River is the tallest and, at least for now, the last major construction project by Mr. Trump. Through a combination of cost overruns and the bad luck of opening in the teeth of the Great Recession, it was also a vast money loser.
But when Mr. Trump sought to reap tax benefits from his losses, the I.R.S. has argued, he went too far and in effect wrote off the same losses twice.
The first write-off came on Mr. Trump’s tax return for 2008. With sales lagging far behind projections, he claimed that his investment in the condo-hotel tower met the tax code definition of “worthless,” because his debt on the project meant he would never see a profit. That move resulted in Mr. Trump reporting losses as high as $651 million for the year, The Times and ProPublica found.
There is no indication the I.R.S. challenged that initial claim, though that lack of scrutiny surprised tax experts consulted for this article. But in 2010, Mr. Trump and his tax advisers sought to extract further benefits from the Chicago project, executing a maneuver that would draw years of inquiry from the I.R.S. First, he shifted the company that owned the tower into a new partnership. Because he controlled both companies, it was like moving coins from one pocket to another. Then he used the shift as justification to declare $168 million in additional losses over the next decade.
The issues around Mr. Trump’s case were novel enough that, during his presidency, the I.R.S. undertook a high-level legal review before pursuing it. The Times and ProPublica, in consultation with tax experts, calculated that the revision sought by the I.R.S. would create a new tax bill of more than $100 million, plus interest and potential penalties.
Mr. Trump’s tax records have been a matter of intense speculation since the 2016 presidential campaign, when he defied decades of precedent and refused to release his returns, citing a long-running audit. A first, partial revelation of the substance of the audit came in 2020, when The Times reported that the I.R.S. was disputing a $72.9 million tax refund that Mr. Trump had claimed starting in 2010. That refund, which appeared to be based on Mr. Trump’s reporting of vast losses from his long-failing casinos, equaled every dollar of federal income tax he had paid during his first flush of television riches, from 2005 through 2008, plus interest.
Mr. Trump at the tower in 2008, with his three eldest children. The project kept falling short of its predicted success, with condo units unsold and retail space sitting empty.Credit…Amanda Rivkin/Agence France-Presse — Getty Images
The reporting by The Times and ProPublica about the Chicago tower reveals a second component of Mr. Trump’s quarrel with the I.R.S. This account was pieced together from a collection of public documents, including filings from the New York attorney general’s suit against Mr. Trump in 2022, a passing reference to the audit in a congressional report that same year and an obscure 2019 I.R.S. memorandum that explored the legitimacy of the accounting maneuver. The memorandum did not identify Mr. Trump, but the documents, along with tax records previously obtained by The Times and additional reporting, indicated that the former president was the focus of the inquiry.
It is unclear how the audit battle has progressed since December 2022, when it was mentioned in the congressional report. Audits often drag on for years, and taxpayers have a right to appeal the I.R.S.’s conclusions. The case would typically become public only if Mr. Trump chose to challenge a ruling in court.
In response to questions for this article, Mr. Trump’s son Eric, executive vice president of the Trump Organization, said: “This matter was settled years ago, only to be brought back to life once my father ran for office. We are confident in our position, which is supported by opinion letters from various tax experts, including the former general counsel of the I.R.S.”
An I.R.S. spokesman said federal law prohibited the agency from discussing private taxpayer information.
The outcome of Mr. Trump’s dispute could set a precedent for wealthy people seeking tax benefits from the laws governing partnerships. Those laws are notoriously complex, riddled with uncertainty and under constant assault by lawyers pushing boundaries for their clients. The I.R.S. has inadvertently further invited aggressive positions by rarely auditing partnership tax returns.
The audit represents yet another potential financial threat — albeit a more distant one — for Mr. Trump, the Republicans’ presumptive 2024 presidential nominee. In recent months, he has been ordered to pay $83.3 million in a defamation case and another $454 million in a civil fraud case brought by the New York attorney general, Letitia James. Mr. Trump has appealed both judgments. (He is also in the midst of a criminal trial in Manhattan, where he is accused of covering up a hush-money payment to a porn star in the weeks before the 2016 election.)
Beyond the two episodes under audit, reporting by The Times in recent years has found that, across his business career, Mr. Trump has often used what experts described as highly aggressive — and at times, legally suspect — accounting maneuvers to avoid paying taxes. To the six tax experts consulted for this article, Mr. Trump’s Chicago accounting maneuvers appeared to be questionable and unlikely to withstand scrutiny.
“I think he ripped off the tax system,” said Walter Schwidetzky, a law professor at the University of Baltimore and an expert on partnership taxation.
The old Chicago Sun-Times building, which would be replaced by Mr. Trump’s 92-story, glass-sheathed skyscraper.Credit…Tim Boyle/Getty Images
From ‘$1.2 Billion’ to ‘Worthless’
Mr. Trump struck a deal in 2001 to acquire land and a building that was then home to the Chicago Sun-Times newspaper. Two years later, after publicly toying with the idea of constructing the world’s tallest building there, he unveiled plans for a more modest tower, with 486 residences and 339 “hotel condominiums” that buyers could use for short stays and allow Mr. Trump’s company to rent out. He initially estimated that construction would last until 2007 and cost $650 million.
Mr. Trump placed the project at the center of the first season of “The Apprentice” in 2004, offering the winner a top job there under his tutelage. “It’ll be a mind-boggling job to manage,” Mr. Trump said during the season finale. “When it’s finished in 2007, the Trump International Hotel and Tower, Chicago, could have a value of $1.2 billion and will raise the standards of architectural excellence throughout the world.”
As his cost estimates increased, Mr. Trump arranged to borrow as much as $770 million for the project — $640 million from Deutsche Bank and $130 million from Fortress Investment Group, a hedge fund and private equity company. He personally guaranteed $40 million of the Deutsche loan. Both Deutsche and Fortress then sold off pieces of the loans to other institutions, spreading the risk and potential gain.
Mr. Trump planned to sell enough of the 825 units to pay off his loans when they came due in May 2008. But when that date came, he had sold only 133. At that point, he projected that construction would not be completed until mid-2009, at a revised cost of $859 million.
He asked his lenders for a six-month extension. A briefing document prepared for the lenders, obtained by The Times and ProPublica, said Mr. Trump would contribute $89 million of his own money, $25 million more than his initial plan. The lenders agreed.
But sales did not pick up that summer, with the nation plunged into the financial crisis that would become the Great Recession. When Mr. Trump asked for another extension in September, his lenders refused.
Two months later, Mr. Trump defaulted on his loans and sued his lenders, characterizing the financial crisis as the kind of catastrophe, like a flood or hurricane, covered by the “force majeure” clause of his loan agreement with Deutsche Bank. That, he said, entitled him to an indefinite delay in repaying his loans. Mr. Trump went so far as to blame the bank and its peers for “creating the current financial crisis.” He demanded $3 billion in damages.
At the time, Mr. Trump had paid down his loans with $99 million in sales but still needed more money to complete construction. At some point that year, he concluded that his investment in the tower was worthless, at least as the term is defined in partnership tax law.
Mr. Trump’s worthlessness claim meant only that his stake in 401 Mezz Venture, the L.L.C. that held the tower, was without value because he expected that sales would never produce enough cash to pay off the mortgages, let alone turn a profit.
When he filed his 2008 tax return, he declared business losses of $697 million. Tax records do not fully show which businesses generated that figure. But working with tax experts, The Times and ProPublica calculated that the Chicago worthlessness deduction could have been as high as $651 million, the value of Mr. Trump’s stake in the partnership — about $94 million he had invested and the $557 million loan balance reported on his tax returns that year.
When business owners report losses greater than their income in any given year, they can retain the leftover negative amount as a credit to reduce their taxable income in future years. As it turned out, that tax-reducing power would be of increasing value to Mr. Trump. While many of his businesses continued to lose money, income from “The Apprentice” and licensing and endorsement agreements poured in: $33.3 million in 2009, $44.6 million in 2010 and $51.3 million in 2011.
Mr. Trump’s advisers girded for a potential audit of the worthlessness deduction from the moment they claimed it, according to the filings from the New York attorney general’s lawsuit. Starting in 2009 Mr. Trump’s team excluded the Chicago tower from the frothy annual “statements of financial condition” that Mr. Trump used to boast of his wealth, out of concern that assigning value to the building would conflict with its declared worthlessness, according to the attorney general’s filing. (Those omissions came even as Mr. Trump fraudulently inflated his net worth to qualify for low-interest loans, according to the ruling in the attorney general’s lawsuit.)
Mr. Trump had good reason to fear an audit of the deduction, according to the tax experts consulted for this article. They believe that Mr. Trump’s tax advisers pushed beyond what was defensible.
The worthlessness deduction serves as a way for a taxpayer to benefit from an expected total loss on an investment long before the final results are known. It occupies a fuzzy and counterintuitive slice of tax law. Three decades ago, a federal appeals court ruled that the judgment of a company’s worthlessness could be based in part on the opinion of its owner. After taking the deduction, the owner can keep the “worthless” company and its assets. Subsequent court decisions have only partly clarified the rules. Absent prescribed parameters, tax lawyers have been left to handicap the chances that a worthlessness deduction will withstand an I.R.S. challenge.
There are several categories, with a declining likelihood of success, of money taxpayers can claim to have lost.
The tax experts consulted for this article universally assigned the highest level of certainty to cash spent to acquire an asset. The roughly $94 million that Mr. Trump’s tax returns show he invested in Chicago fell into this category.
Some gave a lower, though still probable, chance of a taxpayer prevailing in declaring a loss based on loans that a lender agreed to forgive. That’s because forgiven debt generally must be declared as income, which can offset that portion of the worthlessness deduction in the same year. A large portion of Mr. Trump’s worthlessness deduction fell in this category, though he did not begin reporting forgiven debt income until two years later, a delay that would have further reduced his chances of prevailing in an audit.
The tax experts gave the weakest chance of surviving a challenge for a worthlessness deduction based on borrowed money for which the outcome was not clear. It reflects a doubly irrational claim — that the taxpayer deserves a tax benefit for losing someone else’s money even before the money has been lost, and that those anticipated future losses can be used to offset real income from other sources. Most of the debt included in Mr. Trump’s worthlessness deduction was based on that risky position.
Including that debt in the deduction was “just not right,” said Monte Jackel, a veteran of the I.R.S. and major accounting firms who often publishes analyses of partnership tax issues.
After declaring the tower “worthless,” Mr. Trump claimed as much as $651 million in losses on the project. He later claimed $168 million more.Credit…Jamie Kelter Davis for The New York Times
A Second Bite at the Apple
Mr. Trump continued to sell units at the Chicago Tower, but still below his costs. Had he done nothing, his 2008 worthlessness deduction would have prevented him from claiming that shortfall as losses again. But in 2010, his lawyers attempted an end-run by merging the entity through which he owned the Chicago tower into another partnership, DJT Holdings L.L.C. In the following years, they piled other businesses, including several of his golf courses, into DJT Holdings.
Those changes had no apparent business purpose. But Mr. Trump’s tax advisers took the position that pooling the Chicago tower’s finances with other businesses entitled him to declare even more tax-reducing losses from his Chicago investment.
His financial problems there continued. More than 100 of the hotel condominiums never sold. Sales of all units totaled only $727 million, far below Mr. Trump’s budgeted costs of $859 million. And some 70,000 square feet of retail space remained vacant because it had been designed without access to foot or vehicle traffic. From 2011 through 2020, Mr. Trump reported $168 million in additional losses from the project.
Those additional write-offs helped Mr. Trump avoid tax liability for his continuing entertainment riches, as well as his unpaid debt from the tower. Starting in 2010, his lenders agreed to forgive about $270 million of those debts. But he was able to delay declaring most of that income until 2014 and spread it out over five years of tax returns, thanks to a provision in the Obama administration’s stimulus bill responding to the Great Recession. In 2018, Mr. Trump reported positive income for the first time in 11 years. But his income tax bill still amounted to only $1.9 million, even as he reported a $25 million gain from the sale of his late father’s assets.
It’s unclear when the I.R.S. began to question the 2010 merger transaction, but the conflict escalated during Mr. Trump’s presidency.
The I.R.S. explained its position in a Technical Advice Memorandum, released in 2019, that identified Mr. Trump only as “A.” Such memos, reserved for cases where the law is unclear, are rare and involve extensive review by senior I.R.S. lawyers. The agency produced only two other such memos that year.
The memos are required to be publicly released with the taxpayer’s information removed, and this one was more heavily redacted than usual. Some partnership specialists wrote papers exploring its meaning and importance to other taxpayers, but none identified taxpayer “A” as the then-sitting president of the United States. The Times and ProPublica matched the facts of the memo to information from Mr. Trump’s tax returns and elsewhere.
The 20-page document is dense with footnotes, calculations and references to various statutes, but the core of the I.R.S.’s position is that Mr. Trump’s 2010 merger violated a law meant to prevent double dipping on tax-reducing losses. If done properly, the merger would have accounted for the fact that Mr. Trump had already written off the full cost of the tower’s construction with his worthlessness deduction.
In the I.R.S. memo, Mr. Trump’s lawyers vigorously disagreed with the agency’s conclusions, saying he had followed the law.
If the I.R.S. prevails, Mr. Trump’s tax returns would look very different, especially those from 2011 to 2017. During those years, he reported $184 million in income from “The Apprentice” and agreements to license his name, along with $219 million from canceled debts. But he paid only $643,431 in income taxes thanks to huge losses on his businesses, including the Chicago tower. The revisions sought by the I.R.S. would require amending his tax returns to remove $146 million in losses and add as much as $218 million in income from condominium sales. That shift of up to $364 million could swing those years out of the red and well into positive territory, creating a tax bill that could easily exceed $100 million.
The only public sign of the Chicago audit came in December 2022, when a congressional Joint Committee on Taxation report on I.R.S. efforts to audit Mr. Trump made an unexplained reference to the section of tax law at issue in the Chicago case. It confirmed that the audit was still underway and could affect Mr. Trump’s tax returns from several years.
That the I.R.S. did not initiate an audit of the 2008 worthlessness deduction puzzled the experts in partnership taxation. Many assumed the understaffed I.R.S. simply had not realized what Mr. Trump had done until the deadline to investigate it had passed.
“I think the government recognized that they screwed up,” and then audited the merger transaction to make up for it, Mr. Jackel said.
The agency’s difficulty in keeping up with Mr. Trump’s maneuvers, experts said, showed that this gray area of tax law was too easy to exploit.
“Congress needs to radically change the rules for the worthlessness deduction,” Professor Schwidetzky said.
Susanne Craig contributed reporting. Read by Eric Jason Martin. Narration produced by Anna Diamond and Krish Seenivasan. Engineered by Steven Szczesniak
Russ Buettner is an investigative reporter. Since 2016, his reporting has focused on the finances of Donald. J. Trump, including articles that revealed tax avoidance schemes evidenced on several decades of his tax returns. In 2019, he shared a Pulitzer Prize for work that revealed the vast inheritance Mr. Trump had received from his father.
Not to spend too much time writing about Donald Trump this week, but I was struck by this report in The Washington Post on the former president’s recent overtures to oil executives. After hearing one executive during an event last month at his Mar-a-Lago club complain about supposedly burdensome environmental regulations promulgated by the Biden administration, Trump made a proposition.
You all are wealthy enough, he said, that you should raise $1 billion to return me to the White House. At the dinner, he vowed to immediately reverse dozens of President Biden’s environmental rules and policies and stop new ones from being enacted, according to people with knowledge of the meeting, who spoke on the condition of anonymity to describe a private conversation. Giving $1 billion would be a “deal,” Trump said, because of the taxation and regulation they would avoid thanks to him, according to the people.
The rest of the story goes on to describe Trump’s plans to gut the federal government’s response to climate change and facilitate more and greater fossil fuel extraction.
Trump told the executives that he would start auctioning off more leases for oil drilling in the Gulf of Mexico, a priority that several of the executives raised. He railed against wind power, as The Post previously reported. And he said he would reverse the restrictions on drilling in the Alaskan Arctic.
This would be a generational setback on climate change, a large and disastrous mortgage on the future so that oil and gas giants could fill their coffers for just a little bit longer before they are overtaken by clean energy.
I’m obviously angered by the blatant disregard for the planet and its inhabitants. But I’m also struck by the in-your-face brazenness of Trump’s reported quid pro quo. This is more than the hint of corruption; it is the overpowering scent of the rotting corpse of corruption. It is influence trading of the sort that would embarrass a Boss Tweed or a Roscoe Conkling, whose “honest graft” came with at least the pretense of pursuing the public good.
Even more striking than Trump’s corruption, however, is the fact that we seem to be completely unfazed by the fact that the former president has apparently offered to sell his prospective administration to fossil fuel interests. That might be because, from the beginning of his term to its end, Trump was a font for corruption while in office. His hotel, located just down the street from the White House, was a clearinghouse for anyone who wanted to buy a favor. His daughter and son-in-law may not have accomplished much as presidential advisers, but they walked away from the administration with upwards of hundreds of millions of dollars in new wealth. And six months after leaving the White House, Jared Kushner secured a $2 billion investment from a fund led by the crown prince of Saudi Arabia.
If Trump’s latest instance of corruption isn’t a campaign-ending scandal, it may be because it is nothing new. Trump is corrupt to his bones and now that appears to be as noteworthy as the weather.
