- The Supreme Court has paved the way for the Manhattan DA to get Donald Trump's tax returns.
- A former Trump Organization executive and Trump's personal lawyer told Congress he kept two sets of books: One to pay low taxes, another for bank loan rates.
- Prosecutors will be able to look at the evidence and see if the filings rise to financial crimes.
- Visit the Business section of Insider for more stories.
This week, the US Supreme Court rejected a challenge from Donald Trump to keep his tax returns secret.
The ruling cleared the way for Manhattan prosecutors - who have been pursuing them for years - to finally get their hands on financial documents belonging to the former president and his companies.
Trump's tax returns have become the subject of mystique over the past five years, as he became the first major-party nominee since Gerald Ford to not voluntarily release them.
The Manhattan District Attorney's office, led by Cyrus Vance Jr., first sought Trump's tax documents since it opened an investigation into his finances in 2017.
The precise scope of the investigation is unclear, but court filings suggest that Vance's office is looking into whether the former president's tax filings amounted to criminal tax fraud. If Trump were to be indicted for financial crimes, the tax returns would no doubt be a centerpiece for the charges.
Vance's office is also reportedly looking into whether Donald Trump, Jr. and Allen Weisselberg, the former chief financial officer of the Trump Organization, were involved in wrongdoing.
The investigation was first triggered after Michael Cohen, a former executive of the Trump Organization and personal lawyer to Trump, told Congress he used the company's funds for hush-money payments to Stormy Daniels, an adult-film actress who claims she had sex with Trump in 2006. Vance is looking into whether those payments broke laws as well.
Chief among the issues is whether - as Cohen testified - Trump kept two sets of books for his finances: One for favorable loan deals and another for low tax rates.
Jeff Robbins, a former attorney for the US Senate Permanent Subcommittee on Investigations and federal prosecutor overseeing money-laundering probes, said keeping two sets of books could lead to a number of serious financial crimes.
"Inconsistency is not a crime. The intent to defraud is a crime," Robbins told Insider. "What a prosecutor is going to be looking at is: Did Trump seek to defraud the government of the United States with respect to the valuation of assets and the paying of taxes? Was there an intent to defraud banks?"
Trump has gone to great lengths to keep his tax returns secret despite saying he wants to make them public
He has also lied about severing ties to his own businesses, raising questions of whether he used his vast powers as president to make money for himself. Trump said in 2019 that the presidency was costing him up to $5 billion, but has steadfastly refused to furnish documents proving that claim.
In January 2017, Trump held a press conference with his three eldest children and pointed to a large pile of papers that he said showed he was withdrawing from the Trump Organization and giving all control over to Eric Trump and Donald Trump, Jr. He has never permitted reporters to look at those purported documents.
A 2020 investigation from The New York Times found and analyzed nearly two decades' worth of Trump's returns. It cited major revelations, including:
- Trump paid $0 in federal taxes for the majority of the years reviewed and $750 during his first two years as president. At the same time, he paid hundreds of thousands of dollars in taxes to foreign governments.
- He received tens of millions of dollars from foreign sources.
- $300 million in loans are due to be paid back over the next several years.
- He vastly overstated his charitable giving.
- He has been involved in a yearslong battle with the IRS over a $73 million refund, which he may owe back to the federal government.
- He appeared to have worked with his daughter Ivanka Trump to make up fake consulting fees as tax write-offs.
- He apparently mischaracterized his 200-acre family retreat in upstate New York in tax filings to write off millions of dollars more.
Tax experts have described all of those findings as highly unusual, even among the hyper-rich who take advantage of obscure tax loopholes. Trump's attempts to keep them secret have delayed the ability of prosecutors and judges to determine whether they amounted to tax crimes.
Vance has gone further than anyone else to obtain Trump's returns, twice going to the Supreme Court to obtain them.
The subpoenas will also enable Vance to obtain other documents related to Trump's taxes, including communications between the Trump Organization and its accountants at the accounting firm Mazars USA, as well as questions, complaints, concerns, instructions, and arguments for how to value certain assets.
Robbins described these documents as "a potential treasure trove of admissions."
"I'm sure prosecutors are looking at all sorts of contradictions in those documents," Robbins, now the co-chair of the Congressional Investigations practice at Saul Ewing Arnstein & Lehr, told Insider.
"If the taxpayer had taken a totally different position with respect to the asset in some other place, that would be very strong evidence of an intent to defraud," he added.
Deutsche Bank, the Trump Organization's chief lender, and Aon, its insurance broker, have already cooperated with Vance's investigation, according to The New York Times.
Trump is also subject to at least two other financial investigations
In addition to the Manhattan District Attorney's office investigation, New York Attorney General Letitia James is also looking into whether the Trump Organization kept two sets of books for its properties.
The House of Representatives' Ways and Means Committee is also seeking to obtain Trump's tax returns as part of an investigation into whether he interfered with the IRS's audit program.
It is not clear if the US Attorney's Office for the Southern District of New York, which oversees federal prosecutions in Manhattan, is also looking into Trump's finances. It successfully obtained a guilty plea from Michael Cohen in 2018 for campaign-finance violations related to the Stormy Daniels hush-money payments.
And just because Vance will get Trump's tax returns doesn't mean everyone else will.
Under New York state law, evidence obtained for a grand jury - as Vance is doing here - must be kept under seal unless the case goes to court. Both James and the House have been mired in their own court challenges over Trump's returns. Rep. Richard Neal, the chairman of the House committee, has cited Vance's recent Supreme Court win as a mark of confidence that he'll succeed in his own lawsuit.
James, the state attorney general, has been involved with several tangles with Trump, his family, and his company over financial matters.
In 2019, she secured a settlement with Trump and his children where they paid a $2 million fine and were barred from serving on charity boards in the state. The Trump Foundation, which was dissolved as part of the settlement, had used funds to bolster Trump's political fortunes and for the then-candidate's personal image.
A separate probe from James' office is looking into whether the Trump Organization has misrepresented its assets, including the value and use of its properties, for tax benefits. The office interviewed Eric Trump, the current chief executive of the Trump Organization, in October.
Trump, his family members, and the Trump Organization have all denied wrongdoing.
Vance is not expected to run for reelection as Manhattan's District Attorney this year. He recently hired Mark Pomerantz, a former mob prosecutor, to oversee the Trump team and ensure its continuity under a new administration.
The investigations into Trump's finances aren't the only legal perils he's facing. He, his company, political operation, and numerous other businesses and organizations he's affiliated with are staring down a tsunami of investigations. He also faces numerous civil lawsuits related to his business practices and sexual-assault accusations.