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Trump’s ‘Two sets of books’

Service Area: Fraud

Member: Roger Isaacs

According to a new report from investigative newsroom ProPublica, Donald Trump reported his business assets to lenders and New York City tax officials in two very different ways, leading to suspicions and allegations of fraud.

The documents Mr Trump provided to his lenders appear to be different from those he gave to the US tax department, which appeared to show ‘two sets of books’, according to ProPublica. This is a potentially illegal practice defined as an attempt to “hide or disguise certain financial transactions from outsiders by having a set of fraudulent accounting records (or books) for official use and another, the real set, for personal records”.

Real estate experts in the US claim that the tax documents contain ‘stark discrepancies’ that could point to financial fraud. For example, in one instance in 2017, Mr Trump told a lender that he got twice as much rent from one building as he reported to the tax authorities that year. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.

New York City’s property tax form states that the person signing them “affirms the truth of the statements made” and that “false filings are subject to all applicable civil and criminal penalties”.

In the US, the punishments for lying to tax officials, or lenders, can be significant, ranging from fines to criminal fraud charges and imprisonment.

However, to bring a successful prosecution, there needs to be sufficient evidence. While Mr Trump’s former lawyer Michael Cohen has accused his former client of manipulating numbers on his tax and loan documents, records have rarely surfaced and, until now, there has been little official documentary evidence supporting the claims.

In any forensic investigation, evidence is crucial, and without it, any amount of inference or suspicion is not enough.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “There has been pressure since the start of his presidency for Mr Trump to release his tax records to the public.

“The majority of his predecessors have freely released their tax records when coming into office and this has led to further suspicion from rivals.

“These latest allegations are likely to increase the pressure on Trump to release more information, which he claims can’t be done as they are currently being audited.

“Until concrete evidence can be secured and analysed it is impossible to know whether criminal charges could be justified. As in the case in any legal proceedings, evidence is critical which highlights the importance of forensic accountancy in revealing the information that allows the justice system to make an appropriate and informed decision.”

“In any event, the U.S. Justice Department has a decades-old policy that a sitting president cannot be indicted. Accordingly, if sufficiently compelling evidence of wrongdoing was found, the U.S. Constitution sets out how the impeachment process could be used by Congress to remove a president from office for “high crimes and misdemeanors”.

Author: Roger Isaacs
21 October 2019