Our Outlaw

Everyone loves an outlaw. Hollywood operates on that premise. Alfred Hitchcock cast Cary Grant as a famous cat burglar – a master jewel thief – a sophisticated beyond-cool rogue but really a good guy now – but with no regrets about his past. Grace Kelly couldn’t resist him. She couldn’t resist that taste of real danger. She couldn’t resist the bad boy. And pirates are good too. Capatain Jack Sparrow is cool. It would be cool to be a pirate. H. L. Mencken thought so – “Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.”

Everyone feels that way at times. Politicians know this. Rick Scott was involved in that Columbia/HCA Medicare billing fraud case – HCA ended up paying fines and settlements that came to 1.7 billion dollars – but he escaped direct charges. He pleaded the Fifth over and over – no one can be forced to incriminate themselves – and when he couldn’t do that, Scott admitted that he had been a terrible CEO – he had no idea what his people had been doing – so it wasn’t his fault. And they went to jail, not him. He walked away a free man, and a very rich man – HCA had made a ton of money billing Medicare for entirely imaginary services and treatments – and then the people of Florida elected Rick Scott governor, twice, and will probably elect him senator this year and send him off to Washington. They like the guy. He stuck it to The Man – to the damned government. He took the government’s money, lots of it, and got away with it. To those who hate “big government” he’s a hero – almost a legend.

Donald Trump understands this too. He breaks all the rules. It was the same before he was president. He stiffed creditors. His vodka and his university were scams and he hardly tried to hide that. Only the rubes were fooled, and soon parted from their money. A few rubes sued about the university, and won, but everyone else shrugged. Let him play his games. He’s an outlaw, perhaps a bad thing, but he quickly humiliates anyone who gets in his way, which is so damned cool. People do love outlaws.

They may even love this:

President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents, an investigation by The New York Times has found.

The New York Times doesn’t like getting sued. The New York Times is careful. When the New York Times reports “outright fraud” it’s best to assume they can document that in full detail, but the main thing they stress is this:

Mr. Trump won the presidency proclaiming himself a self-made billionaire, and he has long insisted that his father, the legendary New York City builder Fred C. Trump, provided almost no financial help.

But The Times’s investigation, based on a vast trove of confidential tax returns and financial records, reveals that Mr. Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day.

So he is not a self-made man:

Much of this money came to Mr. Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Mr. Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings…

The president’s parents, Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances.

The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.

And that explains this:

The Times’s findings raise new questions about Mr. Trump’s refusal to release his income tax returns, breaking with decades of practice by past presidents. According to tax experts, it is unlikely that Mr. Trump would be vulnerable to criminal prosecution for helping his parents evade taxes, because the acts happened too long ago and are past the statute of limitations. There is no time limit, however, on civil fines for tax fraud.

The State of New York and the City of New York are now looking into that, but the Times looks at other oddities:

What emerges from this body of evidence is a financial biography of the 45th president fundamentally at odds with the story Mr. Trump has sold in his books, his TV shows and his political life. In Mr. Trump’s version of how he got rich, he was the master dealmaker who broke free of his father’s “tiny” outer-borough operation and parlayed a single $1 million loan from his father (“I had to pay him back with interest!”) into a $10 billion empire that would slap the Trump name on hotels, high-rises, casinos, airlines and golf courses the world over. In Mr. Trump’s version, it was always his guts and gumption that overcame setbacks. Fred Trump was simply a cheerleader.

“I built what I built myself,” Mr. Trump has said, a narrative that was long amplified by often-credulous coverage from news organizations, including The Times.

Certainly a handful of journalists and biographers, notably Wayne Barrett, Gwenda Blair, David Cay Johnston and Timothy L. O’Brien, have challenged this story, especially the claim of being worth $10 billion. They described how Mr. Trump piggybacked off his father’s banking connections to gain a foothold in Manhattan real estate. They poked holes in his go-to talking point about the $1 million loan, citing evidence that he actually got $14 million. They told how Fred Trump once helped his son make a bond payment on an Atlantic City casino by buying $3.5 million in casino chips.

But The Times’s investigation of the Trump family’s finances is unprecedented in scope and precision, offering the first comprehensive look at the inherited fortune and tax dodges that guaranteed Donald J. Trump a gilded life. The reporting makes clear that in every era of Mr. Trump’s life, his finances were deeply intertwined with, and dependent on, his father’s wealth.

That may be the real news here:

By age 3, Mr. Trump was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. By the time he was 17, his father had given him part ownership of a 52-unit apartment building. Soon after Mr. Trump graduated from college, he was receiving the equivalent of $1 million a year from his father. The money increased with the years, to more than $5 million annually in his 40s and 50s.

So much for the self-made man, but there’s more:

Fred Trump was relentless and creative in finding ways to channel this wealth to his children. He made Donald not just his salaried employee but also his property manager, landlord, banker and consultant. He gave him loan after loan, many never repaid. He provided money for his car, money for his employees, money to buy stocks, money for his first Manhattan offices and money to renovate those offices. He gave him three trust funds. He gave him shares in multiple partnerships. He gave him $10,000 Christmas checks. He gave him laundry revenue from his buildings…

All told, The Times documented 295 streams of revenue that Fred Trump created over five decades to enrich his son….Here is what can be said with certainty: Had Mr. Trump done nothing but invest the money his father gave him in an index fund that tracks the Standard & Poor’s 500, he would be worth $1.96 billion today. As for that $1 million loan, Fred Trump actually lent him at least $60.7 million, or $140 million in today’s dollars, the Times found.

Perhaps this was just clever. Fox News’ Neil Cavuto says so – Trump “out dodged” the IRS. Trump stuck it to The Man of course, but Slate’s Ben Mathis-Lilley sees this:

As someone who is about to be priced out of New York City by its absurdly high housing prices, I also appreciated the Times piece’s explanation of how the Trumps used a shell company called All County Building Supply & Maintenance, which was owned by Fred Trump’s children, to simultaneously 1) pass money from Fred Trump to his kids without paying gift or estate taxes and 2) provide justification for bogus rent increases.

The gist was basically this: If a building needed $1,000 in repairs, All County Building Supply & Maintenance would pay the $1,000, and then charge Fred Trump $2,000. The extra $1,000 went into the kids’ bank accounts without being subject to gift and estate taxes – and Fred Trump could now take an essentially phony receipt for $2,000 in repairs to state authorities to justify raising rents by a commensurate amount when in fact he’d only improved the value of his tenants’ building by half that.

From the Times:

State records show that after All County’s creation, the Trumps got approval to raise rents on thousands of apartments by claiming more than $30 million in major capital improvements. Tenants repeatedly protested the increases, almost always to no avail, the records show…

“All of this smells like a crime,” said Adam S. Kaufmann, a former chief of investigations for the Manhattan district attorney’s office who is now a partner at the law firm Lewis Baach Kaufmann Middlemiss.

Mathis-Lilley can add only this:

People as wealthy and connected as Fred and Donald Trump have too much financial and political inertia to ever fully suffer the consequences of their misbehavior, no matter how well-documented. Fred Trump, who was arrested at a violent KKK rally in 1927 and sued by the Nixon administration for discriminating against black tenants in 1973, certainly never faced anything like justice; his son has spent decades evading the consequences of his own financial ineptitude through legal stall tactics, loophole exploitation, and public-relations bullshit. Meanwhile, New York state government, one of the authorities that’s ostensibly responsible for making sure the kind of stuff the Trumps pulled with their real-estate money doesn’t happen, is run by a Democratic governor who sells himself as a hero of the anti-Trump resistance … but whose campaigns have famously long been funded by wealthy real estate developers.

Do you ever feel like you’ve been cheated?

Well, every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats, but Jonathan Chait is more measured:

Trump was in the money-inheriting business. And that business was essentially, and not just incidentally, illegal. The Times found 295 income streams created by Fred Trump for his son, many of them illegal on their face. The English language has terms for people who make large sources of money from illegal activity: criminals.

The article makes clear that Trump is safe from criminal prosecution largely because tax-law enforcement is weak, and many of his apparently illegal activities took place too long ago to prosecute now. That does not minimize his culpability in any moral sense though. It’s merely a testament to the general immunity from consequences that wealthy people enjoy, and regular people do not.

But something else bothers Chait:

The revelations illustrated the degree to which Trump was paradoxically the most under-vetted presidential candidate since the invention of American mass media. It’s not that there was a dearth of Trump coverage – just the opposite. There was so much Trump coverage, for so many years, that it overloaded the circuits. New Trump outrages kept crowding out old Trump outrages. Trump produced so much that was bizarre, offensive, unprecedented, or otherwise newsworthy that some of the basic vetting work could not be completed.

This was crucially abetted by his unprecedented financial secrecy – Trump was the only presidential candidate in four decades to refuse disclosure of his tax returns. That fact itself would have dominated the coverage of any normal candidate who tried it. But as Trump produced so many other extraordinary (and usually negative) stories about himself, the tax-return issue simply faded away.

So here we are:

So a man whose path to success was formed in large part by participating in schemes to hide and launder illegal handouts from his father managed to maintain the illusion that he was a successful law-abiding president.

It probably would have mattered a lot if Trump had been widely described in the news media as the crook the Times reveals him to be. But there is no undoing his election now.

It is an open question whether attacks on his crooked business activity will form a potent message against him in 2020, or whether voters, more likely, will dismiss it as irrelevant history.

Voters, more likely, will find it clever and rather cool. Everyone loves an outlaw. Fox News wants you to love this particular outlaw and his outlaw family – the Sopranos of Manhattan real estate.

The Washington Post’s Philip Bump notes the change:

The opening credits for “The Apprentice” in the show’s introductory 2004 season were unsubtle. Private jets, high-rise office buildings, a close-up on the Mercedes logo on a car. With those images, the show’s host, Donald Trump, teased the sort of wealth that he enjoyed. It was at least the third time that Trump’s business acumen had been presented to the American public anew, and it was almost certainly the iteration of that story that was most responsible for the results of the 2016 presidential election.

At the center of the show’s proposition was that, under Trump’s tutelage, random energetic business junkies could re-create his success. They were apprenticing with him, with Trump, the guy who took his father’s mishmash of real estate investments and built an empire on the island of Manhattan. That Trump built his wealth himself was essential to the show and to his candidacy.

But that was for the rubes:

That version of events was always worth taking with a grain of salt, if only because of Trump’s proven record of embellishing his business success. His own personal estimates of his net worth, which he at one point admitted were largely subjective, were always substantially higher than those of outside observers.

Bump documents that with an impressive array of charts and tables, but he suggests that this all comes down to one paragraph in the Times explaining a tour of New York that Trump gave a Times reporter in the mid-1970s:

In the chauffeured Cadillac, Donald Trump took The Times’s reporter on a tour of what he called his “jobs.” He told her about the Manhattan hotel he planned to convert into a Grand Hyatt (his father guaranteed the construction loan), and the Hudson River railroad yards he planned to develop (the rights were purchased by his father’s company). He showed her “our philanthropic endeavor,” the high-rise for the elderly in East Orange (bankrolled by his father), and an apartment complex on Staten Island (owned by his father), and their “flagship,” Trump Village, in Brooklyn (owned by his father), and finally Beach Haven Apartments (owned by his father). Even the Cadillac was leased by his father.

And now he’s president. And there’s the “outright fraud” and all the rest. He is an outlaw. But he’s OUR outlaw now. Does that help?

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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