A nonprofit watchdog group has filed a complaint to the Department of Justice (DOJ) alleging that former President Donald Trump improperly listed a “mystery loan” on financial disclosures that could be evidence of tax fraud.
Citizens for Responsibility and Ethics in Washington (CREW) said in its Thursday filing to the DOJ that there is “credible evidence” that Trump, in describing a $50 million loan he received from a Chicago-based company he owns, was filing financial statements that “were not true.”
CREW notes that Trump has been filing these statements to be compliant with the Ethics in Government Act of 1978, which requires candidates running for president to report “liabilities owed to any creditor…which exceed $10,000 at any time during the preceding calendar year.” Reporting a $50 million loan, even to himself, would fall under the purview of that law, which exists to discern any conflicts of interest candidates may have during a campaign or while they’re serving in office.
Failure to comply with the law, by either not filing such statements or making false claims on them, can result in fines and even one year of imprisonment, CREW said in its complaint to the DOJ.
Yet, there is a huge peculiarity with the loan in question: it doesn’t seem to exist at all.
As CREW recounts in its filing, a court-appointed monitor overseeing Trump’s business entities — which was assigned to Trump and the Trump Organization as part of a civil fraud trial in New York — said that, when she asked about the loan upon discovering it in company documents, she was told that the loan “never existed.” The monitor also noted that there are “no loan agreements that memorialize the [Chicago-based] loan” either.
The issue of the “mystery loan” was first reported by The Daily Beast earlier this year, when the monitor included her questioning its existence in a footnote of a broader report she had submitted to the New York court at that time.
The loan “appears to have evolved out of a debt restructuring deal undertaken by Mr. Trump in 2012 when he made a discounted prepayment on debt owed to one of his lenders on his Chicago hotel project,” CREW wrote in its filing. As to why Trump would report on a loan that doesn’t exist, the group didn’t have a definite answer, but it did state that the action seemed to be comparable to other forms of fraud that are regularly attempted.
It is not clear why Mr. Trump would have reported a non-existent loan as a liability owed to one of his own companies, but some reporting suggests that the deal could be part of a tax-avoidance scheme, known as debt parking, that has been used by taxpayers to purchase debt and then leave it in a separately-owned entity rather than incur tax liability on debt which has been forgiven, while others theorize that the loan may be owed to a secret third party.
In a statement given to The Daily Beast regarding CREW’s filing a complaint urging the DOJ to investigate the matter, Noah Bookbinder, president of CREW, said the lie about the loan was “odd” and that it warrants an inquiry.
“Donald Trump has a long history of lying about his finances for his personal benefit — he’s on trial in New York right now for doing just that — and this appears to be another example,” Bookbinder said.
“The FBI and the Department of Justice should investigate and, if the facts support it, act to ensure accountability for this lawlessness,” he added.
An investigation by the DOJ into Trump’s mystery loan, if the department does indeed decide to heed CREW’s advice, could add to the pile of legal messes that Trump currently faces this election year.
Any charges stemming from such an investigation likely wouldn’t be made anytime this year — at least not publicly — as the DOJ has a longstanding policy of not issuing any statements about such matters within 60 days before a presidential election if doing so could influence the outcome in some way.
But if an inquiry is started within the next couple of months, the embarrassment of yet another legal investigation won’t help Trump when the election season ramps up. And if he loses the presidential race to President Joe Biden, a new investigation could be a thorn in Trump’s side, legally speaking, in 2025 or beyond.
Join us in defending the truth before it’s too late
The future of journalism is uncertain, and the consequences of losing it are too grave to ignore. To ensure Truthout remains fearless, tough, and 100 percent independent, we need to raise $50,000 in the next 9 days. Every dollar raised goes directly toward the costs of producing news you can trust.
Please give what you can — because by supporting us with a tax-deductible donation, you’re not just preserving a source of news, you’re helping to safeguard what’s left of our democracy.