fraud – Sheila Kennedy

Democracy And Dirty Tricks

When Democrats gripe that American government is no longer small-d democratic, they have a point. Not only has extreme gerrymandering given more power to rural voters than to those who reside in cities, but the allocation of two Senate seats to each state, regardless of population, has grossly distorted the ideal of “one person, one vote.” The last time the GOP won the Senate, it was with twenty million fewer votes than had been cast for the Democratic “minority.”

Democratic Senators currently represent some forty million more voters than Republican Senators, despite an almost-even split in the upper house. Thanks to predicted demographic shifts, it’s poised to get even worse: one scholar estimates that by 2040, 70% of Americans will live in the fifteen largest states, and will be represented by thirty Senators, while the remaining 30% will have 70 Senators voting on their behalf.

If these structural advantages weren’t enough, the deep pocket donors who support the GOP continue to fund political dirty tricks. I’ve been reading a number of reports about the latest effort to re-elect Donald Trump: a phony “third party” called No Labels.

As Robert Hubbell recently wrote,

The “No Labels” organization is a GOP dark-money PAC designed to elect Donald Trump by running a doomed third-party candidate to draw votes away from Joe Biden in 2024.

Hubbell quotes the Intercept for a story suggesting that No Labels intends to run Manchin; whether that is accurate or not, what we do know is that No Labels is not a real political party. It is funded by the Koch brothers, Harlan Crow, and Peter Theil (among others).

Worse, “No Labels” is operating as a 501(c)(4) charitable organization so that it does not have to disclose its donors like every other political party—even though No Labels is registering as a political party across the nation for the 2024 election.

Arizona Democrats, among others, are challenging the organization’s misrepresentation of itself as a third party, alleging that, as a 501(c)(4) organization — which legally cannot primarily be engaged in political activity — it cannot comply with federal election regulations governing political parties, including disclosure of contributors.

“No Labels is not following the rules for political party recognition, while attempting to be placed on the ballot alongside actual, functioning political parties who do,” a spokesperson for the Arizona Democratic Party said in March.

Hubbell quite properly characterizes articles suggesting that No Labels is a new, “centrist” political party as “journalistic malpractice.”

As anyone who has followed election politics even casually knows, thanks to America’s political structures, third party candidates are always spoilers. That’s true even when the third party is a legitimate party and the candidate honorable and sincere. The presence of such ballot options simply takes votes from one of the major party candidates. (Most consequential example: No Ralph Nader on the ticket, no George W. Bush in the White House.)

In this case, there is ample evidence that the effort to mount a bogus “third-party” option is anything but honest and sincere. There is also absolutely no doubt who they hope that bogus entrant will benefit–any doubt about the motives should be dispelled by the identity of the funders.

Harlan Crow already owns a Supreme Court Justice; now he and the surviving Koch brother and Peter Theil and their ilk want to ensure the election of Trump, an intellectually vacuous and mentally-ill narcissist they can easily manipulate.

I worry that this particular “dirty trick” may not receive the publicity it deserves–the media and the voters who pay attention are constantly distracted by the equally dangerous antics of the MAGA nutcases and Neo-Nazis currently impeding rational governance and fiscal meltdown in Congress–and relatively few voters pay attention.

It is absolutely true that both parties have engaged in political trickery–mostly at the local level–just as both parties have gerrymandered when in a position to do so. In the last couple of decades, however, it is the GOP that has benefitted–thanks in large part to the huge amounts of money these millionaires and billionaires have been willing to spend in order to foreclose the twin threats of increased regulation and increased taxation.

If the Democrats ever secure a real, working majority in Congress, they need to address the structures that are most anti-democratic–at least, the ones that are amenable to changes in rules (the filibuster) and statutory repair (gerrymandering, vote suppression). They can also address the corruption at the Supreme Court. There is nothing lawmakers can realistically do about distorted Senate representation, and the National Popular Vote Interstate Compact would have to be passed by several Red States, which makes that effort to neuter the Electoral College unlikely.

But nothing good will happen without massive turnout that ignores third party candidates–real or fictitious.

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She Has The Receipts…

Oh, snap ! Excuse my schadenfreude….

Those of us who follow the news have been hearing about New York Attorney General Letitia James’ investigation of the Trump Organization for what seems like a century. Yesterday, we finally got to see the results of that methodical investigation–and they were devastating.

As the saying goes, she brought the receipts.

What made the announcement of James’ suit even more satisfying was the fact that it followed by just a few hours the smackdown of Judge Cannon’s widely derided decision by the Court of Appeals. (It is worth noting that two of the judges on that three-judge panel were Trump appointees.) As Robert Hubbell wrote in his newsletter, “It is difficult to convey the extraordinary rebuke delivered by the 11th Circuit to Judge Cannon.”

Hubbell also quoted from Letitia James’ verbal presentation of her 225 page complaint at the press conference.

For too long, powerful, wealthy people in this country have operated as if the rules do not apply to them. Donald Trump stands out as among the most egregious examples of this misconduct. With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system. . . . Mr. Trump thought he could get away with the art of the steal, but today, that conduct ends. There are not two sets of laws for people in this country; we must hold former presidents to the same standards as everyday Americans. I will continue to ensure that no one is able to evade the law, because no one is above it.

In all my years of practicing law, I never saw a 225 page complaint; James has used those pages to enumerate in great detail an absolutely breathtaking amount of fraud, employed consistently over many years. Those of you who want to read the entire document can do so here.

Among the “inaccuracies” Trump supplied to banks, taxing agencies and insurance companies were the following:

Trump’s apartment in NY was approximately 10,000 square feet. That’s really big– but of course, not as big as Trump’s ego. In his financial statements (intended to be relied upon by lenders) he claimed it was 30,000 square feet. That isn’t an inadvertent measurement error.
Trump purchased undeveloped land in Scotland for $12 million dollars. Eight years later, he claimed it was worth $435 million. (A contemporaneous appraisal found that–if the land was developed–it would be worth $21 million.
Then there was the golf course Trump purchased on the west coast near Los Angeles. He granted a conservation easement to the state, and an appraisal valued the golf course at $18 million. When Trump claimed a tax deduction for the grant of easement, he claimed the property was worth $25 million–a value that reduced his taxes to the IRS by millions of dollars.
40 Wall Street, a downtown building owned by the Trump Organization, was valued at $200 million on a tax filing in 2010. In the very next year, Trump valued it at an astronomical $524 million.

There is much, much more, and the sheer chutzpah is amazing. James’ office lacks the authority to bring criminal charges, so her case is civil, but she announced that she has made criminal referrals to both the U.S. Attorney for New York and the IRS.

Although James’ case is civil, it’s worth noting that she is seeking what you might call a “corporate death penalty” for the Trump Organization. Among the various remedies she’s seeking are cancellation of corporate certificates (without which businesses can’t operate), the appointment of an independent monitor, an order barring Trump and the Trump Organization from doing loan, real estate and other transactions relating to New York for five years, and permanently barring Trump, three of his adult children (I bet Tiffany is grateful for those years of cold shouldering) from serving as officers or directors of any New York businesses.

And since this is a civil suit, James is free to point to the hundreds of times Donald and his son Eric refused to answer questions and took refuge behind the Fifth Amendment. (In a criminal proceeding, prosecutors cannot draw inferences from the fact that a defendant claimed the Fifth; in civil suits, however, the rule is different.)

Vanity Fair ran an article under the headline: “How Screwed Are Donald Trump and his Adult Children?”I think the answer is: royally. And it couldn’t happen to a more deserving family of grifters.

Pass the popcorn.

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Once A Grifter…

Whenever there is discussion on this blog about why thus-and-so happened, someone will inevitably post a comment containing “follow the money.” I wish I could say I disagree with the premise that–no matter what the subject is–money is a substantial part of the explanation, but I can’t. (The problem with dismissing adages of this sort is that, no matter how hackneyed, they tend to reflect reality.)

One of the most illuminating aspects of the testimony that emerged from the June 13th hearing of theJanuary 6th Committee was the obscene amount of money Trump raised in the run-up to January 6th–and the blatant dishonesty of the way he raised and distributed it. As the Daily Beast reported,

The committee also alleged that the Trump campaign and its allies used those false claims to exploit donors, to the tune of hundreds of millions of dollars. In perhaps the most egregious instance, multiple campaign officials told the committee that the “official election defense fund” mentioned in fundraising emails didn’t even exist. It was just a marketing ploy to extract money, which was then divvied up among a number of accounts.

And while Trump and GOP allies did end up igniting millions of dollars on the legal altar, most of the donations went elsewhere. A slide put together by congressional investigators pointed out that $5 million went to Event Strategies, which helped set up the rally at The Ellipse near the White House where Trump fired up an angry crowd that later attacked the Capitol building. They also noted that last year, $1 million went to the nonprofit that hired his chief of staff Mark Meadows, with another $1 million going to the America First Policy Institute, which backed the social media lawsuit Trump lost in April. Another $204,857 was funneled to the Trump Hotel Collection.

“The Big Lie was also a big rip off,” Lofgren said.

Co-chair Liz Cheney (R-WY) said the panel would explore that element in a future hearing.

I can hardly wait…

As Representative Lofgren pointed out, people making these small donations are entitled to know where their money is actually going. According to the findings of the investigation, however, funds were not only diverted from their purported purpose, it wasn’t inadvertence; that was pretty clearly the intent from the start.

As the Independent reported,

Donald Trump’s presidential campaign raised $250 million from supporters by telling them the money would be used to fight voter fraud, but the campaign knew those claims of fraud were bogus and instead diverted the money to his own political organisation, the House committee investigating the January 6 attacked claimed on Monday.

Mr Trump’s campaign sent millions of fundraising emails to supporters encouraging them to donate to help fight voter fraud between election day and January 6, the committee said. Many of those emails asked supporters to donate to an “election defense fund” for legal cases related to the election.

However, an investigator for the committee said that fund did not exist, and most of that money went Mr Trump’s ‘Save America’ political action committee, not to election-related litigation.

“The evidence highlights how the Trump campaign pushed false election claims to fundraise, telling supporters it would be used to fight voter fraud that did not exist,” said Amanda Wick, senior investigative counsel for the House committee.

“The Trump campaign knew these claims of voter fraud were false yet they continued to barrage small-dollar donors with emails encouraging them to donate to something called the ‘Official Election Defense fund.’ The select committee discovered no such fund existed,” she added.

Everything this man ever touched was a grift–a con job. Trump steaks, vodka, University…the list goes on. Most sentient Americans concluded long ago that–in addition to his repellent personal characteristics–Trump was a petty crook, not a businessman.

The question we confront isn’t whether Trump himself was guilty of lies big and small, or whether he constantly engaged in unethical and illegal activities. We know the answer to that. The question–to which I have absolutely no answer–is why so many Americans see him as somehow admirable, as someone deserving of their loyalty and money.

The only answer that makes any sense is that these people–these members of the cult–live in an alternate reality, an information bubble in which Fox is actually a news organization, the My Pillow nutcase has access to classified information, Sidney Powell and Rudy Guliani are competent lawyers, and every “legacy” news source is part of a”deep state” conspiracy financed by George Soros that is lying to them.

There’s a diagnosis for people who believe those things…..

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So THIS Is Why Trump Is Hiding His Tax Returns…

Among the many mysteries I’ve been unable to fathom is a deceptively simple one: why don’t Trump voters find his hysterical efforts to hide his taxes suspicious? Don’t they ever wonder what it is he is so determined to hide?

So far, of course, he’s been successful. His lawyers have been able to appeal lower court orders requiring him to turn over his tax returns, his bank says it doesn’t have copies (and if you believe that, I have some swampland in Florida to sell you…), and between the insane tweets and the bizarre behaviors and now the impeachment shenanigans, the issue of the tax returns has receded into the vast pile of venality labeled “and other stuff.”

But thanks to Pro Publica, we now have at least a partial answer. It’s not surprising, but it sure does explain why he wanted to keep the information hidden.

Documents obtained by ProPublica show stark differences in how Donald Trump’s businesses reported some expenses, profits and occupancy figures for two Manhattan buildings, giving a lender different figures than they provided to New York City tax authorities. The discrepancies made the buildings appear more profitable to the lender — and less profitable to the officials who set the buildings’ property tax.

For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.

Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.

When tax experts were shown the discrepancies, they dismissed the possibility that they were careless errors; they agreed the inconsistencies were properly characterized as tax fraud.

New York City’s property tax forms state 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.”…

ProPublica obtained the property tax documents using New York’s Freedom of Information Law. The documents were public because Trump appealed his property tax bill for the buildings every year for nine years in a row, the extent of the available records. We compared the tax records with loan records that became public when Trump’s lender, Ladder Capital, sold the debt on his properties as part of mortgage-backed securities.

ProPublica reviewed records for four properties: 40 Wall Street, the Trump International Hotel and Tower, 1290 Avenue of the Americas and Trump Tower. Discrepancies involving two of them — 40 Wall Street and the Trump International Hotel and Tower — stood out.

One expert who was asked to look at the returns said the numbers suggested the company had kept two sets of books–one for lenders, another for tax authorities.

Taxes have long been a third rail for Trump. Long before he famously declined to make his personal returns public, a New York Times investigation concluded, Trump participated in tax schemes that involved “outright fraud,” and that he had formulated “a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns.” Trump’s former partners in Panama claimed in a lawsuit, which is ongoing, that Trump’s hotel management company failed to pay taxes on millions in fees it received. Spokespeople for Trump and his company have denied any tax improprieties in the past.

In February, Cohen told Congress that Trump had adjusted figures up or down, as necessary, to obtain loans and avoid taxes. “It was my experience that Mr. Trump inflated his total assets when it served his purposes,” Cohen testified, “and deflated his assets to reduce his real estate taxes.”

Most Trump voters, of course, lack the resources to play these games. They have to pay what they owe. One would think they might resent it when rich people lie to evade taxes–but then, it’s widely known that Trump routinely stiffs vendors and contractors, and his base doesn’t seem to care. (As long as he hates the same people they do…)

What was that Trump line? “When you’re a star, they let you do it.” A star! I guess the delusional self-image that supposedly entitles him to grab women’s genitals tells him he’s also entitled to cheat on his taxes.

Evidently, the people who think gold toilets are classy think tax fraud is smart…..

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About That “City On A Hill”

Back when Republicans were (mostly) sane–when they cared about good government at least as much as raw power, I worked in the Indianapolis mayoral administration of Bill Hudnut. Bill had his faults, as we all do, but he passionately loved the city and tried to do what was best for all of its inhabitants.

He was also a former Presbyterian minister who often compared America–and to a lesser extent Indianapolis– to “The Shining City on the Hill.” We were to be a beacon, an ideal to which others aspired.

In the absence of a real newspaper, I can’t offer an educated evaluation of today’s Indianapolis, but no one in their right mind thinks today’s United States is a beacon to be emulated. It isn’t simply our massive and embarrassing policy failures (think health care, the environment, criminal justice, race relations, women’s rights and economic justice, for starters…)

It’s the corruption.

As the New York Times has recently–amply, overwhelmingly– documented, our President is a crook. Not that most of us are surprised, given the indictments of his associates, the scandals of his cabinet , and his whole sordid history.

Paul Krugman has responded analytically to the evidence:

The blockbuster New York Times report on the Trump family’s history of fraud is really about two distinct although linked kinds of fraudulence.

On one side, the family engaged in tax fraud on a huge scale, using a variety of money-laundering techniques to avoid paying what it owed. On the other, the story Donald Trump tells about his life — his depiction of himself as a self-made businessman who made billions starting from humble roots — has always been a lie: Not only did he inherit his wealth, receiving the equivalent of more than $400 million from his father, but Fred Trump bailed his son out after deals went bad.

So, Krugman says, voters who bought Trump’s highly inaccurate version of Donald Trump bought snake-oil. But the bigger, and much more damaging fraud is the story we tell ourselves about America the Meritocracy.

The tale of the Trump money is part of a bigger story. Even among those unhappy at the extent to which we live in an era of soaring inequality and growing concentration of wealth at the top, there has been a tendency to believe that great wealth is, more often than not, earned more or less honestly. It’s only now that the amounts of sheer corruption and lawbreaking that underlie our march toward oligarchy have started to come into focus.

Until recently, my guess is that most economists, even tax experts, would have agreed that tax avoidance by corporations and the wealthy — which is legal — was a big issue, but tax evasion— hiding money from the tax man — was a lesser one. It was obvious that some rich people were exploiting legal if morally dubious loopholes in the tax code, but the prevailing view was that simply defrauding the tax authorities and hence the public wasn’t that widespread in advanced countries.

But this view always rested on shaky foundations. After all, tax evasion, almost by definition, doesn’t show up in official statistics, and the super-wealthy aren’t in the habit of mouthing off about what great tax cheats they are. To get a real picture of how much fraud is going on, you either have to do what The Times did — exhaustively investigate the finances of a particular family — or rely on lucky breaks that reveal what was previously hidden.

We’ve had some of those “lucky breaks,” as Krugman points out. Thanks to the Panama Papers and other leaks, we now know that outright tax evasion by the very wealthy is pervasive. Researchers estimate that the rich pay on average 25 percent less than they owe–enough to pay for the entire food stamp program. And of course, that tax evasion serves to entrench privilege and allows it to be passed on to the heirs of that privilege.

Just like Trump’s daddy did.

Meanwhile, Republicans in Congress have been “systematically defunding the Internal Revenue Service, crippling its ability to investigate tax fraud. We don’t just have government by tax cheats; we have government of tax cheats, for tax cheats.”

It’s not just that the president of the United States is, as veteran tax reporter David Cay Johnston put it, a “financial vampire,” cheating taxpayers the way he has cheated just about everyone else who deals with him.

Beyond that, our trend toward oligarchy — rule by the few — is also looking more and more like kakistocracy — rule by the worst, or at least the most unscrupulous. The corruption isn’t subtle; on the contrary, it’s cruder than almost anyone imagined. It also runs deep, and it has infected our politics, quite literally up to its highest levels.

So much for “the Shining City on the Hill.” America is more like an inner-city neighborhood where kids look up to the rich drug dealer.

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