The New York Times reveals in a new report that Donald Trump got out of having to repay hundreds of millions of dollars that he owed lenders in connection with his building in Chicago. A variety of factors combined behind the stunning level of debt forgiveness: for starters, Trump’s venture into Chicago did not go as well as he had hoped. A majority of the tens of thousands of square feet of retail space on the premises has never been occupied, and from 2014 through 2018, the building’s yearly profits took a freefall, going from $16.3 million to $1.8 million. Besides the development’s financial travails, Trump also sued his lenders — including the infamous Deutsche Bank — alleging that they had engaged in predatory lending practices.
Breaking: New NYT tax report.
Trump's federal income tax records show for the first time that, since 2010, Deutsche Bank and other lenders have forgiven about $287 million in debt that Trump failed to repay. https://t.co/iaTNEx8vPC
— Kyle Griffin (@kylegriffin1) October 27, 2020
Donald Trump is the one who personally guaranteed $40 million of the overall $640 million loan from Deutsche Bank alone and then failed to repay the overall sum. Trump’s personal guarantee meant that, despite the fact that Trump was doing business with Deutsche Bank through an intermediary branch of his family business, the bank could pursue repayment from Trump directly, in his personal capacity as a private businessperson. While developing the Chicago building, Trump also got $130 million from a hedge fund and private equity company called Fortress Investment Group.
In late 2008, the Times reports that Trump and his family business sued Deutsche Bank and Fortress Investment Group, along with the other lenders who the firms had sold pieces of the loans too. Stunningly, in a letter that Trump sent Deutsche Bank in the days before the lawsuit, the eventual president “accused it of helping ignite the financial crisis,” according to the Times. In the lawsuit itself, Trump accused Deutsche Bank of those aforementioned predatory lending practices. Wildly, Trump sought a total of $3 billion in damages. There’s no particular evidence that Trump was in any way actually entitled to that level of damages.
In July of 2010, the litigation — including a countersuit from Deutsche Bank — wound down with a revelation that the legal teams for Trump, Deutsche Bank, and Fortress Investment Group had reached a private agreement. Although the parties did not reveal the terms of this agreement to the court, the Times reports that according to Trump’s tax returns, in this case, Trump “was let off the hook for about $270 million,” which the paper notes “was the type of generous financial break that few American companies or individuals could ever expect to receive, especially without filing for bankruptcy protection.” It’s another example of the eventual president gaming the country’s financial system for his benefit.
The controversy surrounding the huge level of debt forgiveness doesn’t end there. Forgiven debts are required to be treated like income on tax returns, but — in large part through claiming huge losses — Trump avoided paying personal income taxes on most of the forgiven debts. This wrinkle in the president’s financial background is one of the subjects of an ongoing investigation into Trump and his finances by New York Attorney General Letitia James.
Another separate investigation is underway by Manhattan District Attorney Cy Vance. Theoretically, if Trump loses the election, then he could suddenly become much more vulnerable to criminal charges, if prosecutors were to determine them to be warranted.