Since September, New York prosecutors have opened two inquiries that could require Donald Trump to fend off potential charges of fraud in the early days of his life after the presidency. A report from the New York Times on Thursday provides new details on the criminal investigation led by Manhattan district attorney Cyrus Vance Jr. and the civil investigation led by New York attorney general Letitia James. Both prosecutors are reportedly looking at apparent tax write-off schemes at the Trump Organization, some of which include the president’s eldest daughter.
The Times reports that the authorities, who are acting independently, have subpoenaed the Trump Organization in recent weeks for records pertaining to tax deductions taken on consulting fees. And though there is little public knowledge about the current focus of the investigations, a Times exposé on Trump’s tax returns reveals the kind of incongruities that would catch the eyes of prosecutors:
Among the revelations was that Mr. Trump reduced his taxable income by deducting about $26 million in fees to unidentified consultants as a business expense on numerous projects between 2010 and 2018.
Some of those fees appear to have been paid to Ms. Trump, The Times found. On a 2017 disclosure she filed when joining the White House as a presidential adviser, she reported receiving payments from a consulting company she co-owned, totaling $747,622, that exactly matched consulting fees claimed as tax deductions by the Trump Organization for hotel projects in Hawaii and Vancouver, British Columbia.
Ms. Trump was an executive officer of the Trump companies that made the payments, meaning she appears to have been treated as a consultant while also working for the company. While companies can deduct professional fees, the Internal Revenue Service requires that consulting arrangements be market-based and reasonable, as well as “ordinary and necessary” to running a business.
The good news for Ivanka is that there is “no indication” that she is a “focus of either inquiry,” according to the Times. (Nevertheless, she wasn’t thrilled by the development. “This is harassment pure and simple,” she tweeted, adding: “This ‘inquiry’ by NYC Democrats is 100% motivated by politics, publicity, and rage.”) The bad news for the family is that both of these inquiries are at the state level, so if they develop into court cases, they are unaffected by a potential presidential pardon, which only covers federal crimes.
Ivanka Trump has been under scrutiny from state and local authorities before. As part of the agreement that shuttered the self-dealing Donald J. Trump Foundation, Ivanka Trump and her brothers Eric and Donald Jr. were ordered to receive “training on the duties of officers and directors of charities so that they cannot allow the illegal activity they oversaw at the Trump Foundation to take place again,” according to the terms of the settlement. And according to ProPublica, Vance’s office was building a criminal case against Ivanka and Don Jr. in 2012 for inflating the sales of property in the Trump Soho building to mislead prospective buyers. Vance overruled prosecutors, telling them to close the investigation. He later told ProPublica he didn’t see a case — though he acted after a visit from Trump’s then-attorney, who had recently made a $25,000 contribution to Vance’s campaign.
This post has been updated.