Trump lawyers: President has few financial ties to Russia
WASHINGTON — President Donald Trump’s lawyers say his income tax returns do not show income from Russian sources or debt owed to Russians, with the exception of $95 million paid by a Russian billionaire for a Trump-owned estate in Florida and $12.2 million in payments in connection with holding the Miss Universe pageant in Moscow in 2013.
The statements are contained in a letter from two lawyers, Sheri Dillon and William Nelson, to Trump, which the White House released Friday. The president cited the letter in an interview with Lester Holt of NBC News as proof that there were no hidden financial ties between him and Russia.
In addition to the Florida estate and the beauty pageant, the lawyers said Trump received undisclosed payments over 10 years from Russians for hotel rooms, rounds of golf or Trumplicensed products, like wine, ties or mattresses.
But they said those amounts were “immaterial” and would not have been identified as coming from Russian sources in the tax returns.
The lawyers noted that their statement covers only the period dating to 2005, when their firm, Morgan Lewis & Bockius, began representing Trump and the Trump Organization. It also leaves many questions unanswered, owing to the complexity of international finance, such as whether Trump or his firms received Russian income or loans from entities registered elsewhere.
The details in the letter are generally consistent with what Trump’s sons, Eric and Donald Jr., have said in recent interviews regarding income associated with Russian entities.
They acknowledged the considerable profit gained from the 2008 sale of Maison de L’Amitie, a sprawling beachfront estate in Palm Beach, Florida, which the Trump family acquired for about $41 million in 2005. The buyer was a Russian billionaire, Dmitry Rybolovlev.
The sons also acknowledged that affluent Russians are often bidders on Trump Organization condominium sales. That does not jibe with the lawyers’ statement that any other Russian income from real estate sales was immaterial. But it is possible, because of the way real estate depreciation rules work, that profits from an individual sale might not show up in a way that has major income tax implications.
Trump’s previously released financial disclosures also have not given any indication that corporate entities he directly controls or owns entirely had taken loans from Russian lenders.
But the Trump Organization could still be an investor in other entities for which he is not the sole or principal owner and that have Russian debts. These types of loans have never been made public, as the financial disclosure report issued during the election campaign only detailed loans given to companies he controls, leaving his full list of potential lenders unknown.
Some tax-law experts questioned key parts of the letter, like how the lawyers defined “Russian” sources and lenders. Major companies in Russia frequently use subsidiaries in other jurisdictions, like Cyprus, the Netherlands or the British Virgin Islands, to conduct overseas business. Moreover, it was unclear what the lawyers meant by asserting that the tax returns do not “reflect” any income from Russian sources.
“You would have to dig down to books and records of underlying entities to see components” of various sources of income, said Edward Kleinbard, a tax law professor at the University of Southern California. Without seeing the actual returns, he said, “asserting that TTO counterparties are not ‘Russian’ is genuinely meaningless,” using an abbreviation for the Trump Organization.
In the interview with Holt of NBC, Trump said he had sent a certified copy of the letter to Sen. Lindsey Graham, R-S.C., who has questioned Trump’s business dealings with Russia.