Manhattan DA’s Office Digs Into Forgiven Loan In Trump Chicago Skyscraper Project

CHICAGO - JUNE 19: The new "TRUMP" sign gracing the river side of the Trump International Hotel and Tower on June 19, 2014 in Chicago, Illinois. (Photo By Raymond Boyd/Getty Images)
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March 9, 2021 11:55 a.m.

As its investigation into the former president continues, the Manhattan district attorney’s office is eyeing the loan the Trump Organization received from a hedge fund and private equity company for its eponymous Chicago skyscraper.

Documents subpoenaed late last year from Fortress Investment Management, first reported by CNN Monday night, are related to the $130 million loan the company made to the Trump Organization for the construction of a luxury hotel and condo tower in downtown Chicago.

The documents could be a critical piece in puzzling together ways that Trump persuaded lenders to cut him a break after defaulting on loans, which he may not have recorded as income as required by the Internal Revenue Service.

The New York Times previously reported that before Trump defaulted on the loan from Fortress, the company had expected to receive more than $300 million from the Trump Organization that included the $130 million in principal and roughly $185 million in anticipated interest and fees.

According to the Times, Fortress settled for $48 million, which Trump wired to the firm in March 2012.

The IRS requires taxpayers to treat forgiven debts as income when calculating what they owe in federal taxes, a concern taken up by New York Attorney General Letitia James, who disclosed in a court filing back in the fall that it was investigating whether Trump and the Trump Organization recorded the forgiven amount as income and had paid required the taxes.

Fortress has not been accused of any wrongdoing.

Partners to Fortress have included former Treasury Secretary Steve Mnuchin’s Dune Capital, and Cerberus Capital Management, whose co-chief executive, Stephen Feinberg, later became a major Trump fundraiser and later led a White House advisory panel.

The forgiven debts showed up in Trump’s tax returns, the Times reported. One of Trump’s companies, 401 Mezz Venture, reported about $181 million in canceled debts in 2010. Two years later, DJT Holdings, a company that the Chicago project fell under, reported that another $105 million of debt had been forgiven. Most of that appears to reflect the unpaid Fortress sum, the Times said. 

The tax records reviewed by the Times show that while Trump accounted for $287 million of income from his canceled debts, he managed to avoid paying income taxes on nearly all of it.

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