UPDATED, 10:20 a.m., May 27: In the latest controversy surrounding the Trump Soho and developer Bayrock Group – as well as the presumptive GOP presidential nominee himself – a British newspaper investigation claims Bayrock and Trump signed off on a $50 million investment from an Icelandic company that was later reclassified as a loan in order to dodge taxes.
Trump himself signed documents approving the deal in 2007, which would see Icelandic investor FL Group pour $50 million into four development partnerships led by Bayrock, including the Trump Soho and two other projects bearing the Trump name, according to the Daily Telegraph.
But that equity investment was later relabeled as a loan – meaning that Bayrock and its partners would escape some $20 million in taxes by disguising the sale of the partnership stake to FL Group, as well as an estimated $80 million in taxes on future profits from the properties.
Trump had a 15 percent stake in Trump Soho at the time. His attorney, Alan Garten, told the Telegraph that Trump “had nothing to do with the transaction,” with his signature merely a formality and Trump only a “limited partner” in the property.
CBRE, which like Trump was a partner on one of the four development partnerships involving FL Group, asked questions about the tax structure but ultimately agreed to the deal after hearing that Trump had signed off, the Telegraph reported.
In a statement to The Real Deal, Bayrock described the Telegraph article as “misleading and inaccurate,” and said the transaction with FL Group “was vetted and approved by outside accountants and tax counsel for both Bayrock and FL.”
In addition, Bayrock cited “an extensive field audit” by the IRS of pertinent loan documents and materials tied to the deal, which concluded “that classification of the transaction as a loan was appropriate and lawful.”
But the Telegraph’s investigation raises further questions about business dealings at the Trump Soho. Trump, Bayrock and partner Sapir Organization were hit with a lawsuit in 2010 for lying about how many units they sold at the condo and hotel tower at 246 Spring Street – a matter that was also subject to a separate criminal investigation by the Manhattan District Attorney’s Office.
Bayrock, meanwhile, is tied to a bizarre list of scandals, including the dealings of convicted developer and former NBA player Tate George. A former consultant also sued Bayrock in 2014, claiming the company used “mob tactics” to cut him out of a commission. [Daily Telegraph] – Rey Mashayekhi