Trump signed off $50M Trump Soho investment-turned-loan: report

Bayrock and partners allegedly dodged up to $100M in taxes by disguising deal

TRD New York /
May.May 26, 2016 12:14 PM

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


Related Articles

arrow_forward_ios
Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory
Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month
Kamala Harris and Joe Biden with Donald Trump (Getty; iStock)

Biden and Harris’ income tax filings shine light on their real estate holdings

Biden and Harris’ income tax filings shine light on their real estate holdings
President Donald Trump and Joe Biden (Getty; iStock)

Will real estate take the stage at Trump-Biden debate?

Will real estate take the stage at Trump-Biden debate?
Donald Trump and the Trump National Doral golf course (Getty, Trump Hotels)

In the rough: Trump’s golf clubs and resorts have lost $315M

In the rough: Trump’s golf clubs and resorts have lost $315M
Donald Trump with 1290 Sixth Avenue in Manhattan and 555 California Street in San Francisco (Getty, Google Maps)

Trump took nearly $100M out of Vornado partnership in 2013

Trump took nearly $100M out of Vornado partnership in 2013
Joe Biden and Donald Trump

Biden vs. Trump: What’s at stake for real estate?

Biden vs. Trump: What’s at stake for real estate?
A federal judge issued an injunction allowing TikTok to remain in app stores. The company recently signed a major office lease at One Five One in New York (Getty; iStock; Google Maps)

TikTok, savior of NYC’s office market, not yet banned in US

TikTok, savior of NYC’s office market, not yet banned in US
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...