An Ongoing Look Into the Origins of Trump’s Wealth

[0] Hey, it's Michael.

[1] This week, we're revisiting our favorite episodes of the year, listening back, and then hearing what's happened in the time since they first ran.

[2] Today, we return to an investigation into Fred and Donald Trump's taxes.

[3] You have to swear an oath of blood before you're allowed in, so...

[4] Okay.

[5] It has not been clean since we took it over.

[6] Can you just kind of walk me through the piles a little bit?

[7] These are thousands of property records, deeds, and mortgages, and transfers on every property you ever owned going back for 60 years.

[8] There you've got all these buildings here.

[9] There's the house that he owned.

[10] And this is an aerial photograph of one of the buildings, I assume?

[11] Right.

[12] Let's go out.

[13] And then there's bank statements, tax returns, detailed accounting records where we can follow where the money's going.

[14] Okay, so I know this has been a sprawling complicated.

[15] But I wonder if you could just boil it down for me. What is the big question that you have been trying to answer?

[16] For all of us, the question always comes back to what's the actual ground truth about Donald J. Trump and how he got rich.

[17] My father gave me great knowledge.

[18] Didn't give me a lot.

[19] The famous go -to talking point that Donald Trump says.

[20] I started with a million dollar loan.

[21] I built a company that's worth a lot.

[22] more than $10 billion, okay?

[23] Is that his father loaned him a million dollars.

[24] It's not been easy for me. It has not been easy for me. And that he parlayed that million dollar loan into this $10 billion empire.

[25] My father gave me a small loan of a million dollars and I had to pay him back and I had to pay him back with interest.

[26] This idea that he's a self -made guy.

[27] I built this empire and I did it by myself.

[28] And when you turn over the rock on that, nobody did it for me. It's just wholly untrue.

[29] But there's more to the story than just Donald Trump got more from his father than is previously known.

[30] Yeah, from the documents we've gathered, we were able to unearth the tales about Donald Trump's wealth, that he has worked very hard for a very long time to keep hidden.

[31] My colleagues, Russ Boutner, Sue Craig, and David Barsdow have spent much of the past year locked in a room, pouring over never before.

[32] seen documents as they investigated President Trump's financial history.

[33] Today, the story of what they discovered.

[34] It's Wednesday, October 3rd.

[35] September 23rd, 2016 was just a chaotic day for me at the times.

[36] I was closing a page one story that day, and in between going from one place to another, I stopped at my mailbox.

[37] And there was one piece of mail there, and I grabbed.

[38] I stopped it, and I looked at it, and it was from somebody at the Trump Tower.

[39] I wasn't sure what to make of it.

[40] I just had a couple stories on them.

[41] I wasn't sure if it was hate mail, who knows what it was.

[42] And I open it, and it was three pages of Donald Trump's tax returns from 1995.

[43] And I just stood there, and I've been working with my colleague, David Barstow, on a couple of other stories, and I immediately went over to his desk.

[44] I remember I was on the phone, and Sue had this sort of agitated look at her face.

[45] She was thrusting these papers kind of in front of my face.

[46] And when it dawned on me what I was potentially looking at, I was like, oh, my God, and immediately hung up.

[47] Do you believe voters have a right to see your tax returns before they make a final decision?

[48] I don't think they do, but I do see.

[49] As a candidate, Donald Trump broke with 40 years plus of tradition by, declining to release any of his tax returns.

[50] Clearly, his tax returns tell a story that the American people deserve and need to know.

[51] That has removed from the public record.

[52] One of the main tools that we have traditionally used to scrutinize the finances of our presidents.

[53] And at some point, I don't remember if it was that afternoon or the next day, they came over to me, told me they had this thing.

[54] they want to talk me about, and we went into a small room.

[55] And what was it like to see those tax papers for the first time?

[56] It was just, holy shit.

[57] The New York Times published three pages from the candidate's 1995 tax return.

[58] They showed Trump declared a nearly $916 million loss.

[59] These three pages were just like gold because they were the only glimpse we had into what he had told, the IRS about his wealth.

[60] The New York Times this morning reporting that Donald Trump declared a loss of nearly $916 million in 1995.

[61] A loss of over $900 million.

[62] Almost a billion dollars in a single year.

[63] That moment just sent us looking and starting to peel back more and more layers of the story of Donald Trump and money.

[64] You may have heard.

[65] We've got some significant breaking news tonight.

[66] So six months later, In March, 2017, Donald Trump is president, and Rachel Maddo, late in the day, sends out a tweet saying she's got a copy of Donald Trump's tax returns.

[67] And so we were all like, holy cow.

[68] What I have here is a copy of Donald Trump's tax returns.

[69] We have his federal tax return for one year for 2005.

[70] And in terms of what's on here, let me give you the basics.

[71] Aside from the numbers being large, these pages are straightforward.

[72] Well, it turned out that it wasn't very relevant.

[73] or is telling he would have hoped.

[74] But if you add up the lines for income, he made more than $150 million in that year, Mazel Tov.

[75] It raised interesting questions to us.

[76] The partial tax return that we had from 1995 showed that he was bleeding money.

[77] And by 2005, it showed that he was making significant amounts of money.

[78] So we started trying to figure out, how does a guy go from having a loss of $900 million plus in 1995 to booking $150 million of income in 2005, what's going on?

[79] Was there something extraordinary that happened in his life that year?

[80] Could the apprentice account for some part of that?

[81] It had started the year before that he sell things.

[82] And then we came across this little smattering of clips that mentioned that in 2004 Donald Trump and his siblings had sold their father's real estate empire in Brooklyn for over $600 million.

[83] And I'm like, that's interesting.

[84] And it made us want to learn everything we possibly could about that particular empire.

[85] And we started reaching out to people who had been involved in an empire, had disputes with it, worked for it.

[86] Trying to reconstruct a 50 -year history of Fred Trump in New York City.

[87] And we started acquiring these documents.

[88] So we started going through these documents.

[89] Previously unseen documents.

[90] Writing names down.

[91] 50 ,000 pages of internal documents.

[92] And then we called people again and again.

[93] And eventually we were left with a detailed view of Fred Trump's empire.

[94] No one had ever seen before.

[95] So tell me about Fred Trump, Donald Trump's father.

[96] Fred Trump was born in 1905 from the Bronx, the son of immigrants.

[97] His father had come from Germany, built some bars, some brothels maybe.

[98] And when he was 12 years old, his father.

[99] died.

[100] And Fred, at a very young age, becomes enamored with the construction business.

[101] It's just sort of an incredible thing.

[102] By the time he was 15 or 16, he started building houses.

[103] Not just, like, as a construction worker, like, overseeing the whole thing.

[104] He was described as kind of the Henry Ford of home construction.

[105] So he would hire a whole team of brick masons.

[106] He'd get them set up with these high -speed mixers.

[107] He'd set up floodlights.

[108] He'd run them two shifts a day.

[109] And by 35, he was building hundreds of houses a year.

[110] The day of days for America and her alive.

[111] Then when World War II wins, reporters rush out to relay the news to an anxious world and touch off celebrations throughout the country.

[112] There's this huge demand for housing for returning veterans.

[113] More than a million sing and dance in the street.

[114] People say luck is when being prepared meets opportunity.

[115] Well, that was an incredible opportunity, and Fred Trump was better prepared than anyone in the country.

[116] Federal government offered developers low -cost loans to encourage them, incentivize them, into building lots of middle -class housing.

[117] Many millions of Americans still live in habitations, which not only fail to provide the physical benefits of modern civilization, but breed disease and impair the health of future generation.

[118] Fred Trump became one of the country's largest recipients of those federally subsidized building loans.

[119] And he immediately launched on making these huge projects with low interest, government guaranteed loans, and keeping the costs so low that he was guaranteed a life of extraordinary wealth.

[120] So as you're going through all of Fred Trump's documents, at what point does Donald Trump appear?

[121] Donald Trump starts to show up in his father's business affairs when he's three years old in 1949.

[122] So what the documents revealed to us was that when Donald Trump was three years old, he was actually Fred Trump's landlord.

[123] Fred Trump gives his children the land under these massive apartment projects that he's built and then begins paying them rent.

[124] And as we begin tracking those payments, we see that those payments made Donald Trump the equivalent.

[125] one of a millionaire in today's dollars by age nine.

[126] And then in the early 1960s, Fred Trump was beginning to actually transfer buildings, actual buildings, to his kids.

[127] He runs them still.

[128] He does all the labor, but on paper, his children are the owners, and the profits for those buildings start going to them.

[129] So Donald Trump at age 17 became an owner of a 52 -unit apartment building in Brooklyn.

[130] And things just keep coming at him.

[131] In 1968, he graduates from college, and he lands right into a cushy job at his father's company with a salary.

[132] Fred Trump found a way to make Donald Trump one of his bankers.

[133] He gets consulting fees for doing things for his father.

[134] He leased a car for him.

[135] He built his first offices in Manhattan for him.

[136] He also found ways to give him the laundry revenue from his buildings.

[137] And then in 1976, you see this article in the New York Times.

[138] Let me grab it.

[139] And I'll just read you the lead.

[140] It says he is tall, lean, and blonde with dazzling white teeth.

[141] He looks ever so much like Robert Redford.

[142] He rides around town in a chauffeur, silver Cadillac.

[143] He dates slinky fashion models, belongs to the most elegant clubs, and at only 30 years of age, estimates that he is worth more than $200 million.

[144] He took the New York Times reporter on a tour of what he was describing as his empire.

[145] Showing this reporter all the things he's done, all the things he's built, all of his jobs.

[146] This building and this building and this building.

[147] What we now know from looking at these records is that Donald Trump didn't own any of that.

[148] Donald Trump hadn't been involved in the building of any of that.

[149] It's accurate probably that he was dating slinky fashion models, but we've come to to learn.

[150] It was all his father's empire, his father's success, and he was just appropriating all of that as his own to build his own myth.

[151] This is sort of like the first instance where you just see the lie begins.

[152] Thank you, Mr. Trump, for joining us this morning.

[153] Hi, you Dan.

[154] I have heard that you are worth something like $3 billion.

[155] It seemed like in the 1980s every time you turned on the TV.

[156] Well, I've always said, you know, money isn't a totally essential ingredient, but it does make it easier.

[157] He was there.

[158] He's young.

[159] He has Robert Redford, good look, and he's rich.

[160] And he was telling you how successful he was.

[161] Anything else you want to buy as you look at?

[162] I'd really like to buy everything if they were fashionable.

[163] I bet you would.

[164] It's at that point in time when Donald Trump begins to realize, I can say almost anything to reporters.

[165] Are you smarter than most people who would call themselves entrepreneurs?

[166] And it will come to a newer benefit to my image and my reputation.

[167] And I can make money off of that reputation.

[168] Well, that's an interesting question.

[169] I don't know if anyone's ever asked me the question.

[170] Am I smarter than other people?

[171] I think that...

[172] He starts buying casinos, yachts from princes.

[173] He buys the Plaza Hotel.

[174] I just bought the Plaza Hotel in New York and my business, real estate.

[175] That's the ultimate crown jewel.

[176] He's able to convince bankers to give him these tremendously outsized loans based just on the image, the myth that he's built for himself already.

[177] And one thing that we found that I don't think anybody ever knew before, is that his father goes along with the ride on some of that.

[178] They had this particularly intimate father -son relationship.

[179] They talked to each other constantly.

[180] And they each shared this view of the world, that the world was this zero -sum game.

[181] The idea that your worth in a family matters based on how much money you're making.

[182] And you were either a killer or you were killed.

[183] and there was sort of nothing in between.

[184] So one of the revelations that we came across in the documents was how Fred and Donald Trump coordinated stock purchases together.

[185] For example, in the late 1980s.

[186] New York tycoon Donald Trump wants control of the nation's largest airline.

[187] Donald Trump would leak to the financial press that he was taking a position in American Airlines.

[188] He doesn't have the financial wherewithal to take over those corporations.

[189] But his father, we can see in his tax returns, buy stock in American Airlines.

[190] Then...

[191] American Airlines was the most active stock on the big board yesterday, pushing all transportation issues sharply higher.

[192] The stock goes way up, and his father tries to sell before it goes down.

[193] He doesn't make it.

[194] We saw this pattern in multiple instances.

[195] In another case, Donald made a public comment that he was going to take over Time, Inc., the magazine and publishing company.

[196] His father did buy stock right before Donald made those comments.

[197] A week later sold it, and he wound up making $40 ,000 just on his son's hot air, basically.

[198] It was a very clear manifestation of these two guys executing financial strategies together.

[199] It was more than just a father -son relationship.

[200] They were trying to achieve something together in terms of elevating the idea of Donald Trump as self -made billionaire.

[201] This goes on for years.

[202] Ladies and gentlemen, please welcome the author of this book right here, Trump, The Art of the Deal, Donald de Trump.

[203] In 1987, Donald Trump published this book, The Art of the Deal.

[204] Where do you learn the art of the deal?

[205] I mean, what point were you working with your father and you knew that there were bigger things for you?

[206] Well, I really think you have it or you don't have it.

[207] The premise of the book was that he only made good deals, that he could tell the world how to make good deals and get rich on their own.

[208] And you have to go and be driven and, you know, do all the different.

[209] and things that we all sort of know about and the things I discuss in the book.

[210] But by 1990, all of his bets had gone bad.

[211] He was already getting deep into the hole that would lead to his darkest moment.

[212] Casinos are failing, businesses are failing.

[213] He was just buried in debt.

[214] He is going through a very rough divorce with Ivana Trump.

[215] What we found and what people haven't known before is the degree to which his father helped him out of that hole.

[216] It was loan after loan after loan.

[217] He owed his father at that point in time.

[218] somewhere between $15 and $25 million that he never talked about and that he wasn't paying back.

[219] In the financial records that we've obtained, we can see that the flow of money from Fred Trump to Donald Trump increased at moments when Donald Trump was in his highest duress.

[220] He can't make his loan payments.

[221] People are talking about foreclosing, taking away everything.

[222] He gets down at one point to just having a couple of million dollars in the bank, and he's burning through more than that every month.

[223] So in the course of our reporting, we've learned that in 1990, in this just really dark period in Donald Trump's life, he makes an aggressive play to get more control of his father's wealth.

[224] It's one of the most remarkable discoveries we made along the way.

[225] We'll be right back.

[226] So what was this remarkable discovery you made in your investigation?

[227] So at that crucial point in his life, 1990, we found, Donald Trump crafts, in essence, a new will for his father.

[228] It amends the will that's there.

[229] And then he sends lawyers to his father's house to have him sign it.

[230] His father had no idea this was coming and flipped out.

[231] And according to the sworn testimony of his relatives, as he read it, he began to realize that what this document would do is that it would give Donald Trump extraordinary control over his estate upon his relatives.

[232] death.

[233] His father was 84 years old, but still an incredibly savvy man and looked at this and thought, this is my son, who is in incredible trouble right now, trying to get control of the empire that I built.

[234] You know, that was a step too far for Fred Trump.

[235] This means that my son's creditors could come after my wealth, my empire, and he shuts the whole thing down.

[236] He calls his daughter, Marion Trump -Berry has her organize a legal team to come up with a new will that will make sure that Donald Trump doesn't have any more control than any of his siblings, and that his business problems can't drain his own empire.

[237] That episode, it is this moment, this jolt.

[238] It kind of triggers a deeper reckoning within the Trump family.

[239] it forces them to come to grips with two facts.

[240] One is that Fred Trump is starting to get frail.

[241] His health is failing.

[242] He's starting to suffer the effects of dementia.

[243] And then the kids start to recognize dad has this enormous fortune.

[244] He had all these buildings that were worth hundreds of millions of dollars and he had tens of millions of dollars running through his bank accounts.

[245] We just couldn't believe when we started looking through the financial records of his companies.

[246] how much cash he had.

[247] And what they were recognizing at that moment was that if Fred Trump died, all of that, every penny of that, is subject to a 55 % estate tax.

[248] So that means if Fred Trump passed away and was worth a billion dollars.

[249] 55 % of all of that goes to Uncle Sam.

[250] And so the Trump's come up with a plan, a plan beyond the bounds of the law.

[251] One of the first steps they took was to create something called All County Building and Supply.

[252] All County Building Supply and Maintenance.

[253] So Fred Trump bought an enormous amount of goods and services to keep his buildings going.

[254] For years, Fred Trump was buying everything he needed for his buildings directly from wholesalers.

[255] So he needed an air conditioner.

[256] He'd write a check.

[257] Get an air conditioner.

[258] He needed paint supplies.

[259] Go and get paint supplies.

[260] And then all of a sudden, this new company comes along called All County.

[261] And it starts buying everything, so it will pay $100 for the air conditioner, $300 for the fridge, $100 ,000 for the boiler.

[262] And then they turn around and they bill Fred Trump for the very same items at this marked up price.

[263] And if they paid $150 for the air conditioner, they then bill Fred Trump 250, and they pocket the difference.

[264] Same thing with the fridge and stove.

[265] They buy it for $200.

[266] They send an invoice to Fred for $300, all county paup.

[267] It's the difference.

[268] It's kind of a middleman that's doing nothing.

[269] This company had no employees.

[270] It was doing no negotiating of its own.

[271] Literally, it's an invoice padding operation.

[272] All County was a company set up with the sole purpose of deceiving the IRS.

[273] And we've run this scenario past some of the best tax experts in the country, and every single one of them says, that's fraud.

[274] It's incredible to think about.

[275] One of the things that really jumped out as is how effective that process was.

[276] It started out relatively small in 1992, but by 1998, it was generating millions of dollars a year and profits to the Trump children.

[277] By the time he dies in 1999, he goes from being a guy who was sitting on tens of millions of dollars of cash to a guy who has less than $2 million left.

[278] His biggest asset as a $10 million debt that Donald Trump owed him.

[279] And that in and of itself is a testament to simply how successful they were at making cash disappear.

[280] But the second part of the scheme was actually maybe the most ingenious, and it involved the biggest tax dodge of all.

[281] By the early 1990s, they're basically through All -County and another entity that they set up, getting their father's profits from his empire.

[282] But their father still owns the buildings themselves.

[283] He owned all these buildings, hundreds of millions of dollars, bricks and mortar.

[284] And they're going to take control that empire through this particular kind of trust that's called a grat.

[285] Lots of rich people have trust.

[286] It's a kind of a vehicle for transferring wealth from one generation to the next.

[287] In this case, what the Trumps did is having put all of these apartment buildings in this trust, they then systematically lowballed the value of each apartment building.

[288] They went out and they got an appraiser, and the appraisals that came back are just unbelievable.

[289] They had all of these buildings in Fred Trump's empire appraised so that rather than being what they really were, which was $10, $15, $20 million buildings, instead having them appraised as if they were one to $3 million buildings.

[290] They find an appraiser who says some of Fred Trump's biggest apartment buildings are absolutely worthless.

[291] And they did this over and over and over and over.

[292] And then they push the limits in other ways as well to reduce the overall value of this tremendously profitable, massive empire.

[293] They put a value ultimately on this empire of $40 million.

[294] What we found in our analysis is that in real life, in market value, it was worth at least 10 times that.

[295] This is an empire that less than a decade later, the banks would place a value of almost a billion The tax experts that we've interviewed are saying that the way the Trump's took this legal thing and twisted it is, in fact, illegal.

[296] You're not allowed to submit bogus appraisals to the IRS.

[297] The appraisals really have to reflect reality.

[298] I started off with a very, very small amount of money.

[299] And by the way, when my father passed away, remember, I have four.

[300] I have a total of five in my family.

[301] So we have brothers, sisters, split.

[302] And my father didn't leave a great fortune.

[303] It was Brooklyn and Queens real estate.

[304] It's interesting because that estate has, again, fed into this narrative when Donald Trump points to it, he can say, look, my father's estate was only worth, you know, $20, $30 million.

[305] But now what they do is they build it up like, oh, he left Donald money.

[306] I started off with $1 million, and now I'm worth over $10 billion.

[307] This guy, the 45th president of the United States, He inherited hundreds of millions of dollars from his father, and much of it was gotten through fraudulent means.

[308] I mean, that's an important chapter in his history that should be set straight and people should know about.

[309] So now that this investigation has been made public, what could come of these revelations?

[310] Where all this falls, I don't know.

[311] A lot of it has passed statutes of limitations.

[312] Criminal statutes generally limit people's exposure to a criminal charge.

[313] to five to seven years, all those clocks have long since told.

[314] There is still the possibility for the IRS to perhaps penalize the family for what they did, pursue back taxes, issue fines.

[315] The statute of limitations on that is forever.

[316] So they could come back at any point in time and look at that and impose penalties on them.

[317] But the IRS in this case is under the management of President Trump.

[318] And the likelihood of that seems.

[319] very remote.

[320] We, on the one hand, feel like, okay, we have peeled back many, many new layers of the onion of the story of Donald Trump and his money, simply by taking his father's tax returns and taking all of these other documents that lay bare the financial relationship between Fred and Donald Trump.

[321] That tells us so much about the first, say, 50 -plus years of Donald Trump's life.

[322] But just imagine how much more we could learn, how many more questions we could ask, how many more layers we could peel back if we could just get our hands on his tax returns.

[323] So since the story ran, officials or regulators from both New York State and New York City have been looking into it, and they're just trying to figure out at this point if there's any back taxes that could be owed because of the fraud that we uncovered.

[324] And then separately, and other things happen since the story ran, and that is that the Democrats will soon control the House of Representatives.

[325] And that's going to be really interesting because they are going to have the ability to request Donald Trump's taxes.

[326] And that doesn't mean that they're going to request them and that immediately they're going to be out in public view.

[327] There's probably going to be a lot of legal wrangling around that.

[328] I'm sure the president, you know, faced with his taxes being, released could potentially mount a court fight and it's also just will the Democrats immediately want to do that if they're trying to build bridges and get other things done but if they are released or they are leaked and we hope it's to us we're ready to go as a team The Daily is produced by Theo Belcom Lindsay Garrison Rachel Quester Annie Brown Andy Mills Ike Streys Conneraja Claire Tennis Getter Michael Simon Johnson Jessica Chung Alexandra Lee Young and John Jonathan Wolk, and edited by Paige Cowan, Larissa Anderson, and Wendy Doer.

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