Probes of Trump taxes carry potential for millions in fines
By BERNARD CONDON and STEPHEN BRAUN
Thursday, October 4
NEW YORK (AP) — Though President Donald Trump insists he did nothing wrong on his taxes, experts say he could be on the hook for tens of millions of dollars in civil fines if state and federal authorities substantiate a New York Times report that found he and his family cheated the IRS for decades.
The statute of limitations for bringing criminal charges has long run out, but civil cases have no such limits, and the financial penalties could be staggering. Civil fraud charges for intentionally underpaying taxes, as the Times alleged the Trump family did, could include a penalty of up to 75 percent of the unpaid federal taxes and double the unpaid state amount, experts said.
The penalties “could be substantial, and if the allegations are proven in court, they should be levied,” said Norman Eisen, chairman of Citizens for Responsibility and Ethics in Washington and former chief ethics counsel in the Obama administration.
The New York tax department said it is studying the Times’ 15,000-word report and “vigorously pursuing all appropriate avenues of investigation.” New York City also said it would investigate. A spokesman for the Internal Revenue Service declined to comment.
Trump tweeted that the newspaper did “a very old, boring and often told hit piece on me.”
The White House dismissed the report as a “misleading attack against the Trump family by the failing New York Times,” but spokeswoman Sarah Huckabee Sanders said the newspaper got one thing right: Trump’s father not only did deals with his son but heaped praise on him by saying “everything he touched turned to gold.”
A lawyer for Trump, Charles J. Harder, told the Times that there was no “fraud or tax evasion” and that parts of the report were “extremely inaccurate.”
The Times said Trump received at least $413 million from his father over the decades, much of that through dubious tax maneuvers, including outright fraud. The report contradicts Trump’s portrayal of himself as a self-made billionaire who started with just a $1 million loan from his father.
Tax law experts expressed skepticism that the IRS would mount any civil investigation. The main reason, they said, is that the Times account says IRS officials have already conducted extensive audits of the estate left by Trump’s parents.
“That ship has sailed,” said Mark W. Everson, who was IRS commissioner during President George W. Bush’s second term and is now vice chairman of AlliantGroup, a Houston-based corporate tax advisory firm. He added: “I would be concerned were the service to reach back that far in time, given that it could only be doing so because of the person’s current position.”
In addition to maneuvers aimed at avoiding estate taxes, the Times reported that the president’s father, Fred Trump, paid no federal gift taxes on seven buildings that were transferred to Donald Trump and his siblings.
That opens another possible avenue of investigation, said Beth Shapiro Kaufman, a Caplin & Drysdale tax lawyer and a former Treasury official.
There is typically a three-year statute of limitations on federal gift inquiries, but that doesn’t apply when a gift is made without being reported to the government. And if the donor is dead, the IRS would have the ability to go after the beneficiary of the gift for unpaid taxes, Kaufman said.
In New York, tax officials had already been looking into whether Trump or his charitable foundation misrepresented their tax liability. State law would allow them to seek civil penalties if they can show someone intentionally sought to evade taxes, even decades ago. Those who lose such cases are often required to pay their back taxes along with penalties.
In August, the state subpoenaed former Trump attorney and “fixer” Michael Cohen as part of the probe.
The state investigation follows Democratic state Attorney General Barbara Underwood’s lawsuit alleging Trump illegally tapped his Trump Foundation to settle legal disputes, help his campaign for president and cover personal and business expenses, including the purchase of a 6-foot portrait of himself for $10,000.
Eisen said that if Democrats win the House in November, they will have the investigative muscle and subpoena power to scour Trump’s latter-day tax records and see whether the tax schemes alleged by the Times have continued.
Former IRS Deputy Commissioner Mark E. Matthews cautioned that the IRS would not be obligated to conduct an investigation if Congress turned up new evidence of continuing tax maneuvers, but added: “The agency knows where its bread is buttered. If it gets to the point of a full committee report with new evidence, somebody at the IRS will take a hard look. But there’s no guarantee they’d go beyond a look.”
The federal tax code’s statute of limitations for criminal cases is typically no more than six years, legal experts said. To bring criminal charges, investigators would have to find a continuing tax fraud conspiracy that stretched into recent years, they said.
Building such a case — similar to the charges that former Trump presidential campaign chairman Paul Manafort pleaded guilty to last month — would require overwhelming recent evidence, buttressed by new documents and strong testimony from Trump insiders, the experts said.
AP writers David Klepper in Albany, N.Y., Michael Sisak in New York and Marcy Gordon in Washington contributed to this report.
The Conversation: Academic rigor, journalistic flair
Interruptions at Supreme Court confirmation hearings have been rising since the 1980s
October 4, 2018
Paul M. Collins, Jr.
Professor and Director of Legal Studies, University of Massachusetts Amherst
Lori A. Ringhand
J. Alton Hosch Professor of Law, University of Georgia
Components of this project were funded in part by a grant from the Dirksen Congressional Center. Collins consulted with the Office of United States Senator Sheldon Whitehouse (D-RI) regarding the Kavanaugh hearing.
Ringhand was called by Senator Richard Blumenthal (D-CT) to testify as an expert witness regarding the history of the Supreme Court confirmation process.
University of Massachusetts Amherst provides funding as a founding partner of The Conversation US.
Depending on who you ask, the American people saw very different things in the riveting testimony before the Senate Judiciary Committee on Supreme Court nominee Brett Kavanaugh.
To some, Kavanaugh’s behavior was the self-indulgent temper tantrum of an angry and entitled man. To others, it was the understandable – even laudable – reaction of a man pushed too far, forced to defend his honor.
There are no obvious ways to bridge this perception gap. The meaning of Kavanaugh’s display, it appears, is in the eye of the beholder. To us, as legal scholars, it was a stunning display from a sitting federal judge. We have, for more than a decade, studied Supreme Court confirmation hearings in minute detail, and we have never seen anything like it. Even Clarence Thomas’s striking metaphor in 1991, denouncing his confirmation hearing a “high-tech lynching,” did not openly invoke such raw partisanship or vengeful threats such as Kavanaugh’s “what goes around comes around.”
But, as scholars of the confirmation process, we aim to measure what is measurable, in the hope that data can inform our more subjective perceptions of politics. And one measurable feature of Kavanaugh’s testimony is the striking number of times he interrupted the senators to challenge their comments or force his own point. Here, the historical record can shed some light.
There is a great deal of research on the power dynamics of interruptions. Interrupting another speaker is a way of wresting authority and conversational control away from the original speaker. Even when an interruption is intended to be helpful, the act of interrupting communicates dominance and confidence. This can contribute to the silencing of women and minorities.
Additionally, all interruptions are not viewed equally. Numerous studies have shown that female interrupters tend to be seen more negatively than male interrupters. For example, a study out this year from Stanford scholar Katherine Hilton found that that perception is itself gendered. Male listeners were more likely to view a female interrupter as ruder, less friendly and less intelligent than a male one. Notably, this study involved cases in which the interrupting speaker, like Kavanaugh, raised his voice or used the interruption to change the subject.
That may explain why Republican senators and voters, who are disproportionately male, see Kavanaugh’s pattern of aggressive interruptions in a more sympathetic light. It also puts in context the seeming contradiction of Kavanaugh’s vocal indignation that the (often female) senator who he had interrupted moments before would not let him finish the point he had interrupted her to make.
This is a familiar pattern. In our paper, presented last month with Christina L. Boyd at the American Political Science Association Annual Meeting in Boston, we examined interruptions at confirmation hearings. To do this, we investigated every question asked and every answer given at every open, transcribed Supreme Court confirmation hearing from 1939 to 2010 – a total of more than 31,000 statements.
Data shows that the rate of interruptions at the hearings is increasing. The interruptions themselves echo and amplify racial, gender and partisan divides.
Some earlier hearings were marked by a relatively high percentage of interruptions – most notably the Robert Jackson and Antonin Scalia hearings in 1941 and 1986, respectively. But the steady upward trend really began with the nominations of Clarence Thomas and Ruth Bader Ginsburg: a member of a racial minority and a woman.
Female nominees are particularly affected, interrupted almost twice as frequently as male nominees. This pattern is amplified by partisan opposition between the speaker and the interrupter.
Because three of the four female nominees have been appointed by Democratic presidents, and because there has to date been no female Republican senator on the Judiciary Committee, this also means that most of these interruptions have been Republican senators interrupting the female nominees of Democratic presidents.
We have found in our research that Supreme Court confirmation hearings both reflect and amplify societal perceptions of gender norms and biases. This sheds light on the very different lenses through which a deeply polarized nation viewed what happened during the hearing featuring Judge Kavanaugh and Christine Blasey Ford. For many (obviously not all) women, it was the dramatic culmination of a power dynamic they see played out both in their own lives and in prior confirmation hearings. For others – most obviously the male Republican senators sitting in the hearing room – that dynamic was likely less visible, and almost certainly less salient.
The gender divide between the two major political parties is large and growing, and support for the Supreme Court itself is increasingly fracturing on that basis. The nation’s disparate reactions to Kavanaugh’s testimony vividly illustrate the risk that division poses to Americans’ ability to understand each other’s perspective, much less find common ground.
How should we judge people for their past moral failings?
October 3, 2018
Instructor of Philosophy, Arizona State University
Andrew Khoury does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Arizona State University provides funding as a member of The Conversation US.
The recent allegations of sexual assault against Supreme Court nominee Brett Kavanaugh have further divided the nation. Among the questions the case raises are some important ethical ones.
Not least among them is the question of moral responsibility for actions long since passed. Particularly in light of the #MeToo movement, which has frequently involved the unearthing of decades old wrongdoing, this question has become a pressing one.
As a philosopher, I believe this ethical conundrum involves two issues: one, the question of moral responsibility for an action at the time it occurred. And two, moral responsibility in the present time, for actions of the past. Most philosophers seem to think that the two cannot be separated. In other words, moral responsibility for an action, once committed, is set in stone.
I argue that there are reasons to think that moral responsibility can actually change over time – but only under certain conditions.
Locke on personal identity
There is an implicit agreement among philosophers that moral responsibility can’t change over time because they think it is a matter of one’s “personal identity.” The 17th-century British philosopher John Locke was the first to explicitly raise this question. He asked: What makes an individual at one time the very same person as an individual at another time? Is this because both share the same soul, or the same body, or is it something else?
Not only is this, as philosopher Carsten Korfmacher notes, “literally a question of life and death,” but Locke also thought that personal identity was the key to moral responsibility over time. As he wrote,
“Personal identity is the basis for all the right and justice of reward and punishment.”
Locke believed that individuals deserve blame for a crime committed in the past simply because they are the same person that committed the past crime. From this perspective, Kavanaugh the 53-year-old would be responsible for any of the alleged actions that he committed as a young adult.
Problems with Locke’s view
Locke argued that being the same person over time was not a matter of having the same soul or having the same body. It was instead a matter of having the same consciousness over time, which he analyzed in terms of memory.
Thus, in Locke’s view, individuals are responsible for a past wrong act so long as they can remember committing it.
While there is clearly something appealing about the idea that memory ties us to the past, it is hard to believe that a person could get off the hook just by forgetting a criminal act. Indeed, some research suggests that violent crime actually induces memory loss.
But the problems with Locke’s view run deeper than this. The chief one is that it doesn’t take into consideration other changes in one’s psychological makeup. For example, many of us are inclined to think that the remorseful don’t deserve as much blame for their past wrongs as those who express no regret. But if Locke’s view were true, then remorse wouldn’t be relevant.
The remorseful would still deserve just as much blame for their past crimes because they remain identical with their former selves.
Responsibility and change
Of late, some philosophers are beginning to question the assumption that responsibility for actions in the past is just a question of personal identity. David Shoemaker, for example, argues that responsibility doesn’t require identity.
In a forthcoming paper in the Journal of the American Philosophical Association, my coauthor Benjamin Matheson and I argue that the fact that one has committed a wrong action in the past isn’t enough to guarantee responsibility in the present. Instead, this depends on whether or not the person has changed in morally important ways.
Philosophers generally agree that people deserve blame for an action only if the action was performed with a certain state of mind: say, an intention to knowingly commit a crime.
My coauthor and I argue that deserving blame in the present for an action in the past depends on whether those same states of mind persist in that person. For example, does the person still have the beliefs, intentions and personality traits that led to the past act in the first place?
If so, then the person hasn’t changed in relevant ways and will continue to deserve blame for the past action. But a person who has changed may not be deserving of blame over time. The reformed murderer Red, played by Morgan Freeman, in the 1994 film, “The Shawshank Redemption,” is one of my favorite examples. After decades in the Shawshank Penitentiary, Red the old man hardly resembles the teenager that committed the murder.
If this is right, then figuring out whether a person deserves blame for a past action is more complex than simply determining if that individual did, in fact, commit the past action.
In the case of Brett Kavanaugh, some commentators have, in effect, argued that his recent Senate testimony displayed the persisting character of an “aggressive, entitled teen,” although there are those who disagree.
What I argue is that when confronted with the issue of moral responsibility for actions long since passed, we need to not only consider the nature of the past transgression but also how far and how deeply the individual has changed.
As Somalia marks horrific attack, a book explores al-Shabab
By CARA ANNA
Thursday, October 4
“Inside al-Shabaab: The Secret History of al-Qaeda’s Most Powerful Ally” (Indiana University Press), by Harun Maruf and Dan Joseph
The deadliest terror attack in Africa’s history began with a loaded truck barreling down a busy street in Somalia’s capital, seemingly bound for the international airport and the embassies sheltering there.
The truck instead detonated in Mogadishu traffic, killing well over 500 people. Somalis who had witnessed decades of chaos were horrified. In a rare protest, they marched by the thousands to defy the Islamic extremist group that is now the deadliest in sub-Saharan Africa, the al-Qaida-linked al-Shabab.
On Oct. 14, Somalia marks the anniversary of the bombing. Many around the world barely took note of the attack, though it was easily one of the worst since 9/11.
Anyone with interest in the spread of extremism, however, should read the new book “Inside al-Shabaab: The Secret History of al-Qaeda’s Most Powerful Ally.”
Imagine, it says, a Washington where the U.S. government controls the White House, a few adjacent buildings and the highway to the airport while insurgents hold the rest. “Every so often, the insurgents fire mortar shells toward the White House.” This has been Mogadishu over the years as the extremists, some of them raised in the United States, surge and retreat.
The authors, Voice of America journalists Harun Maruf and Dan Joseph, interviewed al-Shabab members, defectors and others to tell a fluid tale of how an Islamic nation once known for its moderation, not unlike the Afghanistan of a certain age, slid into the hands of young men trained in Osama bin Laden’s camps abroad.
“This was the start of the battle between al-Qaeda and America,” one al-Shabab leader later said of the battle for Mogadishu in the early 1990s as bin Laden-backed local fighters attacked U.S. troops who tried to restore order after the fall of dictator Siad Barre. The “Black Hawk Down” attack in 1993 that saw U.S. soldiers dragged through the streets led the U.S. military to leave Somalia alone for two decades.
Inspired, a new generation of hard-line Islamic fighters — al-Shabab is Arabic for “the youth” — took shape. The book describes the surprising internal debates over the years as some members of a group known for harsh dictates and brazen bombings argued that only a more accepting approach would win over Somalia’s people as it pursued an Islamic state.
In one of the book’s more extraordinary sentences, Maruf and Joseph write that “al-Qaeda encouraged al-Shabaab to be flexible.”
The world’s first extremist group to use Twitter to claim a major attack, al-Shabab has been relatively organized, with financing from taxes on captive communities, piracy off the long Indian Ocean coast and, in at least one town, the yanking out of civilians’ gold teeth.
For military enthusiasts, “Inside al-Shabaab” has vivid descriptions of street-by-street fighting in Mogadishu as the extremists pushed the fragile Somali government to the edge of the sea. For those wondering how Somalia has never been able to shake off the threat, the book has piercing details of what still goes wrong both among Somalis and in the international community.
“My soldiers have to offer to share their lunch,” one commander of the African Union peacekeeping force said of Somali partner forces, long unpaid, who looked on hungrily.
Widespread corruption, deeply held clan rivalries, exasperation from both Western and African allies, all have affected the fight against al-Shabab. Now the country, with a Somali-American president who spent years as a bureaucrat in Buffalo, New York, faces the nervous prospect of taking over its own security from the A.U. force in the few years ahead.
Officials with the U.S. military, which under President Donald Trump has increased drone strikes in Somalia and put about 500 personnel on the ground, have warned that Somali forces are not ready. And now a new threat has emerged: “Inside al-Shabaab” devotes a chapter to the rise of fighters who have pledged allegiance to the Islamic State organization.
ISIS these days might be fading or fleeing. But “by almost any tangible measure … al-Shabaab grew stronger throughout 2017,” the new book says.
The U.S. has made gestures of confidence in Somalia, appointing its first ambassador in a quarter-century and even presenting President Mohamed Abdullahi Mohamed with a trucker cap bearing the phrase “Make Somalia great again.”
Meanwhile, al-Shabab’s grip on the countryside ebbs and flows. The extremists have taunted Trump as a “brainless billionaire.” And every few weeks or so, they sneak into Mogadishu with bombs and, at the gates of a hotel or government compound, explode.
“They are part of the society, a cancerous part, they reappear in wherever you clean them from,” one Somali army colonel says in “Inside al-Shabaab.” ”If we don’t get a trained, strong Somali army it will be difficult to defeat them.”
Follow Africa news at https://twitter.com/AP_Africa
Opinion: Gulf Countries May Offer Enticing Investment Environment, but Risks Run High
By Victoria Toensing
While the Persian Gulf may seem like an attractive place for U.S. investors, recent actions by high-ranking officials in Kuwait and Dubai reveal continued risks for foreigners — especially women — looking to do business in the region. Dubai’s freezing of a half-billion dollars in international investment and Kuwait’s illegal imprisonment of a prominent foreign businesswoman demonstrate the ways powerful individuals exploit the system for their own financial advantage.
Kuwait’s arrest and sustained detention of CEO Marsha Lazareva have reverberated throughout the global investment community. Lazareva is well known for her investment prowess. Her ability to succeed in a foreign, male-dominated culture was unlikely in the extreme.
A Wharton graduate, Lazareva identified opportunities in Kuwait and moved there on her own 13 years ago. She decoded Kuwait’s business landscape and began making deals. She had soon built an investment firm and was securing significant returns for her investors.
After successfully completing a $500 million real estate development deal in the Philippines named after the Kuwaiti Amir himself, she was arrested by Kuwaiti authorities on specious charges, the specifics of which changed significantly over time. The proceeds from the Philippines project were frozen by Emirati officials when wired to company’s account at Noor Bank in Dubai last November and remain frozen at the request of Kuwaiti officials.
The ensuing trial was merely for show. Lazareva was barred from calling any witnesses and denied access to exculpatory documents. She was even prohibited from attending a number of key hearings. At one point she felt ill and was denied access to the bathroom. “Let her go to the corner and be sick,” the judge said.
Today, she sits in Sulaibiya prison serving a sentence of 10 years’ hard labor.
Sidelining successful competitors by having them charged with a criminal act is an all-too-often business strategy in Kuwait. One foreign official told a representative of Lazareva’s company that “interested parties” plan to use her conviction as an opportunity to steal and divide the money.
By targeting Lazareva, a message was sent to those who aspire to power or influence in the Gulf. It also set a limit to how far a woman can climb before being torn down. Unfortunately for those intent on clinging to this system, the campaign against Lazareva was waged at a time when women around the world are refusing to be silenced or sidelined. The year she was arrested, 2017, was the year the Fortune 500 reported a record number of female CEOs and the year the #MeToo movement surged to demand full accountability from men who leveraged their power to prey on female professionals.
These forces have converged to support Lazareva, propelling her case to a high-level international controversy. Current and former government officials in the United States and the United Kingdom have lodged complaints with the Kuwaiti Amir and other high-ranking government officials. Lazareva’s lawyers have filed denial-of-justice proceedings against Kuwait, serious charges that carry a damning air Kuwait has so far avoided.
This sordid affair has cast a shadow over the Kuwaiti Amir’s message to President Trump and the business community. During his visit in September, the Amir claimed to seek a “strategic relationship” and “permanent partnership” with U.S. companies for infrastructure projects — the same types of projects in which Lazareva had invested.
As U.S. officials began looking into Lazareva’s case, Kuwait and Dubai blamed each other. Both countries benefit from a stalemate. Kuwait claims Lazareva cannot repay investors, which include members of the Kuwaiti government, because she stole the money. That charge fails if the money is released because she will be able to distribute the net profits to those investors.
Noor Bank, which has struggled financially according to some reports, benefits by holding the $500 million. The ruler of Dubai, Mohammed bin Rashid, is the largest single shareholder in Noor Bank. Kuwait, however, reportedly has recently requested that Dubai unfreeze the funds and send them directly to its coffers, which would amount to an illegal expropriation of these funds.
Thanks to Trump’s 2017 Executive Order blocking the property of people involved in human rights abuse or corruption, Lazareva has an opportunity for recourse. Under that order, the Treasury Department’s Global Magnitsky Regulations can authorize sanctions on government officials for complicity in expropriating private assets for personal gain.
A decisive move by the United States on Lazareva’s behalf would send an important message that the U.S. will not tolerate the seizure of privately earned funds or the failure to ensure due process in countries that receive major international investments. Lazareva’s release would be a rare triumph for women’s rights in the Gulf, where an obstinate power structure continues to exclude women from major societal changes.
ABOUT THE WRITER
Victoria Toensing is a founding partner in the Washington law firm diGenova & Toensing LLP. She wrote this for InsideSources.com.