Prosecutors issued the grand jury subpoena to Fortress Investment Management late last year, people said, as part of their extensive investigation into former President Donald Trump and his company.
Researchers’ interest in how Trump and his company handled the Chicago loan is an expansion of an investigation that spans multiple aspects of the Trump business.
Prosecutors are examining whether the company has misled creditors or insurance brokers about the valuations of certain properties. They are also investigating fees paid to consultants and a conservation easement taken at a New York family property called Seven Springs.
His interest in Fortress is related to a $ 130 million loan the company made to the Trump Organization for the construction of a luxury hotel and a condo tower in Chicago.
In 2012, Fortress subsequently forgave another $ 100 million of the loan, which, including interest and fees, was worth about $ 150 million, according to court records. The pardon was made to secure a partial refund of about $ 45 million at a time when the housing market was suffering from the financial crisis.
Prosecutors in the Manhattan district attorney’s office, Cy Vance, are investigating whether Trump and the Trump Organization recorded the loan forgiveness as revenue, as required by the IRS, and paid the appropriate taxes, people say.
The Fortress was not charged with any wrongdoing. Representatives for Fortress and the Manhattan district attorney’s office declined to comment.
The Trump Organization did not respond to a request for comment.
New York Attorney General Letitia James first raised questions about how Trump handled the Fortress loan last fall, when her office disclosed in a lawsuit that it was investigating whether Trump and the Trump Organization recorded the amount forgiven. such as income and taxes paid or if there was any explanation as to why that would not be necessary.
The attorney general’s office said at the time that the information about the transactions was “significant” to the civil investigation.
The New York Times, which obtained Trump’s taxes, said that forgiven debts appeared in Trump’s tax returns as canceled debts. The Times wrote that Trump took advantage of a law enacted after the 2008 financial crisis that allowed companies to distribute revenue from canceled debts over several years.
In addition to tax returns, investigators have obtained financial statements and working papers that can shed light on the decision-making process behind the treatment of canceled debt. It can also reveal any internal debate and discussion that could help prosecutors determine the intention behind any conclusions they have reached.