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Prosecutors issued the grand jury summons to Fortress Investment Management late last year, the people said, as part of their broad investigation into former President Donald Trump and his company.
Investigators’ interest in how Trump and his company handled the Chicago loan is an expansion of an investigation that encompasses multiple aspects of the Trump business.
Prosecutors are examining whether the company has misled lenders or insurance brokers about valuations of certain properties. They are also investigating fees paid to consultants and a conservation easement taken on a family estate in New York called Seven Springs.
Their interest in Fortress relates to a $ 130 million loan the company made to the Trump Organization for the construction of a luxury hotel and condo tower in Chicago.
In 2012, Fortress subsequently canceled more than $ 100 million from the loan, which, including interest and fees, was worth around $ 150 million, according to court documents. The pardon was intended to secure a partial repayment of around $ 45 million at a time when the real estate market was suffering from the financial crisis.
Attorneys at Manhattan District Attorney’s Office Cy Vance are investigating whether Trump and the Trump organization recorded the loan forgiveness as income, as required by the Internal Revenue Service, and paid the taxes appropriate, people say.
Fortress has not been 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 Trump’s handling of the fortress loan last fall when her office revealed in a court file that it was investigating the issue of whether Trump and the Trump organization would record the remitted amount as income and pay taxes or if there was an explanation as to why this would not be necessary.
The attorney general’s office said at the time that information about the transactions was “important” to its civil investigation.
The New York Times, which obtained the taxes from Trump, said the forgiven debts appeared on 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 spread income from canceled debts over several years.
In addition to income tax returns, investigators obtained financial statements and working papers that could inform the decision-making process behind handling the canceled debt. It could also reveal any internal debate and discussion that could help prosecutors determine the intent behind the conclusions they reached.
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