{"id":26163,"date":"2019-06-05T10:38:20","date_gmt":"2019-06-05T15:38:20","guid":{"rendered":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/?p=26163"},"modified":"2019-06-05T10:38:20","modified_gmt":"2019-06-05T15:38:20","slug":"former-business-partner-alleges-trumps-evaded-taxes-panama","status":"publish","type":"post","link":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/former-business-partner-alleges-trumps-evaded-taxes-panama\/","title":{"rendered":"A Former Business Partner Alleges the Trumps Evaded Taxes in Panama"},"content":{"rendered":"

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The New York Times associates, Ben Protess and Steve Eder report on the never ending Trump story in Panama.<\/p>\n

The owners of a luxury hotel in Panama City that ousted the Trump Organization as property managers last year accused it on Monday of evading taxes in Panama and creating a \u201cfalse light\u201d around the hotel\u2019s finances.<\/p>\n

The accusations, made in a legal filing in Manhattan federal court, are fraught with potential diplomatic and legal complexities for President Trump. They essentially assert that his family business cheated a foreign government, a claim the Trump Organization characterized in a statement as \u201ccompletely false.\u201d<\/p>\n

The president\u2019s company, the filing alleges, \u201calso made fraudulent and false claims to the Panamanian tax authorities\u201d to \u201ccover up its unlawful activities.\u201d This was originally detected during an audit last year by that country\u2019s tax agency, according to the filing.<\/p>\n

It was not possible to immediately verify accusations in the filing that the Trump Organization did not fulfill its obligation as managers to ensure all the hotel\u2019s taxes were paid, including those related to the Trumps\u2019 management fees. Panamanian law imposes a tax on commissions paid to foreign businesses, but the Trumps\u2019 management fees may have qualified for an exemption.<\/p>\n

The filing does not make clear how much money may be owed \u2014 or for how long the Trump Organization may have failed to pay the taxes \u2014 but suggests that the company\u2019s actions on this and other matters exposed the hotel\u2019s owners to millions of dollars in liability.<\/p>\n

The Trump Organization said the accusations were misdirected. \u201cTo the extent any taxes were to be withheld,\u201d the company\u2019s statement said, it was the responsibility of the hotel owners, not the Trump Organization, which \u201cdid not evade any taxes.\u201d The statement added that the tax decisions were made on the advice of an international accounting firm.<\/p>\n

The filing comes as the Trump Organization is waging battle with congressional Democrats investigating the president\u2019s personal finances. While those investigations present more immediate political threats to Mr. Trump, the Panama dispute could open a new line of attack on the president\u2019s business and provide fodder for his critics.<\/p>\n

The filing also alleges, among other claims, that the Trump Organization understated employee salaries in reports to the Panamanian social security agency, which may have reduced the hotel\u2019s social security tax payments. Collectively, the company\u2019s actions made \u201cthe financial and operational performance of the hotel appear in a false light,\u201d the filing says.<\/p>\n

An official with the Panamanian tax agency, reached by telephone, said he was not authorized to comment.<\/p>\n

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The new accusations escalate a bitter falling out between business partners over what was once known as The Trump International Hotel and Tower, and was the only Trump hotel property in Latin America. Orestes Fintiklis, whose companies control a majority of the hotel, removed the Trump Organization as managers last year and later rebranded the property as a JW Marriott.<\/p>\n

In its statement on Monday, the Trump Organization took aim at Mr. Fintiklis over the court filling, saying he was \u201ctrying to distract from his own fraud and material breaches.\u201d<\/p>\n

The dispute with Mr. Fintiklis began in 2017, soon after he bought 202 of the hotel\u2019s 369 units. Mr. Fintiklis, a Cypriot citizen, took legal action against the Trump Organization, arguing it had mismanaged the hotel, which was struggling financially.<\/p>\n

In early 2018, the fight spilled over to the property itself<\/a>, where shouting and shoving matches broke out and police officers arrived in Kevlar helmets. The Trump Organization accused Mr. Fintiklis of using \u201cthug-like, mob-style tactics.\u201d But in March of last year, a local court ruled in Mr. Fintiklis\u2019s favor and a workman pried off the silver T-R-U-M-P name<\/a> from the 70-story property, Panama\u2019s tallest building.<\/p>\n

It was a blow to the Trump Organization, which was already downsizing as it adjusted to business realities under a presidency that has driven away some customers and brought limitations on overseas deals. In 2017, owners of struggling Trump hotels in Toronto<\/a> and the SoHo neighborhood<\/a> of Manhattan bought out the Trump Organization and changed the names of the properties. Today, the Trump company still has its name on golf courses, hotels and other real estate ventures in 10 countries, from Ireland to South Korea, although several of the projects are still underway.<\/p>\n

The fight with Mr. Fintiklis continues to wind through the courts.<\/p>\n

The Trump Organization has pursued, among other things, its own fraud claim against Mr. Fintiklis and his companies. The president\u2019s company, which was affiliated with the hotel since before it opened in 2011 and was supposed to manage it through 2031, has argued that it is owed at least $3 million.<\/p>\n

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Mr. Fintiklis and his companies are collectively seeking about $35 million in damages from the Trumps, through legal proceedings in Manhattan, where the Trump Organization is based, as well as in Panama and before an international arbitration panel.<\/p>\n

The filing in Manhattan on Monday outlined for the first time the accusation of tax evasion. Mr. Fintiklis and his companies cited a Panamanian law that imposes a 12.5 percent tax on payments to a foreign entity like the Trump Organization.<\/p>\n

The president\u2019s company, the filing alleged, \u201cused its control over the hotel bank accounts to make payments to itself and affiliates without withholding the 12.5 percent tax on its management fees, thus intentionally evading taxes.\u201d<\/p>\n

The president\u2019s financial disclosure statements show that his business received at least several hundreds of thousands of dollars per year in fees related to its management of the Panama property. It is unclear how his company handled any taxes paid on those fees because he has refused to release his tax returns.<\/strong><\/p>\n<\/div>\n