A Fascinating Investigative Piece from Trump, Inc.

The team at Trump, Inc. a group of investigative reporters from ProPublica and WNYC, has put together a fascinating series of reports about Trump’s frequently fishy-smelling money-making operations.   The shows are extremely well put together narratives.   A recent show was called “The Accountants”  and it is from this highly recommended show that these notes of mine are taken.  The episode transcript is the source of all block quotes.

When the New York Times reported that, for tax purposes, Donald Trump had lost over a billion dollars during a single decade, and avoided paying federal income tax for eight years between 1985 and 1994, Trump’s lawyer:   

said the tax information in the Times’ story was “demonstrably false,” but cited no specific errors.

In a prior NY Times story, reporting in great detail about the intricate tax avoidance schemes Trump’s father employed to pass on a billion dollars to his children with minimal taxes paid, one of Trump’s lawyers, (likely a famed legal hard-on named Harden) in an act of bravura puffery, called the Times reporting “100% false, and highly defamatory”  (of course it was, which was why Trump successfully sued the now defunct Grey Lady).  Trump, Inc. explains:

We know now that, as Donald Trump’s businesses were struggling, the Trump family accountants helped funnel millions of dollars from Fred Trump to his children.


CRAMER: In 1992, the Trump Family set up a company called “All County Building Supply & Maintenance.” It was owned by Donald Trump, his siblings, and a cousin. The New York Times uncovered a number of suspect tax strategies that the Trump family used, and All County was one of them. Out of all of the schemes, The Times said All County was the “most overt fraud.” A lawyer for Trump called the Times’ reporting “100% false, and highly defamatory.”

Again, recall, history speaks for itself.   The Times published a 100% false and highly defamatory article that claimed the Trump family had committed financial crimes, including tax fraud.   Trump sued, the case was a slam dunk, the Times is no longer in business.   

On the eve of the Supreme Court arguments over whether Trump has the unprecedented privilege of complete immunity from investigations of any kind while president, Trump, Inc., dug into the story of his accountants.  His accounting firm is one of the parties, along with Deutsche Bank and everybody else, that the secretive Trump is insisting cannot be legally  compelled to turn over subpoenaed records, even to criminal investigators in New York State. 

The dogged team from Trump, Inc.  eventually located one of the Trump family’s longtime accountants, Mitchell Zachary (who was amazed that anyone in the media had found him and happy to speak to them, at length).  Trump Inc. continues:

I asked Mitchell Zachary about All County during our first interview.

ZACHARY: Yep. Know all about it.

CRAMER: Whose idea was that?

ZACHARY: Speci— Well, uh, it wasn’t mine. I — I’ll tell you that. I wish I could take credit for it — it was brilliant — but it wasn’t mine.

CRAMER: Here’s how it worked. Fred Trump bought supplies for his buildings — like refrigerators, stoves, and boilers — from this company, All County Building Supply & Maintenance. All County sold Fred those supplies at hugely marked up prices.

But remember, All County was owned by Fred Trump’s children, and they profited off those huge markups. The Times found that, over time, Fred was able to funnel millions of dollars to his children through All County, and could have avoided paying millions of dollars in taxes.

ZACHARY: I knew what that whole thing was about, you know. It was part of the estate planning strategy.

CRAMER: In the mid-‘90s, Mitchell Zachary left the Trump tax team, and began working on estate planning for Fred Trump.

Zachary told me that All County was implemented by the Spahr accountants, but that he wasn’t part of the team that developed the strategy, and he didn’t work on it directly.

ZACHARY: I wish I could take credit for it, but I only learned from it.

CRAMER: What did you learn from it?

ZACHARY: Uh, that if you plan properly [PAUSE] on a very, very large estate, then — if you have time — you could take steps to reduce the value of the properties. That was the main purpose of All County — to reduce the value of the properties for estate tax purposes.

CRAMER: A former Chief of Investigations for the Manhattan District Attorney’s office, Adam Kauffmann, told the New York Times that the Trumps’ use of All County would have warranted investigation for “defrauding tenants, tax fraud, and filing false documents.” The statute of limitations for criminal prosecution has expired.

The Times reported on another tactic used to reduce the Trumps’ tax bill: Dividing up legal ownership of Fred Trump’s properties so that he lacked complete control. That helped an appraiser justify lower values, which meant lower taxes.

ZACHARY: So, at that time, uh, we brought in this appraiser and he took anywhere between 35% and 40% discount. This was a common technique we used, okay? Well, the IRS hated that.

CRAMER: After Trump’s parents died, the IRS audited their estates and found they were worth 23% more than the Trump family had claimed.

All told, the Times found that Fred and Mary Trump transferred over a billion dollars of their wealth to their children — which could have meant paying over $500 million in taxes. The Trumps paid a fraction of that.

Mitchell Zachary defends the firm’s work for the Trump family, saying it was aggressive but within the law. He said Donald Trump’s taxes were frequently audited, and pointed out that the IRS reviewed their work on the estate taxes.

The ever-secretive Trump, with nothing whatsoever to hide, made his accountants lock up all of his financials every night when they were done with a day’s work massaging them.   The Artist of the Deal, a man famously reluctant to pay his bills, also demanded special, discounted fees, that his accountants were glad to provide.

CRAMER: Confidentiality was more important with Trump than with most clients. At Spahr, the policy was: You couldn’t leave Trump’s documents out overnight. You had to lock them away in a cabinet.

ZACHARY: More than any other individual [BEAT] that I’ve ever seen, he was very big on promoting that he’s this super-rich billionaire. That’s not what you see when you look at his personal tax returns. 

CRAMER: Donald Trump basked in the perception that he was money. In interviews with journalists, he sometimes produced papers, compiled by his accountants, which he said proved his wealth. Trump sued the journalist Tim O’Brien after O’Brien published a book claiming Trump was not a billionaire. Trump lost.

In the end, Donald Trump cared a lot about one other thing: his fees. The firm promised Trump his fees wouldn’t go up after the merger, and he gave the okay. The merger went forward.

Summarizing the first sections of their report on his accountants, on returning from a musical interlude, Ilya Marritz said:

MARRITZ: And we’re back. Let’s just recap where we are.

One of Donald Trump’s former accountants, Mitchell Zachary, has confirmed that Trump was not the super rich guy he presented himself as in The Art of the Deal. To protect that image, Trump’s accountants applied a high level of secrecy and security around his finances. 

Despite its big-name client, the accounting firm was still small. And the partner in charge of Trump’s taxes was accused of malpractice, and was found to have committed fraud. The firm lost its malpractice insurance.

Meg picks up the story now, with Mitchell Zachary out of the picture, and Donald Trump branching out from real estate to branding and entertainment. 

And on they go, invading this most private of public citizen’s well-guarded privacy.   And I keep listening.   Oh, my goodness.  I can’t believe how petty I am to keep taking in 100% false and HIGHLY defamatory information dredged up (or simply made up) by obvious liars.   How I often think so badly of this very fine person, our excellent and unaccountably constantly attacked totally innocent and serially exonerated president.   It’s almost like I have Trump Derangement Syndrome!   I need help — any ideas greatly appreciated.

Meantime, check out this excellent episode, a very listenable narrative.  Here’s a bit more, from the transcript, from their discussion with Trump’s talkative, longtime accountant Mitchell Zachary:

CRAMER: He says you can see from the Times reporting that Trump appears to have lost more money than anybody during that period of time.

ZACHARY: So naturally, it was very unusual.

CRAMER: He does not think Trump was pushing the envelope.

ZACHARY: Yeah, we were a little aggressive, but not, uh, pushing the envelope too far. The man lost a lot of money. We didn’t need to push the envelope.

CRAMER: At one point, he put it like this: Trump had lost so much money, “he was a built-in tax shelter.”

Trump was a difficult client. Zachary told me that collecting fees from Trump was awful. Eventually, Spahr negotiated a deal: Lower fees if Trump paid on time.

ZACHARY: Donald always made it clear. You get the privilege of saying you’re Donald Trump’s accountants, and you have to pay the price.

CRAMER: Mitchell Zachary worked under a partner at the firm, a man named Jack Mitnick. For decades, Mitnick was the accountant behind the Trump family’s tax strategy. Zachary said Mitnick was known around the firm as a ‘Tax God’ — an accountant so gifted, you had to sit up and pay attention.


ZACHARY: And what I learned from Jack Mitnick was keep researching until you find a way to do what you want to do. Don’t give up. Just keep digging.

CRAMER: Zachary told me that Mitnick had an especially close relationship with the Trumps, that Mitnick was constantly on the phone with either Donald or Fred. He had tax ideas for them, they had questions for him — and that they wouldn’t make a move without discussing it with Mitnick first.


CRAMER: My conversations with Mitchell Zachary began in January, on the phone. At the very beginning of March, Peter Elkind and I flew to Florida to meet him. This was back before social distancing. Some of the tape is from our in-person interview.


ZACHARY: Okay. You have to understand, Jack … The — the aura around Jack Mitnick was that he was infallible. I mean, when I first came there — you might find this interesting or not — I couldn’t call him Jack. I always called him Mr. Mitnick. That’s part of his — his aura. You know, that he’s the biggest tax expert in the world, and he’s always right. And if he blesses something, you can do it. That was the feeling that everybody thought about Jack. 


CRAMER: He seemed to screw up again and again and again, though. 

ZACHARY: Yeah. He didn’t always win. His opinion wasn’t always a winning position. 

CRAMER: Do you think he really, like, took a lot of extreme positions?

ZACHARY: Probably. I think the court cases bear that out. 


PETER ELKIND: Well the first case is called Fresci vs. Grand Coal Venture.

CRAMER: This is Peter Elkind. Peter came across a federal appeals court opinion from 1985, involving Jack Mitnick and a group of investors. Mitnick was working for them, managing their investment in coal mining in North Dakota.

ELKIND: He was accused of deceiving the investors. That basically, even though he was the administrator of this operation, he told them that if this one coal mine that they were pouring their money into didn’t pay off, if it wasn’t productive, that he had another coal mine that would be productive and he’d guarantee that they’d turn out fine — that they’d make money.

CRAMER: Mitnick knew that was not the case. The investors accused him of fraud.

ELKIND: And after reviewing the record, both a district court — a trial court — and an appeals court concluded that that was justified. In fact, the appeals court, in a written opinion, said that the record amply demonstrates that he committed fraud, and even in the opinion said that the matter should be referred to the appropriate Professional Conduct Review Committees.


CRAMER: Mitnick continued working at the firm as a Senior Partner, and he continued to work closely with Fred and Donald Trump.


CRAMER: The office building where Jack Mitnick and the Spahr accountants did Donald Trump’s taxes for many years was this place. It’s a blocky concrete structure with a sort of shabby, mid-century appeal. It’s out on Long Island — a short drive from Fred Trump’s home in Queens. Peter and I went there in January.

CRAMER: In the space, there’s kind of an atrium in the middle, with a central staircase going downstairs.

CRAMER: Inside, the offices have low ceilings and windowless hallways. We just went to have a look.


CRAMER: It’s a squeeze to get more than two people in the elevator.

It makes sense that Fred Trump’s accountants worked here. Fred himself worked out of a renovated dentist’s office on Avenue Z in Brooklyn. But it’s a long way from the marble and gold of Trump Tower.

Ultimately, by staying close to his father’s accountants, Trump also stayed close to his father’s wealth. Kind of, like, the rich-person version of staying on your family’s cell phone plan.

We know now that, as Donald Trump’s businesses were struggling, the Trump family accountants helped funnel millions of dollars from Fred Trump to his children.


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