“Manafort was found guilty of filing a false tax return in each of the years from 2010 through 2014, as well as not filing a form in 2012 to report a foreign bank account as required,” The Washington Post reported. “He was also convicted of two instances of bank fraud, related to a $3.4 million loan from Citizens Bank and a $1 million loan from Banc of California.”
Manafort listed fictitious loans on his tax returns to reduce the amount he’d have to pay the IRS, his own accountant testified during his trial.
In a double whammy of bad news, the president’s former longtime personal attorney Michael Cohen pleaded guilty in New York to eight crimes that also included tax fraud. He also admitted that he helped arrange — directed by Trump — to pay off two women who have said Trump had affairs with them.
Cohen pleaded guilty to five counts of tax evasion and making a false statement to a bank and two campaign finance violations.
Cohen didn’t report $4 million in income from 2012 to 2016, mostly from interest and taxi rental payments, according to court filings
“He also concealed $100,000 he made selling a piece of property in Ocala, Fla., in 2014, a $30,000 in profit he made for arranging the sale of a couture Birkin handbag and $200,000 in consulting fees he made from an assisted-living company,” The Post reported.
As part of his plea deal, Cohen will pay $1.5 million to the IRS.
The Post’s Jennifer Rubin asked in early August, “'Do any of these guys pay their taxes?' It’s not an unreasonable question to ask of the sort of characters in Trump’s orbit. At the ongoing trial of former campaign chairman Paul Manafort, we got a peek at the extent of the alleged theft — yes, theft — from taxpayers."
Rubin went on to write, “Very few presidents have ever had even one tax cheat in their inner circles. Trump may have had a bunch. It’s not fair to assume that if Trump cronies cheated on their taxes, then he must have as well. It is, however, fair to observe that Trump had an affinity with people who had a huge sense of entitlement, a high-flying lifestyle and a belief that the laws apply only to little people. More importantly, we can never ever again elect a president who has not disclosed his taxes for a reasonable number of years. And that includes 2020.”
Manafort and Cohen join a long list of high-profile people who have been taken down for tax evasion.
Perhaps the most famous tax evader was Al Capone, the Chicago gangster who in 1931 was indicted and found guilty of income tax evasion.
"Like Manafort, it was Capone’s lavish spending that proved that he had income from illegal means,” wrote The Post’s Alex Horton. During his trial, prosecutors detailed Manafort’s luxurious lifestyle as well.
“Capone’s grand criminal conspiracy, in other words, was unraveled by the purchase of every silk sock and expertly hemmed coat that materialized without any sort of documented income.”
Unlike their other customers who paid by check, Manafort would pay with foreign bank transactions, vendors said during his trial. "The prosecution strategy to focus on extravagant spending appears similar to the Capone tax case,” Horton wrote.
Remember the hotel mogul Leona Helmsley?
Helmsley and her husband, Harry, were indicted on charges of failing to pay $4 million in income taxes.
Harry Helmsley, who was almost 80 when charged, was found mentally incompetent to stand trial.
Leona Helmsley was convicted in 1989 for tax evasion. She served 21 months. During her income-tax evasion trial that year, a maid testified that Helmsley said, “We don’t pay taxes. Only the little people pay taxes.”
"Helmsley denied having said that, but her reputation for high living made the comment seem convincing to many, and it proved a damning statement at trial,” wrote The Post at the time of her death in 2007.
Helmsley was ordered to pay more than $8 million in fines and back taxes.
Then there was Richard Hatch of “Survivor” fame. He won $1 million in the first season of the reality television show. He was found guilty in 2006 of failing to pay taxes on his winnings. He was also convicted of evading taxes on $327,000 he made as a co-host of a Boston radio show and $28,000 in rent on property he owned.
In response to Manafort’s guilty verdict, Trump said, “Paul Manafort’s a good man.”
Trump went on to say this about the verdict: It “doesn’t involve me, but I still feel, you know, it’s a very sad thing that happened.”
What’s sad is these men, who earned millions, thought the tax laws didn’t apply to them.
The criminal cases against Manafort and Cohen should matter to you. Tax evasion is not a crime without a victim.
When people commit tax fraud, they’re not just cheating on the IRS. They are defrauding every law-abiding taxpayer who pays his or her tax bills.
So no, Mr. President, good people don’t cheat on their tax returns.
Color of Money question of the week
What do you think of Trump’s response to the tax-evasion guilty verdict for Manafort? Send your comments to email@example.com. Please include your name, city and state. In the subject line put “Tax Fraud.”
Live chat today
Let’s talk about your money. I’m live at noon (ET) Thursday to take your personal finance questions.
No guest, just you and me. So, what’s on your mind about your money? Join the discussion by clicking this link.
This is how you know you’re living above your means
In last week’s newsletter I wrote about how to know if you’re living too large.
So I asked readers: What’s your definition of living above your means?
“There was a time, many years ago, when I was in veterinary school, incurring debt every year until I graduated,” wrote Ruth Chodrow of Staunton, Va. “I tried to keep my living expenses as minimal as possible. One day a group of my classmates suggested going over to the local coffeehouse, and I stopped to think whether I could afford and justify the 65 cent charge for a cup of hot chocolate. To me, at that time, that was almost living above my means. I did decide to go and have that splurge, and have never regretted it. I recently told that story to my financial planner. He said that thinking about even that small expense reflected the mind-set that got me to the healthy financial situation that I am in today.”
Color of Money columns this week
Knowledge isn’t power. The right knowledge is power.
Stay informed about your money.
In addition to this newsletter, please read and share my weekly personal finance columns.
Newsletter Comments Policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)
Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to firstname.lastname@example.org. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested.
To read more Color of Money columns, go here.
If you’re viewing this post online sign up to automatically receive Michelle Singletary’s newsletters right into your email box: “Your Retirement” on Mondays and “Personal Finance” on Thursdays