NEW YORK -- The majority owner of a former Trump-branded hotel in Panama alleged in a court filing Monday that the U.S. president's company misrepresented finances of the building to evade taxes in the country.
A filing in New York federal court by property owner Orestes Fintiklis alleges that President Donald Trump's hotel management company evaded Panama's income and social security taxes when it managed the former Trump Ocean Club International Hotel & Tower. The new accusations are part of a protracted dispute between Trump's company and Fintiklis, the majority owner of the 70-story, seaside, sail-shaped building.
The filing says that Trump's company misrepresented salaries paid to employees and other financial records of the hotel in order to cut its tax bill on fees it was collecting for managing the hotel, slash its social security payments and hand over less to Fintiklis. The filing does not state how much in taxes the Trump company supposedly should have paid.
The Trump Organization said it did not evade any taxes and that, if anything, Fintiklis is to blame on tax matters.
"To the extent any taxes were to be withheld, it was the responsibility of the condominium that owns the hotel. The Trump Organization's only role was to manage the property," Trump Organization spokesman Kimberly Benza said in an emailed statement. "We look forward to taking the depositions of Mr. Fintiklis' and his partners and unmasking their fraud."
The filing in U.S. District Court for the Southern District of New York follows a ruling by judicial officials in Panama early last year against Trump's company in favor of Fintiklis. A few months later, Trump's name was removed from the facade and building management turned over to U.S. hotelier Marriott International.
The dispute started in October 2017 after Fintiklis' company, Ithaca Capital Group, took control of 202 of the hotel's condos. Fintiklis then pushed to terminate Trump's 20-year contract managing the building, alleging "gross negligence and potentially fraudulent conduct," including "looted" bank accounts. The Trump Organization disputed its termination as illegitimate and refused to hand over the property.
In 2017, owners of struggling Trump hotels in Toronto and the SoHo neighborhood 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.
The fight with Fintiklis continues to wind through the courts.
The Trump Organization has pursued, among other things, its own fraud claim against Fintiklis and his companies. The president's 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.
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.
The filing Monday in Manhattan outlined for the first time the accusation of tax evasion. Fintiklis and his companies cited a Panamanian law that imposes a 12.5% tax on payments to a foreign entity like the Trump Organization.
The president's company, the filing alleged, "used its control over the hotel bank accounts to make payments to itself and affiliates without withholding the 12.5% tax on its management fees, thus intentionally evading taxes."
The president's 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.
Information for this article was contributed by Bernard Condon of The Associated Press and by Ben Protess and Steve Eder of The New York Times.
Business on 06/05/2019