Tuesday night, Rachel Maddow and David Cay Johnston revealed Donald Trump's 2005 two-page Form 1040 on air. Before revealing the form, Maddow made an extended argument that Donald Trump must release his complete tax returns in order to disclose all potential conflicts of interest from his business empire, including potentially income from foreign governments. 

We agree — but tax returns are merely a starting point for understanding Trump’s business partners.

In one example, Maddow pointed to a sketchy real estate deal with a Russian oligarch. Donald Trump purchased a piece of property in Florida for $40 million in 2005. Just three years later, Trump sold the property for $100 million to a Russian oligarch (i.e., a rich Russian businessperson closely tied to Putin’s government) named Dmitry Rybolovlev.

Trump's 150% return on investment in just three years would be suspiciously large even if the real estate magnate had bought an undervalued property and improved it. However, Rybolovlev actually quickly tore down the 62,000 square foot mansion and sold it off in three pieces. How the value of the property appreciated so quickly is a mystery, especially as the Florida’s real estate market was collapsing.


Alternatively, overpriced transactions are commonly used to launder huge amounts of money across borders. Global Financial Integrity estimates that $100 billion is laundered out of Russia using trade mispricing mechanisms every year.

Was Donald Trump involved in a “misinvoicing” transaction with a Russian counterpart? That is, did Trump deliberately overcharge on the sale, then send a portion of the overcharged amount to a third party? Such a practice is not unusual in high end real estate. These transactions happen every day in order to accommodate the massive flow of illegal money out of countries like Russia and China. 

Sometimes, the legal entity involved in a transaction is an identifiable person, such as Dmitry Rybolovlev. Other times, the legal entity is a corporation where the beneficial owner (the fancy term for actual, non-paper owner) is concealed. These corporations are known as anonymous shell companies. Unfortunately, they are extremely common in the United States, which is the third easiest jurisdiction in the world to form an anonymous shell company. Money launderers often form anonymous shell corporations in states like Delaware in order to shield their identity from inquisitive eyes.

Maddow and others argue that Donald Trump's full tax returns would disclose Trump's foreign sources of funds. Maddow is correct that Trump's tax returns are a necessary step to reveal counterparties, but they are not sufficient. His full tax returns will disclose the legal entities with which he does business, and there are some disclosure obligations of foreign partnerships. However, if Trump made deals with people seeking to obscure their identity, it is unlikely Trump would have disclosed the identities of the person ultimately hiding behind paper entities.

It is incredibly common for Russian oligarchs to buy high-end real estate in places like Trump Tower, often overpaying in order to move money into the United States. An investigation by the New York Times into the posh Time Warner Center building, just three blocks away from Trump Tower, found over two hundred shell companies listed as owners of the multi-million dollar units. Foreign owners included government officials and close associates of officials from Russia, Colombia, Malaysia, China, Kazakhstan and Mexico. One such owner was Vitaly Malkin, a former Russian elected official and banker with ties to Russian organized crime. Instead of his real name, his $15 million unit was listed as owned by "25CC ST74B L.L.C." 

As Bloomberg just summarized their own reporting, which showed Trump’s reliance on Russian investors when financially distressed while building Trump World Tower. “The bottom line: Trump was heavily leveraged when he built World Tower in Manhattan, which Russians flocked to.”

As it is unlikely we know the identity of all beneficial owners of Trump residences, we do not know if any are among the Russians sanctioned by the United States this past December in the wake of the US Intelligence Community’s determination of Russian interference in America’s 2016 election. Trump business partners could easily hide behind innocent-sounding shell company names. 

There are huge non-Trump issues at play. There is no good justification for the existence of anonymous shell corporations. We allow individuals to incorporate in order to facilitate commerce and limit liability, not to help criminals conceal their identities. We should require all corporations active in the United States to disclose information about their true owners at incorporation.

There is a broad-based coalition against shell companies, including conservative think tanks and the Trump endorsing Fraternal Order of Police (FOP). The FOP’s President, Chuck Canterbury, endorsed legislation to end anonymous companies. Canterbury noted last year that anonymous "corporations have been used as front organizations by criminals conducting illegal activity such as money laundering, fraud, and tax evasion" and they hinder investigations into "possible connection between these corporations and terrorist funding.”

And of course there are specific Trump issues as well. Donald Trump should release his full tax returns for all of the reasons why his predecessors released them. However, anyone who wishes to understand the scope of Russian investment in Trump must not end their requests with his tax returns.

Trump must also release the names of all beneficial owners of corporations with which he has a business relationship. Otherwise, Americans should wonder if he is hiding unacceptable conflicts of interest from the American people.