Trump's $100 Million 'Exceptions' in Russian Income

A letter from the president’s attorneys says he has no income or loans in Russia—“with a few exceptions.”

Russian Foreign Minister Sergei Lavrov and President Trump chat in the Oval Office on Wednesday.
Russian Foreign Minister Sergei Lavrov and President Trump chat in the Oval Office on Wednesday. (Russian Foreign Ministry Photo via AP)

Updated on May 12 at 3:25 p.m.

Donald Trump has received more than $100 million in income from Russian sources in one-time transactions over the last decade, but does not have any outstanding debts or holdings in the country, his lawyers asserted in a letter that emerged on Friday.

The letter, signed by Sheri Dillon and William Nelson of the firm Morgan Lewis, states:

With a few exceptions—as detailed below—your tax returns do not reflect (1) any income of any type from Russian sources, (2) any debt owed by you or [the Trump Organization] to Russian lenders or any interest paid by you or TTO to Russian lenders, (3) any equity investments by Russian persons or entities in entities controlled by your or TTO, or (4) any equity or debt investments by or or TTO in Russia entities.

The named exceptions include $12.2 million in come from the 2013 Miss Universe pageant in Russia and $95 million received from the 2008 sale of a Trump mansion in Florida to a Russian billionaire. (The letter does not name him, but the buyer was Dmitry Rybolovlev, a fertilizer magnate who purchased the house for more than twice what Trump had paid for it four years earlier. The mansion had sat on the market, unsold, for two years.) Both of those transactions were already known and widely reported in the press. In addition, “it is likely that TTO or third-party entities engaged in ordinary course sales of goods to Russian or Russian entities,” including for hotel rooms, golf fees, and various Trump merchandise, though “the amounts are immaterial.”

The figures in the letter are unverifiable, however. The attorneys state that they reviewed his tax returns for the past 10 years, and note that they have served continuously as tax counsel to both Trump and his company since 2012. However, Trump—in a break with longstanding precedent for presidents and major-party contenders—has not released his tax returns. During the campaign, he claimed that he could not release them because he was under audit, although he never produced proof of the audit, and the IRS said that did not prevent him from releasing them. More recently, he and aides have suggested he has no intention of releasing the returns.

The letter also does not indicate whether the attorneys also reviewed the Trump Organization’s returns in preparing it, or whether the company has Russian assets, debts, or other ties that might not appear in Trump’s personal tax returns. The few exceptions named might not be the only ones that exist.

“One could very much read this language in legalese and not feel at all convinced that Russian interests do not have leverage over the president,” said Michael Knoll, Theodore K. Warner Professor of Law and Professor of Real Estate at the University of Pennsylvania Law School.

For example, the letter doesn’t define several key terms. “Are they being technical with the language, or are they being straightforward with us?” Knoll asked. “I guess the assumption should be that they’re being technical. What it means by Russian person or entity does not seem that it excludes basically shell non-Russian entities.”

So, for example, a Russian could establish a pass-through company in the United States, the Cayman Islands, Cyprus, or any number of places, and then do business with Trump or the Trump Organization. That might not strictly speaking constitute a Russian entity, but for the purposes of the conflict-of-interest questions at the heart of Trump’s dealings, it would remain equally concerning.

Trump or his company could also work with Russians on a concern that was in neither the U.S. nor Russia that might not be covered by the letter. He could also have interests in companies that he and the Trump Organization did not control. Trump has frequently franchised his name to projects around the globe.

The Wall Street Journal’s Rich Rubin reported on similar concerns. “A Russian would not lend directly to Trump or his businesses,” Steve Rosenthal, a tax lawyer and senior fellow at the Tax Policy Center in Washington, told Rubin. “A Russian would, for example, fund a Cyprus corporation, which would lend to Trump or his businesses, possibly through other intermediary entities.”

The letter also does not indicate which years of taxes were covered, though it would not cover his finances since assuming the presidency. The disclaimer that Trump’s “tax returns do not reflect” these things leaves open the possibility of investments, loans, or other financial ties not covered in the returns. Trump could also potentially have losses, but not income, in Russia.

Dillon also helped Trump devise a plan to answer worries about conflicts of interest between his business and his presidential administration, and she appeared at a January press conference announcing the plan. Most independent ethics experts, however, have rejected that set-up as inadequate. Morgan Lewis was named the 2016 Russia law firm of the year by the research group Chambers and Partners.

During a Senate hearing on Monday, former Director of National Intelligence James Clapper was asked whether he’d ever seen anything about one of President Trump’s business interests in Russia that concerned him. Clapper declined to answer, saying it could have bearing on an ongoing investigation. Senator Lindsey Graham, chair of the Senate Judiciary Committee subcommittee on crime and terrorism, said he wanted to learn more.

“I have no evidence that the Trump business organization did anything illegal with the Russians,” Graham said. “I have no evidence of collusion. But do I want to know about business ties? Yes.”

The White House quickly responded. “He has no business in Russia,” Press Secretary Sean Spicer said Tuesday. “He has no connections to Russia. So he welcomes that. In fact, he has already charged a leading law firm in Washington, D.C., to send a certified letter to Senator Graham to that point, that he has no connections to Russia.”

The letter is not new, however, and is dated March 8, 2017. The White House has repeatedly referred to the note as a “certified letter,” as though correspondence from a client’s lawyer automatically bears an imprimatur of truth.

During an interview with NBC News’s Lester Holt on Friday, Trump seemed to preview the contents of the letter. “I have no investments in Russia, none whatsoever. I don’t have property in Russia,” he said, but mentioned the sale of the house and the Miss Universe income.

Trump has sought business in Russia in the past. Executives of the Trump Organization have at times in the past said Russia was a major area of business, too. “Russians make up a pretty disproportionate cross-section of a lot of our assets.” Donald Trump Jr. said at a 2008 conference in New York. “We see a lot of money pouring in from Russia.” President Trump has, however, admitted under oath in the past that the Trump Organization sometimes lied about its business in public statements.

Taken at face value, the Morgan Lewis letter either suggests Trump Jr. was being untruthful, or else that the Trump Organization’s Russian assets do not appear in Trump Sr.’s personal tax returns. The letter does not help to answer what Clapper referred to in the Monday hearing. But it does show that the president has at least some business with Russians in the recent past.