In Depth Look: Donald Trump's Attorney's Letter On Russia: Where They Loopholes May Be

After a shocking set of statements this morning, Donald Trump had his attorneys send a letter intended to prove that he has no ties to Russia. The letter, from the prestigious law firm Morgan Lewis says the following:

In reading the letter, there are places for a lot of loopholes. In the copy below, we added the questions and potential loopholes that our expert noted. The comments by our expert are in red -- note that we had to reformat the letter so that the comments were clear. The letter without any formatting changes or comments is above.

Re: Transactions with Russian counterparties reported on your U.S. federal income tax returns

Dear President Trump:

We, Sheri Dillon and William Nelson, have served as tax counsel to you and The Trump Organization ("TTO") continuously since 2005. As such we are familiar with your U.S. federal income tax returns and with transactions that are reported on your returns

Note that everything that wasn't in Trump's federal taxes is left out of this letter.

In this capacity, you have asked us to review your returns for the past 10 years. Following such review, we hereby confirm the following facts: As disclosed in your most recent Executive Branch Personnel Financial Disclosure Report (OGE Form 278e), filed on May 16, 2016, you hold interests as the sole or principal owner in more than 500 separate entities...

Note that this letter specifically excludes any businesses where he isn't the sole or essentially sole owner -- including any C-corporations, which are the most common type of corporations.

These entities are collectively referred to and do business as TTO. Because you operate these businesses almost exclusively through sole proprietorships, S-corporations, and/or partnerships...

This letter also does not include anything that is mostly held by his kids or in certain types of trusts.

...your personal federal income tax returns reflect income that is earned by these entities and interest that is paid or received by these entities, as well as income that you directly earned or interest that you paid or received.

With a few exceptions -- as detailed below -- your tax returns do not reflect (1) any income of any type from Russian sources

The letter doesn't specifically define Russian sources, and that's a huge loophole...see the comments in the following sections...

(2) any debt owed by you or TTO to Russian lenders or any interest paid by you or TTO to Russian lenders

Russian lenders implies Russian people or companies whose principal place of business is in Russia. In most reports, the companies that may be connected to Trump are based in other countries (like Cyprus) but run and funded by Russian oligarchs -- those are likely excluded from this letter.

(3) any equity investments by Russian persons or entities in entities controlled by you or TTO,

Again, if they do exist, investments would likely come from a shell company based in Cyprus, the Bahamas, or other countries with lax banking regulations. They would not be directly from Russia.

or (4) any equity or debt investments by you or TTO in Russian entities.

This was never a concern.

The exceptions are: (1) in 2013, the Miss Universe pageant was held in Moscow, and of the $12.2 million of foreign income that it earned that year a substantial portion of it was attributable to the Moscow event; (2) in 2008, Trump Properties LLC sold an estate in Florida, that it had acquired in 2005 for approximately $41 million, to a Russian billionaire for $95 million;

The sale of this home for such a high markup has been a significant question. The letter provides no details about it.

and (3) over the years, it is likely that TTO or third-party entities engaged in ordinary course sales of goods or services to Russians or Russian entities, such as sales / rentals / fees for condominiums, hotel rooms, rounds of golf, books or Trump-licensed products (e.g., ties, mattresses, wine, etc.) that could have produced income attributable to Russian sources (such income would not have been separately identified as "Russian" in your books and records and therefore not separately reflected on your tax returns). With respect to this last exception, the amounts are immaterial.

Regards,

Sheri A. Dillon

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