Inside Trump's Secret Plan to Fund His “Loyalty Squad”

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Well, he's calling this slush fund that really has no rules on it. He can use it however he wants as an anti-weaponization fund for people who have been politically persecuted by the government like himself after all, he is the ultimate victim. And this could extend to anyone, people like Steve Bannon who decided not to comply with the congressional subpoenas by time and jail for that or his traded advisor Peter Navarro, who did the

same Rudy Giuliani, who tried to overturn the 2020 election and crucially January 6th in

directionists. That's right, already her demanding 30 million dollars.

These are people who are convicted and spent time in prison. Take a listen here. I have a very interesting conversation with an investigative journalist from the New York Times. He's a Pulitzer Prize winner. He's been tracking President Trump's tax returns. It's rust-butner. He's really been on this for a long time. Thanks so much for joining the show.

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Thanks for having me, Todd. Let's talk about the basics of this case. I've spewed out a lot of it for our audience,

“but it's a lot to take in because they settled on three different points, right?”

So let me walk through that. What exactly did the DOJ, the Department of Justice settle with Trump on? The lawsuit started with Trump's allegation that he was harmed when an IRS contractor leaks myself and another colleague of mine at the New York Times, 20 years of his tax returns. We can talk about that now because that contractor has been prosecuted and sent to prison for that. Where are we right now? And why did the IRS think

they could win in this suit against Trump? Well, the IRS thought they had a good good standing in this case to win because they had prevailed in similar lawsuits. I had the taxpayers whose returns were leaked. Althon, the president like this was a contractor. It wasn't an IRS employee that did it. And they can't be held responsible for a contractor did it. The judge in the case, as I was saying, required them to show that they were

actually at that conflict. They won't both just answering the president and carrying the president's water. They had until tomorrow to make that case. They're supposed to file briefs. Rather than face that day of reckoning, they just came to an agreement. Well, here's a bristling at even be called a settlement because it's not court endorsed at all. Just an agreement, the president of a drop is lawsuit. And there would be this massive slush fund created of 1.776 appointed

number billion dollars, which he can do pretty much what he wants. It's not clearly defined. And

then the day after it, they added this a denim to it that any existing ongoing audits, and there were a couple, they were important, would be dropped. And that any audits that could be

You would never be audited for anything he's already filed or the IRS.

That's basically a non-prostitution agreement, right? I mean, is that an agreement that even in the future he can't be audited? It's supposed to be just for returns they've already filed. There's a lot of things we don't know about this. One of them is that if they saw this coming, it would create a sort of perverse incentive for them to rush in tax returns on some of their crypto projects, on whatever else, making pretty audacious tax claims, knowing that they were never

“going to be audited on those returns. So anything they got in before I think it's May 18th, they're”

saying they could never be audited on. That's his image test. I want to go back to why the IRS thought they could win this case against Trump. There's not a lot there. The biggest thing was, as I said, they've prevailed on other lawsuits by taxpayers whose returns were part of the same sort of leak, especially their pro-publica. And that it's not clear that the president was really haunted in any way by this. I think there's also some limitations on who can sue like that

what the fact of this. And there was also just a straight-up time deadline, Trump had missed. It was filed exactly on the Statue of Limitations deadline in January going back to January, I believe, 2024. The problem was they said that was when President Trump first learned that his returns had been part of this leak to us. But his own attorney, Alina Haba, had been in the court months before that when this IRS contractor played guilty of these crimes, she went outside the

court house and said how horrible it was that it couldn't have been just him that the IRS must have been in on it as a part of some retribution for Trump. So clearly, people in his circle knew. So the IRS thought they had pretty good grounds on that as well. They just said he just didn't file the claim

“in time and it should be dismissed based on that. And what was the IRS auditing him over?”

So that has taken a lot, right? That was a huge part of his email back to the 2016 campaign. He said I can't release like tax returns because I'm being audited. That was a red herring in itself, right? There is no definite recruits you from showing people your tax returns while

they're under review. But and he never said what it was when we got his tax returns in 2020,

we could see on there there was what it stemmed from was this massive refund that he got back in 2010 in 2011 for $72.9 million, I believe, which included interest. And that was every dime of income tax he had paid in 2005 through 2007. That was extraordinary in itself because Donald Trump typically pays almost no income taxes at all. The losses on his businesses are so large, it wipes that away. But those years were incredibly profitable years for him because it was the start of the

apprentice. And so suddenly he was receiving 10 in 20 and 30 million dollars a year with no expenses at all from being on the show and then licensing and endorsement deals. So he had paid some income taxes in those years. He filed this a request for a refund because he had new business losses he said that he could use that to wipe that away. Part of that was allowed because of the 2008 recovery act of a president Obama moved through, oddly enough. And the address policy is we give you the refund

and then we start an audit based on what it is. So they did that. What we found out there were two things that were central to that. One was that he had declared his investment in his casinos to be entirely worthless. That's important to the tax stability because it allows you to sort of right off all these losses you may be having been able to use for years because of certain limitations to write them off all at once. He did the same thing for his Chicago tower where he said

I have spent so much money building that thing and taken on so much debt and never going to make

any money on it. So my investment there is worthless. That allowed him to write off. We think in the neighborhood actually I think it was more than a billion dollars in business losses. He like

“wrote off in one year. That's how he got that refund. The IRS, we don't know whether they challenged”

the casino thing. We knew that they were looking at it and that never completed on the Chicago tower. They said not only is that a little odd but it looks like you've tried to declare the same losses twice. In some other years he tried to declare more losses from the Chicago tower after declaring his investment already worthless. The IRS was looking very hard at that. Those

it kind of paused during this first presidency. It came back to life afterwards. It was mentioned in December 2022. Congressional report about his tax returns. I asked Eric Trump about it again in 2024. It's about two years ago this month. When we were writing about the Chicago tower audit and he said it was still active and it was still ongoing. There's really no reason to believe it would have been resolved in the last year. So that in itself, we'd conservatively said

that would have cost an access of a hundred million dollars if it would have gotten against him.

But the interests and penalties would have grown since then. It would be considerably more to that. That was a tremendous gift as a part of this basically agreement between two of his underlings to give him this incredible benefit. Let's say the audit was conducted and he had to and he lost and he owed the IRS in fines. How much would he have owed? As I said, well, well above a hundred million dollars. It gathers every year based on certain interest rate multipliers.

So big cash and there could have been other issues by now that would have joined that as well because to deeply when they find something new, they just roll it in. And that's just this

incredible thing to think that that just got wiped away without any scrutiny after being a matter

that was highly contested for 15 years. Yeah, so President Trump just remind everyone as the Chief Executive was controls the Department of Justice. He controls the Treasury Department in the IRS. So who drafted this settlement? Do we know? The only name that appeared on the Dendom about the audits was Todd Blanche, the acting attorney, Jenny. I auditioning for attorney general right now. Of course, right? Who's last job was as Donald Trump's personal defense attorney,

“right? Right. Right. That's a very, very tight relationship. And who I think more than anybody”

we've ever seen in that role has agreed that he just follows the President's orders, the President's definition of what is legal is going after the President's perceived enemies unlike anybody we've ever seen, perhaps, in the Department of Justice history. And this appears to be kind of an extension in that. Yeah. So, and then it's him and the people who answer to Scott Pescent, the Treasury Secretary as well. And also who is quite clear that he

follows President Trump's directives. So yeah, it's like the boss basically said,

"I think I've got a bunch of money coming my way. You guys work out the details and they did you know, I love to include the audience in our conversation." Jesus Acosta said, "He loses all this money and yet voters think he can run the economy."

“So how is he doing with the American economy? I think we all know how that's going.”

Not well, but I do want to go to the idea of ordinary taxpayers, right? Could any ordinary taxpayer do this?" Wow, that is just inconceivable, isn't it? I don't think ordinary taxpayers can't get out of an audit at all. I think we're not, while seeing that, right? Your basic route that should have taken is if they couldn't have come to an agreement on what the truth was,

somebody asked to walk across Street to a federal courthouse, either the IRS or the taxpayer, and file a lawsuit and then hash it out in public. Which would be very expensive because you'd have to pay lawyers to do that. So at that point, you're probably better off just settling with the IRS, right? Right. Well, I think you can see you think about 15 years of his tax lawyers

“fighting this thing. You can see how important it was and that it must have been very big numbers”

at play. And I've been told that things just don't carry on that long unless the stakes are extraordinarily high for both the IRS and the taxpayer. So yeah, no taxpayer could say, "I just went out of this audit and be let go from that." And the unknowable value of any future audits. When Donald Trump has taken aggressive tax positions throughout his life, we were told tax positions on the Chicago Tower and seeing those were very suspect.

The likelihood of prevailing was not high. So it's reasonable to think that there might be other issues that he would have were to pursue in the course of the last 15 years as well. So Biden's IRS commissioner, Danny Worfell, said that there's no venue left to challenge this. Do you think that he's right, but this is pretty much a done deal?

adendom of the audit. That's not clear to me. We're talking we're hearing of rioting things and we've heard

some of that as well. And there are people who are, you probably heard that some of the January six officers, two of them filed lawsuit to try to prevent a creation of this. Let's just call it

“slush fund. It's not clear. You know, I'll have a stand-in to do that. But it's also not clear. I think”

the ask for the audit-adendom. It's not clear that that can withstand scrutiny. What happens? It's not clear that just Todd Blanche has the authority to tell the IRS what a can and can't investigate going forward. The IRS would follow. You would think Donald Trump's directives for a couple of years. But then what happens after he leaves office would the next administration be bound by this dubious-looking one-paradraft promise to Donald Trump or would that be

would they go ahead and pursue an audit and then deal with him in court if he alleges that he was had an agreement or placed it for bidden from doing that? Okay, so I just want to read this sweeping release from the DOJ. It says that the IRS is "foreverbarred and precluded" from pursuing examinations of Trump, quote, "related or affiliated individuals" and related trusts and businesses. That is like Epstein's style sweeping non-prossicution in my opinion, financial non-prossic action.

“I think it seems to be so sweeping. It's not even clear that it has meaning. What does affiliated”

people mean? How do you define what an affiliation is? I guess any business partners they could argue, you know? Okay, so- I think you could argue Jared Kushner, right? Right, exactly. So maybe you could even extend it to Wikov, Wikov, excuse me, it's a cross-brand. Yes. Yeah. Yes, I mean, certainly everybody who's attached to world liberty financial is main crypto organization. You would think that they could be making argument that they're covered by that as well.

Yes, so I have the exact quote from Morphal, Danny Morphal, the former IRS commissioner provided and he said he was quote unaware of a single precedent where the IRS has agreed in advance to permanently forego examination of previously filed tax returns for a specific person or business. So this is really, you know, he's saying that no one has ever had this kind of arrangement crash into them. It's a crazy. I also think Todd turned an interesting thing to me is that

from what I understand about high or as odd it's worth. If there's- this matter has been in dispute since 2011 with this very large sum, that gets carried forward, right? And it could have impact on how this future returns look. So audits that they would have started after that, they did- weren't going to start on his returns after that until that was completed because the impact on the later returns could be so profound. So it seems there's a high likelihood that there

were issues that have been raised over that decade plus that were never really looked at because

they were waiting to resolve that thing from all these years ago. And all of that just disappears with the wave of Todd Blanch's pen. Okay, so I know you have really deep sources within the IRS. Did these officials feel pressure? I mean, I'm not- I don't have really deep sources into the current IRS. We have our reporters right now are looking in very deeply to what- who was in this circle, who were the decision makers. We did have like colleague Andy Durin reported earlier this week

that a treasury high ranking treasury lawyer left and it was suspected that it was because this settlement, especially about the audits was coming down the pike. I should say we have lawyers telling us don't use the word settlement. That actually means you went to a court and you settled something and the judge signed off on it. This is just a side deal. It's not a settlement at all.

“It's Quizzle. I mean, I think it just goes to the profound uniqueness of this whole thing”

that people can't even figure out what word you used to describe. Yeah, it hits so many different

points. This $1.7 billion slash fund. You pointed out that it's unclear what he could use that money

for. Even though they branded it with the year of our country's birth 1776, right, as if it's some sort of patriotic fund for his political allies and you know, a way to protect them January 6th, you know, insurrectionists who have played guilty many of them in a certain time could

contempt of Congress or Peter Navarro, who was his trade advisor, maybe Rudy Giuliani, who was involved in trying to overturn the results of the elections. These are his political loyalists. I'm wondering, is this real? What could this slash fund? Yes, he has the money, but is he really going to use it to help his quote unquote loyalists or does he just want the

“perception that that's what it's for? Is that some sort of political charity for the, you know,”

also persecuted, but you know, people have also been persecuted by a weaponized government. Yeah, it's a great question to talk. I think it's pretty wide open. One of the unique things about this is they'll be no public reporting on who gets the money, how much and when that's all going to happen in a secret. They'll be a quarterly reports file that I think what that means or identifyers. I'm, I think, they've already said they suspect the January sixers would be eligible for

large sums out of this. That's part of the reason that two of the January six officers have filed their their lawsuit. I think they're definitely going to be insiders who are going to try to get this, as you said. And Donald Trump views anybody who's on his side has done wrong, no matter what the nature has been of the crime they've been convicted of. I mean,

“a Steve Bannon can you get a big whack out of this? I don't know. You have to wonder what would”

happen if some of the law firms that the president basically story it over the last year, right,

threatened to take away their government funding because they had represented people he didn't like or some of the colleges that have faced being federally defunded because of they had die pro-di programs that they just decided are illegal without any really everything approved that in court. Maybe they will apply for some of this and what would happen then and will there be people who will be denied and then filed a lawsuit to say I was wrongfully denied this and

would that bring some of this out in the open? The whole document seems to a lot of Italy so sloppily put together that it could have unintended consequences that go ways they don't want it to go. What would happen if Congress stands up, well, only Congress to really appropriate money? This is a significant amount of money. Well, they at some point stand up inside, you know, now this can't go forward the president is now the authority to do that. You know what? Our producer

Abby, she found the J6 or was in what they think they can get from this fund. Number I've put in

is $30 million, $21.5 million is for the wrong firm prison. We endured a lot. Our lives are still

not the same. I don't know what kind of price you can put on that. Some people are whining and saying it's not enough and we're not even hearing numbers yet. It's like surreal to me. I mean look how angry I look. Rachel Powell, a mom of ace and a grandmother to ace. It's hard enough. They think they're entitled to a lot of money. That's for sure. It was close to really stark aren't they? That's just amazing to hear how much law enforcement talks about setting an example that crime will not be

accepted. That's part of the reason that they're there. And now we totally flip that upside down,

“right? I think that's one of the potential outcomes of this. Is that President Trump by”

pardoning all these people and creating this fund, it's almost like he's sort of deputized and fully funded a militia and incentivized them to do whatever he wants them to do, whenever he says the next election or the one after that has been unfairly taken. They've been told that you're okay to go try to take the capital over. You're okay to try to stop votes from being counted. You're okay to commit acts of violence. If I'm there, you will be pardoned and anything that

happens to you, you will be reimbursed for. And here's a few million dollars up front to get you going.

That's a million dollars. They want 30 million dollars these people. Yeah. I don't think there's there's a I've worked in cornhouses before and there's an old joke that prisons don't have any guilty people at them, right? Everybody in prison thinks that they've been done wrong. And as reporters, we get letters all the time from people saying, "Look into my case, I was done wrong." Unfortunately, some of them were true. And that's a lot of work to entangle, but overall,

I think most people who do these things think that they're just that they're hardswin right placing that should be, that should be enough. Yeah. Can a future administration reverse any of this? Another excellent question. Again, I don't think that the enforceability of either the component of these two agreements are really noble at this point in time. This is a very

he does not approve of this thing that creates this gigantic fund. Would the Senate decide,

you know, at some point we have to claw back our authority over the purse. At some point we have to realize that we are a co-equal branch of government, people been waiting for that for the entirety of both Trump's terms. I don't know if that day is going to come, but that's a visit of possibility. I don't know if they lose the midterms could Congress at that point.

“Sometime early next year decide they're going to take a look at this. But I think that's a”

great question. The fund itself is meant to expire when Donald Trump leaves office. Right? So he is committed to essentially spending all the money by the end of his term about the, the, the

adentum that pertains to the audits that is more eternal. It's conceivable that another administration

could say we're not bound by that. We're going to go ahead and start the audits that should have been started. They're still within the time limit and he can sue us in court and we'll fight there for the, the, the strength and forceability of that agreement. You know, CNN, an interesting clip on Dan Abash's show with Senator John Curtis. He's a Republican, right? And he vowed when he was elected, he's from Utah to be an independent voice. And his review of this was so

limb, he was just like, it doesn't really pass the smell test. I don't really know a lot about it though, so I don't want to weigh in. And Dan Abash was like, well, let me tell you more about it. And he's

like, I don't really feel comfortable laying until I don't know. I, I don't think that these

Republican senators are going to rise up. They have, they really haven't heard a peak. You really haven't heard a peak about it. You just heard John things say, I don't, I don't really like it. I know it's almost unimaginable. And then the cumulative effect of all of this of him showing how willing he is to abuse the power of his office for his own gain and how willing his cabinet is,

“this department has R to enable that. No one's saying no. It's really stark. But I think like Donald Trump”

you know, throughout his business career was not good at looking at long-term consequences. He did things that feel good in the moment in that day that make him feel like somebody who's gotten the better of him didn't get the better of him or he's somehow shown them of the truth. Like this could have unintended consequences. Like this could be grounds for impeachment next year if the Congress does flip on some level. I think like you think back to that Ukraine phone call.

Was there ever a political advisor history who would say, yeah, go ahead and call the leader of another country and tell them you'll only give them the defense budget that's been committed if they announce that they're investigating your political opponent. I don't think any operative would say that's a good idea boss make that phone call. They would say do not do that. You're bringing a possible impeachment hearing on yourself. There's going to be investigations that it's going to

get out don't do it. But Donald Trump does those things kind of over and over again. And then when the sort of inevitable happens he just says he's being unfairly persecuted and goes on from that. But I think there could be long-term negative consequences that they're just not thinking through because they're just following his directives off the day. So I feel like we have opened Pandora's box right now. Future presidents could make the argument that they could abuse this power as well.

They could settle enforcement actions against themselves. Yeah. I mean, look, I think we've come to realize how much of how likely regulated the office of the presidency is that it has been in view with great power and the belief that every president is going to be there is going to be thinking bigger than themselves that they're going to

“use judgment that's what's good for the country, what's good for the office, what's good for our”

citizens. And so there's a lot of like discretion that's allowed of us. I think if we get through all this, there's going to have to be a wave of regulations and re-examination of those concepts and have to be some sort of guardrails put up to prevent future presidents from doing a lot of things he's done including something like this that has to be some sort of recourse, some sort of way to monitor the integrity of these kinds of things and not just rely on the president's sense of

his own integrity. Yeah, I think it creates a sort of immunity for the executive branch. That already feels like it has a pretty broad set of, like it's already difficult enough to

I mean, the last few things. I mean, you look about he's starting from the premise of the

“Supreme Court gave him immunity basically from anything he does in the course of his work, right?”

They said you couldn't really be prosecuted from that afterwards. That was a sort of new interpretation. And that's a heck of a starting point. And I think we're just extending down that road. And I don't think we can see each one of these things is somehow shocking and offensive but not surprising. We just keep getting these moments where he's using the office for his own benefit. For nobody else's benefit. In this case, the taxpayers' expense, and whatever sort of like

benefit law enforcement gets from setting the example of people who don't follow law, it's taking all that away just for his own personal gain. But I don't know what the end of that is going to look like. Is this the most serious self-dealing case we've ever seen?

“Just like in a little bit. Yeah, I'm not a historian, but I can't. Not surely not in my lifetime.”

Sir, there's nobody. There are no studies. I didn't see John Nietzsche on television the same. Oh, no, this happened in 1835. This is like, I don't think we've ever had a president who was said, I'm going to take because I feel like I was done wrong by the Prime Minister. I'm going to take

$2 billion even in inflation and just the $2 billion in 1835. Use it as I see fit to give it to my friends.

Who feel like they've been hurt by the Prime Ministeration. And then I'm going to wave with a wand away every action that the government takes against me. That's really, that's just unimaginable if that had ever happened before. It really does feel like this is the most corrupt moment I've ever lived through. I'm not an historian either, but this feels like an extreme amount of corruption. Russ, thank you for joining the show. Thank you for your excellent investigative reporting.

Russ is a Pulitzer Prize winner. He is an incredible investigative reporter for the New York Times. We're so glad that you're here and that you've stayed on this story for so many years. It takes

a lot of time. It's a small turn with investigative reporting. You can't always put things out every

single day, but we appreciate your dedication to it. And the fact that the Times is still employing investigative reporters where a lot of newsrooms are just slashing, right first. Yeah, thank you for that. Trust for a kind of you. Yes, I do. I am grateful to the times for its continued investment and support and was kind of worked. Yeah, and of course you can support my independent journalism at the Red Letter and on Substack by just hitting that subscribe

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