LONDON: Donald Trump could be taken to court after a Daily Telegraph investigation found the Republican presidential nominee signed off on a deal that appears to have deprived the US Treasury of tens of millions of dollars in tax.
Lawyers prosecuting some of Mr Trump's closest business associates in a civil suit, which includes these allegations, believe there may now be cause to include Mr Trump as a defendant.
The Republican presidential nominee will unveil his economic plan in a speech in Detroit today (Monday), as he tries to give fresh momentum to his campaign after a disastrous week. A Washington Post poll yesterday showed Hillary Clinton ahead by an eight-point margin.
Frederick Oberlander, the lawyer executing the legal action, said the Telegraph's disclosures included "new" and "relevant" information that may show Mr Trump shares culpability.
The lawsuit claims that executives at Bayrock, the property development firm behind the Trump SoHo hotel in New York, sought to evade tax.
A key allegation centres on a deal between Bayrock, which operated out of Trump Tower, and FL Group, an Icelandic company. The case, which will be heard in the New York supreme court, alleges that Bayrock sold a $50?million (pounds 38?million) slice of the company, but disguised the sale as a loan to escape tax liabilities, estimated at $20?million.?
A Daily Telegraph investigation earlier this year revealed that Mr Trump approved the deal despite - according to independent experts - its containing several "red flags" suggesting it might be improper.
Moreover, this newspaper revealed it was written into the deal agreement that Mr Trump's consent was required in order for it to go ahead.
In the light of this, Mr Oberlander and Richard Lerner, a colleague, are considering whether Mr Trump may share culpability for the alleged fraud.
"When we first began investigating this case, we found no evidence that Mr Trump was culpable in fraud, as the papers themselves, written some time ago, state," said Mr Oberlander.
"However, in the time since we filed it, as his candidacy has progressed, new, relevant Trump and Bayrock information has surfaced, from sources including Mr Trump himself, which in our opinion has significantly changed that calculus."
Mr Trump was a key player in Bayrock's investments, licensing the use of his name and owning a 15 per cent share in the Trump SoHo development.
A further 3 per cent was placed in the name of Ivanka and Donald Junior, two of Mr Trump's children. Alan Garten, Mr Trump's lawyer, told this newspaper that his client "had nothing to do with that transaction".
He said he did not directly benefit from the deal, and that by signing the consent letters, he was simply acknowledging, rather than approving, the deal, as a "limited partner".
That appeared at odds with the clauses in the contract for the deal, stating that his consent would be needed.
Mr Garten refused to say whether Mr Trump's lawyers identified flaws in the agreement.
The court case is in part based on a complaint filed in 2010 on behalf of Jody Kriss, his then client, the former finance director of Bayrock.
Mr Lerner said: "Mr Trump gave his consent to the transaction after receiving a full set of documentation which made clear that without it the deal would not go through. The extent of his involvement and any culpability will become clear during the course of the case. At this time, it seems that he benefited indirectly as a partner."
Bayrock described the allegations as "baseless". It said the deal was "vetted and approved by outside accountants and tax counsel" and was subject to an "extensive field audit" by the IRS.