Trump’s Panama hotel company accused in lawsuit of tax evasion

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A onetime business partner of Donald Trump’s hotel management company claimed in a court filing that the president’s firm evaded income taxes on a project in Panama and under-reported employee salaries there.

The accusations were contained in a court filing Monday by the business partner, Orestes Fintiklis, and his company, Ithaca Capital Investments, as part of a lawsuit against Trump International Hotels Management. Ithaca assumed control of the property after Trump withdrew from it in March 2018, and a bitter feud over the development has ensued.

Ithaca claims it’s now exposed to millions of dollars in liabilities because of the alleged tax underpayments on Trump’s management fees, which it says were discovered after Panamanian authorities launched an audit of the project a year ago. The under-payments also had the effect of making the development’s finances appear better than they actually were, according to the complaint in Manhattan federal court.

”Mr. Fintiklis is trying to distract from his own fraud and material breaches,” the president’s company said in a statement. “The Trump Organization did not evade any taxes. To the extent any taxes were to be withheld, it was the responsibility of the condominium that owns the hotel. The Trump Organization’s only role was to manage the property.”

The under-reporting of employee salaries was discovered after a labor dispute led to the realization that the amounts reported to the Panamanian social security agency were lower than the amount paid to a worker, the complaint said. News of the claims was reported earlier by The New York Times.

Fintiklis and Ithaca bought a majority of the units in the project, which began as a Trump-managed hotel in Panama City. But the relationship frayed in 2017 over financial performance and other issues. It is now known as the JW Marriott Panama.

The allegation was made in a proposed new complaint filed by Fintiklis and Ithaca Capital. A copy of the document was included in court records.

The case is Ithaca Capital Investments v. Trump Panama Hotel Management, 18-cv-390, U.S. District Court, Southern District of New York (Manhattan).

Bloomberg News
Tax evasion Tax-related court cases International taxes Donald Trump