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Trump’s sister retires as judge, ending inquiry into tax dodges

New York: US President Donald Trump's older sister, Maryanne Trump Barry, has retired as a federal appellate judge, ending an investigation into whether she violated judicial conduct rules by participating in fraudulent tax schemes with her siblings.

The court inquiry stemmed from complaints filed last October, after an investigation by The New York Times found that the Trumps had engaged in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the inherited wealth of Trump and his siblings. Barry not only benefited financially from most of those tax schemes, The Times found; she was also in a position to influence the actions taken by her family.

Elizabeth Trump Grau and Maryanne Trump Barry, who has retired as a judge.Credit:Alamy

Barry, now 82, has not heard cases in more than two years but was still listed as an inactive senior judge, one step short of full retirement. In a letter dated February 1, a court official notified the four individuals who had filed the complaints that the investigation was "receiving the full attention" of a judicial conduct council. Ten days later, Barry filed her retirement papers.

The status change rendered the investigation moot, since retired judges are not subject to the conduct rules. The people who filed the complaints were notified last week that the matter had been dropped without a finding on the merits of the allegations. The decision has not yet been made public, but copies were provided to The Times by two of the complainants. Both are involved in the legal profession.

Barry did not respond to emails or telephone messages left at her Manhattan apartment.

Judicial council reviews can result in the censure or reprimand of federal judges, and in extremely rare cases, a referral to the House of Representatives for impeachment.

Family ties: Trump family members at a 2005 gala auction in New York. From left: Vanessa Haydon, Donald Trump, Jr, Donald Trump, wife Melania, Judge Maryanne Trump Barry, Elizabeth Trump Grau and husband James Grau.Credit:AP

In retirement, Barry is entitled to receive annually the salary she earned when she last met certain workload requirements. Though the exact figure was not immediately available, it appears to be between $US184,500 and $US217,600 (between $257,000 and $304,000).

The Times' investigation focused on how the profits and ownership of the real estate empire built by the president's father, Fred Trump, were transferred to Donald Trump and his siblings, often in ways designed to dodge gift and estate taxes.

A lawyer for the president, Charles J. Harder, said last fall, "The New York Times' allegations of fraud and tax evasion are 100 per cent false, and highly defamatory."

Barry had been a co-owner of a shell company — All County Building Supply & Maintenance — created by the family to siphon cash from their father's empire by marking up purchases already made by his employees, The Times investigation found. Barry, her siblings and a cousin split the markup, free of gift and estate taxes, which at the time were levied at a much higher rate than income taxes.

On a financial disclosure form filed in 1999, Barry noted that her share of the All County profits for the previous 17 months totalled just more than $US1 million.

The family also used the padded invoices to justify higher rent increases in rent-regulated buildings, artificially inflating the rents of thousands of tenants. Former prosecutors said if authorities had discovered at the time how the Trumps were using All County, their actions would have warranted a criminal investigation for defrauding tenants, tax fraud and filing false documents.

Similarly, Barry benefited from the gross undervaluation of her father's properties when she and her siblings took ownership of them through a trust, sparing them from paying tens of millions of dollars in taxes. For years, she attended regular briefings at her brother's offices in Trump Tower to hear updates on the real estate portfolio and to collect her share of the profits. When the siblings sold off their father's empire, between 2004 and 2006, her share of the windfall was $182.5 million, The Times found.

Barry was nominated to the US District Court in New Jersey by President Ronald Reagan in 1983, after several years as a federal prosecutor. She was elevated to the 3rd US Circuit Court of Appeals by President Bill Clinton in 1999.

In February 2017, shortly after her brother's inauguration, she notified the court that she would stop hearing cases and give up her staff and chambers. She was then considered a senior inactive judge, a status that did not entitle her to salary increases, but that left her still subject to conduct inquiries. Barry did not announce a reason for the change at the time.

Following the court's policy of confidentiality, Barry's name does not appear on the order ending the investigation or the correspondence with the complainants. The order identifies the judge in question as a senior inactive judge in the 3rd Circuit, about whom complaints were filed in October 2018. Under court rules, all complaints are reviewed by a judge, and those with an allegation of misconduct or disability are generally referred to a panel of judges for investigation.

"The complaints allege, on the basis of a news article, that the then-inactive senior circuit judge may have committed misconduct relating to tax and financial transactions," says the order, dated April 1.

The complaints had been transferred to the 2nd Circuit to avoid conflicts with judges who knew Barry.

The New York Times

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