Ivanka Trump’s Former Business Partner Sued By DOJ Over Fraud

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Ivanka Trump's former business partner and a close friend of the Trump family, Moshe Lax, is named in a DOJ suit that seeks millions of dollars in unpaid taxes.

New York businessman Moshe Lax and a former business partner of Ivanka Trump is at the center of a lawsuit filed by the Department of Justice (DOJ) following a Politico investigation that uncovered his alleged financial wrongdoings.

Lax, a close friend of the Trump family, is also the man who introduced his former business partner to her now husband, Jared Kushner.

In her 2010 memoir, “The Trump Card,” she wrote about Lax and her admiration for him.

“My new associate was an entrepreneur through and through,” she wrote about him when talking about creating Ivanka Trump Fine Jewelry. “I admired that about him.”

Now, her admiration might be at a low point, as his shady business deals may come back to haunt her.

Politico reports that Lax is being accused of defrauding the federal government out of millions of dollars in tax liabilities tied to his father’s estate.  

According to the suit, Lax, his now deceased father, Chaim Lax, and his sister, Zlaty Schwartz, were involved in “sham transactions” to evade tax liability. These transactions, which the suit states took place at least 10 separate times, were “designed to hide the Lax family assets from the IRS and other creditors and make it appear as though the Estate was insolvent.”  

Lax’s father reportedly began to take part in these schemes just before his death in 2008. The idea was that his heirs could inherit his fortune without having to pay the IRS all of his unpaid taxes.

The suit, which was brought by Southern District of New York by lawyers in the Justice Department’s tax division, seeks more than $60 million in unpaid tax liabilities. But more than money, what this suit could accomplish is to further ingrain the idea that the Trump family and their inner circle are often involved in corrupt schemes.

Trump is not named in the documents brought against Lax by federal attorneys, and she does not stand accused of any wrongdoing in this case. But Madison Avenue Diamonds, the company behind Ivanka Trump Fine Jewelry, is often mentioned in the lawsuit, including one scheme involving an alleged transfer of about $21 million in interest in the jewelry company from Lax's father’s estate to a holding company. The transfer appears to have occurred without his father’s estate getting anything in return.

Lawyers for the DOJ also allege that Lax made a fraudulent transfer of a portion of Madison Avenue Diamonds’ equity between 2008 and 2012 to a holding company named in the complaint. During that period, Trump was still involved with the company, as she also had ownership stake in Madison Avenue Diamonds.

While the jewelry company isn’t named in the complaint, its private creditors are named as parties because they may own assets the government wants to seize.

According to a spokesperson for the Ivanka Trump brand, President Donald Trump’s daughter is not involved in this case under any circumstance.

“The issues in this case have nothing to do with Ivanka or the Ivanka Trump brand,” the unidentified spokesperson said. “These licensing arrangements were terminated by the Ivanka Trump brand in 2016, prior to Ivanka entering government service.”

According to Trump Organization General Counsel Alan Garten, Lax “still owed a significant amount of money” to the Trumps up until last summer. But according to Politico, it is not yet clear whether he paid his debt.

In an exchange between Lax and one associate who remained anonymous, the troubled businessman allegedly claimed to have discussed financial strategies with his former business partner’s father, the president.

After attending the Trump campaign’s election night victory celebration for guests only in November 2016, Lax allegedly took one of his creditors outside the Trump Tower to a kiosk selling Ivanka Trump Fine Jewelry in the building’s lobby. He then said he wanted to take over another jewelry company to turn the Ivanka Trump jewelry brand into a $500 million venture.

He added he wanted to strike while Trump's name was hot.

The creditor then said he didn’t believe he could do it, as Lax was already going through financial troubles. Lax then reportedly said he didn’t need money. After all, he had learned how to use “expedited bankruptcy” from the guy upstairs, as he pointed to the upper floors of the Trump Tower.

The president, who filed bankruptcy six times, continued to allow Lax to stay close to the family even after his daughter ended her partnership. He even attended the inauguration festivities where he introduced himself as a business partner of Trump’s.

Tiffany Trump later attended a launch party for Lax’s retail business called Code, his latest venture. And then last year, Lax managed to have a meeting with a senior member of Congress to advocate on behalf of mining billionaire Dan Gertler, who eventually became the target of economic sanctions imposed by the Trump administration over his corrupt mining deals in the Democratic Republic of Congo.

Whether or not the president’s daughter has anything to do with Lax’s schemes, this case proves that the Trumps have no trouble going into business with nefarious individuals.

It isn’t just Trump’s former campaign manager who stands accused of tax fraud, or the Kushners who have been labeled as “slumlords,” now we know that even the president’s eldest daughter has a hard time not getting involved with potential crooks.

Banner and thumbnail image credit: Reuters/Mike Segar

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