* From Friday…
Daniel Biss today released the following statement in response to WCIA-TV’s report detailing how JB Pritzker transferred hundreds of millions of dollars worth of Hyatt Hotel Corporation stock from offshore accounts in the Bahamas to shell companies established in South Dakota and Nevada:
“JB Pritzker has claimed to be the solution, but today’s report detailing his latest tax scandal is more proof that he’s a continuation of the problem.
“JB’s repeated tax schemes don’t just cheat the state — they cheat middle-class and working families who have to make up for his tax evasion with higher taxes and reduced services. JB transferred money from offshore accounts to out-of-state shell companies that were not listed on his Statement of Economic Interest. This report has raised some alarming questions, and now JB Pritzker is asking us to take him at his word that he paid his fair share in taxes while still refusing to release his full tax returns. We should all be offended.
“We can’t trust a billionaire who benefits from the broken system to fix it. And we certainly shouldn’t elect one as the next governor of our state.”
OK, this was part of an interesting turn of events. A WCIA story was posted at 3:58 Friday morning, but was then taken down. Click here for the original, which I saved on my hard drive, and click here for the revised story, which was posted Friday night.
* The initial explanation for why the first story was taken down…
* Maxwell explained further…
* More…
* The Pritzker campaign, however, still has problems with the revised story…
This “story” connects completely unrelated dates and facts and is a lesson in why regurgitating an anonymous political twitter account is so dangerous. Before taking anonymous information riddled with innuendo and parading it around as news, it would serve the voters to get the facts right first.
Below are excerpts from the story and bullets correcting inaccurate information:
In a series of tweets reminiscent of the now infamous WikiLeaks rollout of hacked DNC emails, the mysterious schemer peddled a web of tax avoidance theories which claim, with scant evidence, that Pritzker began filling his massive campaign war chest by “liquidating offshore assets” and funneling the money through shell companies in Nevada and South Dakota.
* This sale in question only concerns a domestic trust.
* No disbursements from offshore trusts ever went to trust companies in South Dakota or Nevada.
* Money from offshore trusts only goes to charity, and this sale has nothing to do with an offshore trust.
* The documents show the trust being a domestic trust.
SEC filing forms show the shares were cashed out and distributed into the Pritzker Family Foundation, which operates as a 501(c)(3) nonprofit charity. According to tax documents filed with the Internal Revenue Service in 2015, the Pritzker Family Foundation reported it held over $104 million in assets that year.
* This is false. The SEC documents do not show that.
* This sale is from a domestic trust set up in Illinois.
* It doesn’t matter where the trustee or the trust company is located, taxes have to be paid based on where the trust was set up.
* All applicable federal and state (Illinois) taxes were paid as a part of this transaction.
According to insider transaction documents filed with the U.S. Securities and Exchange Commission, Pritzker began unloading his shares of Hyatt Hotel Corporation stock on August 19th, 2016, less than one month after Julian Assange first published emails damaging to Hillary Clinton on WikiLeaks. At the time, Pritzker was heavily invested in Clinton’s presidential bid, donating over $15 million to Priorities USA Action, the pro-Clinton super PAC then run by current Pritzker campaign manager Anne Caprara.
* The timeline of Hillary Clinton’s campaign has nothing to do with the timing of the sale.
* At the time of the first sale, August 19, there was no indication that Hillary was going to lose the election.
* The Pritzker family has restrictions on when they can sell Hyatt stock. Other Pritzkers sold stock around that time as well.
It was only after the trove of WikiLeaks emails was released, some of which contain fundraising emails and conversations with Pritzker himself, did he begin moving money out of his Hyatt fortune in the Bahamas to establish what would become, ostensibly, a hedge bet against Clinton’s unlikely loss in November. Pritzker personally signed off on the documents that show he used shell companies established in South Dakota and Nevada to complete the multi-million dollar transactions.
* Again, this transaction has nothing to do with the Bahamas. If you look at the linked document it’s from 2010, not 2016.
* The Pritzker family has restrictions on when they can sell Hyatt stock. Other Pritzkers sold stock around that time as well.
* Hillary Clinton’s campaign had nothing to do with the timing of the transaction. Again, everyone thought she was going to win until election day. Even Trump’s campaign thought he was going to lose on election night.
* They’re not shell companies, they’re trustees
* No money from offshore trusts ever went to trust companies in South Dakota or Nevada.
Each of these stock transactions appears to have been conducted legally, but Pritzker’s political rivals will almost certainly raise questions about the timing and the ethics of the maneuvers, the civic duty of would-be public servants to pay taxes, the apparent contradiction between his transactions and his public statements calling on the wealthy to “pay their fair share,” and his pledge on Tuesday night to create a “truly blind trust” that would separate him from conflicts of interest.
* These transactions were done legally. Period.
* Trusts for JB’s benefit paid all applicable taxes on these transactions as Mark reports in the paragraphs previously.
Thoughts?
*** UPDATE *** Maxwell has responded. Click here for his thread.
- PJ - Monday, Jan 29, 18 @ 12:00 pm:
My thought is that no one, including me, cares enough to compare the point-by-point breakdown and see how valid the allegations are.
Like anything in politics, all the matters is whether the general cloud sticks. It certainly reinforces the “corrupt billionaire” image the oppo dumps are trying to project.
- Canon - Monday, Jan 29, 18 @ 12:12 pm:
My thought is that Biss horribly mismanaged this dump.
- ILDemVoter - Monday, Jan 29, 18 @ 12:12 pm:
Agree with PJ-
I don’t really understand the ins and outs of offshore trust, SEC interaction, or shell companies and neither does the average voter (or most voters for that matter) in Illinois. Which reinforces the very crux of this campaign argument- “corrupt” (even though this was all very well legal) and out of touch.
- Actual Red - Monday, Jan 29, 18 @ 12:14 pm:
Agree with PJ — very few people have the time or energy to get in the weeds on complicated tax questions like this.
That said, I think this will stick around. Pritzker’s campaign is probably telling the truth when they say everything is done legally. The guy can afford all of the accountants and lawyers in the world, and I’d be surprised if things weren’t by the book.
The problem, which I think Biss ought to highlight, is that the book is written by and for people like JB Pritzker in order to maximize their ability to avoid paying taxes.
The thing with JB, and the reason I think we should be cautious in assuming he is the most likely general election winner, is that he’s susceptible to “death by a thousand cuts.”
Toilet scandals, off shore accounts, shell companies, Blago tapes, not releasing tax returns, poor relations with labor at his hotels, etc. are not enough to sink him on their own. But in aggregate, there is a compelling narrative that says JB is “just another out of touch billionaire.” With the political environment being what it is, that’s a problem for him. I doubt that its an insurmountable problem, but its a problem.
- Not a Billionaire - Monday, Jan 29, 18 @ 12:16 pm:
Especially irresponsible in light of the Times story on social media fakery. Twitter and Facebook should come with a warning for entertainment purposes only.
- Anonymous - Monday, Jan 29, 18 @ 12:22 pm:
I need to set up an anonymous twitter account so I can get WCIA to regurgitatate whatever it is that I make up. Really unprofessional.
- SSL - Monday, Jan 29, 18 @ 12:24 pm:
Probably not a good day at Pritzker HQ. It’s okay to be the frontrunner, but not much fun when everyone’s throwing rocks at you. Especially when you gave them some of those rocks.
On the tax front, JB’s accountants and lawyers may have done everything according to the law, but when you run ads saying the wealthy need to pay their fair share, you can’t be hiding behind complicated tax structures. It may be legal but the common man may not agree it is fair. JB might have a growing credibility issue with some people.
- West Wing - Monday, Jan 29, 18 @ 12:25 pm:
Just more Pritzker baggage he’ll carry if he runs against Rauner … the baggage is getting significant
- Lester Holt’s Mustache - Monday, Jan 29, 18 @ 12:30 pm:
==My thought is that Biss horribly mismanaged this dump==
I’m wondering if that is true? I don’t see anything here like what Biss claims, but maybe I’m missing something. On its face it doesn’t seem like something that Rauner could make hay out of, considering his history of shady financial dealings and his administrations crony contract shenanigans. Biss has proven himself to be much better at this than Kennedy, so I’m unsure why he’d go to such lengths as to create an anonymous twitter account and release this stuff with press releases ready to go if there wasn’t anything at all there. Just grasping at straws, or is there more to come?
- Generic Drone - Monday, Jan 29, 18 @ 12:30 pm:
Are there any 3rd candidates worth looking at?
- Al - Monday, Jan 29, 18 @ 12:34 pm:
Dear Generic Drone, I do not think any of the pro liquor and casino industries approved insiders are worth the trip to the voting booth.
- Great job - Monday, Jan 29, 18 @ 12:37 pm:
Good job JB this is exactly what we need someone who knows how to get things done I’m sure you will look after my tax dollars the same way if you get elected
- Anonymous - Monday, Jan 29, 18 @ 12:45 pm:
Totally irresponsible of Mark Maxwell. And his editors should know better. But just so I’m clear, Pritzker didn’t do anything wrong and paid his taxes. So where’s the scandal? Seems like Biss jumped the gun here more than a little bit.
- Anonymous - Monday, Jan 29, 18 @ 12:48 pm:
Is it really going to swing the election for Rauner? “This guy is rich like me, so we’re the same, but I stunk at my job for four years and have nothing but failure, economic ruin, and scandal to show for most of it.”
- doofusguy - Monday, Jan 29, 18 @ 12:52 pm:
tl;dr was first thought - and after a quick skim am not seeing the ’scandal’ especially in light of the new standards set for financial disclosure set by the Prez and Governor ‘Back Porch’
- Grand Avenue - Monday, Jan 29, 18 @ 12:53 pm:
So is the Biss campaign running the JB Pritzker Tax Trickster twitter account?
- Red fish blue fish - Monday, Jan 29, 18 @ 12:54 pm:
I cringe whenever the Pritzker campaign has to re-state that JB has not broken the law. That’s just not something you want to hear from a candidate.
- CatAttack - Monday, Jan 29, 18 @ 1:01 pm:
Seems like the easiest defense for JB would just be to release his taxes. Since he won’t, it seems like maybe there’s some truth to all this…or something worse in there that maybe isn’t related to this at all.
Just release the taxes and the story goes poof.
- Arsenal - Monday, Jan 29, 18 @ 1:02 pm:
I agree that this story need to explain too much to say too little, and I’m not sure why WCIA ran with it. But it was also oddly publicized; dumped on a Friday night, with basically only Biss people talking about.
- Last Bull Moose - Monday, Jan 29, 18 @ 1:06 pm:
Pritzker has mismanaged this from the toilet problem
He should have said, “I ask my people to make sure I comply with laws, pay taxes I owe, and don’t pay taxes I don’t owe.”
The rules are set by others. I play by the rules. Sometimes the rules are strange and the results look odd. Not much I can do about federal rules. Changes to state law can be discussed once Rauner is removed.
- walker - Monday, Jan 29, 18 @ 1:06 pm:
My first reaction was this is a Rauner operation. ??
- Washington - Monday, Jan 29, 18 @ 1:11 pm:
what an unfortunate amount of slosh. haven’t we all learned from the fake leaks from 2016. seems like sloppy reporting from a very ambitious reporter looking to upgrade his job somewhere else. although, i lean towards voting for DB–this is not a very heartening response by his team. it is almost as if it was from the ck camp. step it up, team db.
- RNUG - Monday, Jan 29, 18 @ 1:13 pm:
This is just another operation to undermine whoever is perceived as the front-runner.
If you think this is bad, just wait until the general election when they really go negative …
- Ducky LaMoore - Monday, Jan 29, 18 @ 1:15 pm:
Still don’t care. A guy with a lot of money moving money around. Did he let the elderly die because of his incompetence? No? Well the current governor did in both his private and public life. That is what I care about. But the democrats are falling over themselves to damage the frontrunner in their party for nothing.
- Ron Burgundy - Monday, Jan 29, 18 @ 1:15 pm:
I generally agree that it’s worse as a perception issue than as an actual story. Hard to argue for the wealthy to pay their fair share when you employ lots of people to minimize your own taxes. I think the average working person doesn’t begrudge their neighbors itemizing their taxes as much as they can, but once your net worth hits ten figures or so perhaps you shouldn’t be trying so hard.
- VanillaMan - Monday, Jan 29, 18 @ 1:19 pm:
This much is clear-we’ve got absolutely nothing in commom with this shockingly rich man of inherited wealth. Tell us again why someone this rich is running for governor instead of managing his gold reserves in his vaults?
How about a governor who knows what it means to be working class?
Billionaires shouldn’t head governments.
- Workin' - Monday, Jan 29, 18 @ 1:20 pm:
If you’re ’splainin’, you’re losin’.
- RNUG - Monday, Jan 29, 18 @ 1:22 pm:
-Last Bull Moose- has a valid point. To all this tax stuff JB should have a pat answer, something along the lines of:
“I hire the best tax lawyers and I follow their advice. That way I have more money to give to schools, etc. It’s not my fault xxx (Rauner, Biss, Kennedy) can’t get good tax advice.”
Or, if you want to play the deflection game (like Rauner does):
“I made my money legitimately. I didn’t have to bust out nursing homes and profit off State pension funds.”
- Anonymous - Monday, Jan 29, 18 @ 1:24 pm:
@Generic Drone In the case of the IL 2018 gubernatorial race, probably not, but otherwise amen. The question I find myself asking so often these days is “How’s that two party system working out for you, America?” You can also substitute “Illinois” for “America” in that question. After watching the utter dysfunction in Springfield and DC for so many years, I think I honestly wish for a parliamentary system of government. Not that it will ever happen though.
- Anonymous - Monday, Jan 29, 18 @ 1:33 pm:
The Hillary Clinton part of this story makes no sense. This is once again some small ball reporting from Maxwell.
- Arthur Andersen - Monday, Jan 29, 18 @ 1:43 pm:
This is all gonna be pretty hard to accurately distill into a 30-60 second ad, imho.
I’m a little bit surprised that JB’s campaign acknowledged the existence of offshore trusts, with the sidebar “money from offshore trusts went to charity.” Well, and this is a bit of a stretch, but the Outfit used to drop off money at the poorhouses, but that didn’t make the money any cleaner.
I just generally don’t see that all the dot points really did much to clear up the allegations.
- yinn - Monday, Jan 29, 18 @ 2:04 pm:
@WCIA3Mark should be @WCYAMark.
- Soccermom - Monday, Jan 29, 18 @ 3:28 pm:
I find the Pritzker response disappointing. It seems like an opportunity to present a counter narrative and to talk about the good things that JB does with his money.
- Fixer - Monday, Jan 29, 18 @ 3:40 pm:
I’d like to see Mark do this kind of in depth posting and follow up to some of the Rauner stories now.
- Anonymous - Monday, Jan 29, 18 @ 3:43 pm:
I just read the full Maxwell response and it’s pretty clear to me that Maxwell doesn’t understand the underlying facts in the story he wrote. He’s out way over his skis on this one.
- Arsenal - Monday, Jan 29, 18 @ 4:01 pm:
==I’d like to see Mark do this kind of in depth posting and follow up to some of the Rauner stories now.==
I dunno, he’s definitely taken it to Rauner before.
Overall, I kinda get the feeling that Team JB’s plan here is to bore us all into talking about something else. In my case, it’s pretty close to working.
- Mark Maxwell - Monday, Jan 29, 18 @ 4:08 pm:
Yinn — W-CYA. That’s a good one. I like your style.
Fixer — I’ve got about a year of an archived reporting on Rauner. A lot of it was posted on this blog.
Man, I don’t know who this “Anonymous” person is, but they *really* don’t like this story. Care to clarify which other stories were “small ball?” Those about JB too?
- Arthur Andersen - Monday, Jan 29, 18 @ 4:22 pm:
Anon 3:43, are you an expert on trusts and SEC filings? If so, maybe you could pick a nickname and explain to all of us civilians the full story along with exactly how Mark is “over his skis.”
I found his reporting to be more understandable, and compelling, than the dot point deluge from Team JB. But what do I know?
- Juice - Monday, Jan 29, 18 @ 4:42 pm:
Arthur Andersen, I was not anonymous at 3:43, however, one of Mark’s follow up tweets was off on the tax claim. In it, he says that the Pritzker folks told him that he paid tax to Illinois at a rate of 5.25%. That rate would have been correct at the time of the sale based on the 3.75% income tax rate and the 1.5% rate for pass through entities for PPRT.
But then Mark claimed that he should have paid the state 27.2% based on data from the tax foundation, but this is pretty clearly the combined federal and state rate at the high earner rate. https://twitter.com/WCIA3Mark/status/958084021107482624
I thought his story as a whole was fine, but that part of his response did stand out to me at least.
- Fixer - Monday, Jan 29, 18 @ 4:45 pm:
Mark, I’m well aware of your work primarily because of this blog. That wasn’t snark. I would genuinely like to see this kind of in depth reporting on the lawsuit and the issues connected to it. That’s what the “now” in my original comment was referring to.
You do good work, and I apologize if you thought I was mocking that. Wasn’t my intent at all.
- jwI - Monday, Jan 29, 18 @ 4:55 pm:
I have often wondered if the real reason JB had the toilets removed was to make more room for skeletons.
- Last Bull Moose RNUG - Monday, Jan 29, 18 @ 6:32 pm:
RNUG, Thanks for improving my point.
- Arthur Andersen - Monday, Jan 29, 18 @ 6:43 pm:
Juice, agree with your post. That clearly isn’t a State-only rate. Mark missed that one.
- Anonybiss - Monday, Jan 29, 18 @ 7:40 pm:
Have there been any new insights into who is operating the account? My immediate inclination is Rauner camp.