The federal government says longtime Donald Trump confidant Roger Stone owes $2 million in unpaid taxes. And while the Department of Justice is taking Stone to court in a civil suit with no criminal charges, at the center of its case is a curious transaction: a $400,000 mortgage loan for a condo.
The government’s complaint lays out a complicated scheme. It describes the condo purchase as an overt act of fraud, and claims a right to seize the property. Essentially, prosecutors say, Stone and his wife Nydia used $140,000 from a private company they already held (Drake Ventures) for a down payment on a condo. Picking up the rest of the tab—almost exactly $400,000—was a mortgage lender.
That lender, a private individual who would only talk to The Daily Beast on the condition that we not print his name, said he had been misled and likely wouldn’t have granted the loan if he had known the full picture.
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It’s still a mystery how Roger Stone, weeks after his front-page criminal indictment in January 2019 and saddled with a $1.5 million federal lien, was able to secure that loan. But interviews and previously unreported documents provide new insight into the Stones’ maneuvering to accomplish what the Department of Justice says was their attempt to defraud the IRS.
Martin Sheil, former supervisory special agent with the IRS criminal investigation division, called the arrangement an apparent act of “blindness.”
“For this transaction, I’d use the term ‘shady.’ I don’t know why anybody would loan them money,” he said. “The ignorance is profound, and I almost can’t believe what you’re telling me.”
The loan came from a man listing an address on the other side of the country, in Sonoma County, California. And while the terms aren’t public and haven’t been previously reported, the lender disclosed them in an interview with The Daily Beast.
He also claimed he was deceived.
First, the private mortgage lender said he didn’t know at the time that he was lending money to Roger Stone. He also said he isn’t a Stone associate, disagrees with his politics, and claimed he likely would have rejected the deal had he been aware Stone was involved. The attorney who arranged the mortgage never mentioned Roger’s involvement, he said, and the interest payments all came from Nydia personally.
When The Daily Beast pointed out Roger Stone’s name was also on the mortgage, which the local attorney prepared and signed, the lender seemed doubtful, but upon checking his records confirmed it.
At the time of the loan, the Stones appear to have owned no real property. They had also been hemorrhaging cash, renting a nine-bedroom Fort Lauderdale mansion—listed at $9,500 a month—and wiring the IRS nearly $20,000 monthly installments as part of an agreement to amortize more than a million dollars in unpaid taxes. And public documents with Broward County show they were also under a joint $1.5 million federal lien, recorded in 2014.
Asked whether he had run a credit check, as is typical for these agreements, the private lender said the attorney did, and had told him it checked out. When The Daily Beast informed him of the pre-existing lien, which is a matter of public record, the lender was incredulous.
“They had a lien on them at the time?” he asked. He said he would ask his attorney about the credit check, but stopped communicating after that. The attorney, former RE/MAX FIRST general counsel Paul Caillaud, who signed the mortgage documents, faces serious legal troubles of his own. He didn’t reply to The Daily Beast’s request for comment, and Stone did not reply when asked about the credit check.
The transaction landed the private lender as a co-defendant in a federal lawsuit alongside Roger Stone.
While the lender told The Daily Beast it was originally a one-year mortgage, the Stones extended it twice. But they only recorded those extensions with Broward County after the lawsuit was filed this April, and they have not been previously reported. The lender charged a high interest rate—12 percent, which came out to more than $4,000 a month, or about one-fifth of their IRS installments—and said that while the couple hasn’t paid back any of the $400,000, Nydia paid the interest on time.
The last fact may be of interest to the government, according to Sheil. The DOJ claims the Stones knew defaulting on the IRS payments would trigger collection. And they defaulted the day after the purchase.
“The IRS wants to see your cash flow. If he comes up with any sort of money, the IRS will go after it,” Sheil said. “I’d want to scrutinize it, and I suspect the folks in the civil department will put any transactions under a microscope.”
Former federal prosecutor Jill Wine-Banks noted the complaint goes to great lengths to collect on the condo, which suggests the government is going after every dollar it can get. “If he had $140,000 for a deposit, he had $140,000 to pay the IRS,” she said.
And Stone did have a revenue stream, via book sales, public appearances, and a defense fund. In an interview on Alex Jones’ InfoWars hours after his January 2019 arrest, Stone said he needed to raise $2 million. It was part of a fundraising blitz for the Roger Stone Legal Defense Fund, an entity Stone created in August 2017 under the burden of legal costs associated with the Mueller investigation. Tax liens are also a legal matter, and Stone had agreed to the IRS payment plan that same year.
He even looked abroad. Around the time of the condo down payments, Stone arranged a call with Turkish billionaire Rahmi Koç to solicit money for his defense fund, according to text messages obtained by The Daily Beast. And days after closing on the condo, Stone sought Koç’s aid again, text messages show. (BuzzFeed News first reported the solicitations.)
Grant Smith, an attorney for the Stones, provided a statement calling unspecified DOJ claims “wrong and misleading,” and noted the trust was revocable, meaning it wasn’t beyond the reach of creditors.
“There was nothing whatsoever improper about the revocable trust’s purchase of the condominium the Stones use as their primary residence. Many of the assertions in the government’s civil complaint are wrong and misleading. The Stones will answer the complaint in great detail at the appropriate time. Until then, the main focus of Mr. and Mrs. Stone is the treatment of Mrs. Stone’s recently diagnosed stage IV cancer,” the statement said. (The court allowed the Stones to pause the case while she undergoes treatment.)
But experts in tax and real estate law say such a ploy was doomed from the start.
Alan Dubin, a real estate law specialist and partner at white collar defense firm Arent Fox, told The Daily Beast after reviewing the case that the DOJ can take action.
“The most likely correct explanation is we’re not dealing with the most sophisticated operators here,” Dubin said.
Wine-Banks said the Stones may have one last resort.
“If you declare bankruptcy, you get to keep a house to live in. You can’t keep a diamond ring, you can’t keep your ostrich jackets—just ask [former Trump campaign manager] Paul Manafort—but you get to live somewhere. And I think he was trying to secure a place to live,” she said.
She added the caveat that Stone couldn’t do that while defaulting on his taxes. “Which he apparently did the very next day,” Wine-Banks said.
The lender, she added, could also choose to foreclose on the condo and collect his money. “Or he can let the IRS do it and keep his share,” she said. “If the home has appreciated, he could turn a profit.”
The lender says he retains that option.
Meanwhile, Stone continues to raise cash for his defense fund. A disclaimer on the online donations portal says the fund and Stone are one and the same: “Under the Internal Revenue Code, all contributions to the Roger Stone Legal Defense Fund are considered gifts to Roger Stone.”
It also has this warning: “Contributions are not deductible for federal income tax purposes.”
