Ivanka Trump’s Friend and Former Business Partner Is Being Sued by the DOJ for Tax Fraud

The Justice Department is suing Ivanka Trump’s friend and former business partner Moshe Lax for major tax fraud. The DOJ’s lawsuit seeks more than $60 million worth of unpaid tax liabilities.

The suit was brought in the Southern District of New York by the DOJ’s tax division lawyers. The suit claims that Lax, his sister Zlaty Schwartz and his late father Chaim Lax were all involved in 10 intriciate “shame transactions” that were aimed at fraudulently evading tax liability. The schemes were allegedly “designed to hide the Lax family assets from the IRS and other creditors and make it appear as though the Estate was insolvent.”

The suit goes on to allege that the schemes were started by Lax’s father before he died in 2008. Chaim Lax wanted his family to receive his fortune without having to pay his unmet tax debts and so, after he died, Lax and Schwartz kept the schemes going.

The suit does not accuse Trump of wrongdoing—in fact, it doesn’t even mention her name. However, it does mention a business that she helped run for years, Ivanka Trump Fine Jewelry, which is now named Madison Avenue Diamonds. This business is one of the 10 schemes detailed in the suit. Lax has been accused of transferring around a $21 million interest in Madison Avenue Diamonds from his father’s estate to a holding company. Lax received nothing in return for the transfer.

Trump’s PR team for her brand said, “The issues in this case have nothing to do with Ivanka or the Ivanka Trump brand. These licensing arrangements were terminated by the Ivanka Trump brand in 2016, prior to Ivanka entering government service.” However, the government claims that a portion of equity in Madison Avenue Diamonds was fraudulently transferred by Lax sometime between 2008 and 2012. At that time, Trump was involved with—and at one point even had an ownership stake in—the business.

Following Trump’s business ventures with Lax, they remained close friends. Their friendship went way back even to when Lax introduced her to her now-husband Jared Kushner 10 years ago. As Trump’s father made his way into the White House, Lax remained in the family’s circle.

In November of 2016, Lax attended an invite-only election night victory celebration with the Trumps. Just two days after the event, he took one of his creditors into the Trump Tower lobby and showed him an Ivanka Trump Fine Jewelry kiosk. According to the creditor, lax informed him that he planned to take over a jewelry company in White Plains, N.Y., and use it to transform Ivanka Trump Fine Jewelry into a $500-million brand. The creditor noted that Lax already had serious financial problems, but Lax said he wouldn’t have to use his own money to carry out his plan because he had an “expedited bankruptcy” process that wouldn’t jeopardize his own assets. Politico notes that “Lax asked the creditor rhetorically who he thought had taught him how to do that, and then he pointed up to the upper floors of Trump Tower, indicating the president-elect, who has filed for bankruptcy six times.”

Lax’s plans with Ivanka Trump Fine Jewelry never happened and the Trump team claims she ended her licensing arrangement with Lax before taking her position at the White House. When asked by Politico about President Trump giving financial advice to Lax, the White House referred the questions to the Trump Organization, who refused to comment.

Since then, Lax has been spotted with multiple Trump family members and even with members of congress.