DOHA: Colony NorthStar Inc chairman Tom Barrack is denying an Italian prosecutor’s accusation that he conspired to evade 170 million euros ($190 million) in taxes when he sold luxury Sardinian properties.
Barrack, a billionaire real-estate investor who led President Donald Trump’s inaugural committee and frequently advocates for Trump, issued the denial through a lawyer in response to accusations by prosecutor Domenico Fiordalisi in the town of Tempio Pausania, on the island of Sardinia.
The prosecutor had said in a May 4 filing seen by Bloomberg that Barrack was the head and promoter of the tax scheme that involved the 2012 sale of properties to Qatar.
The lawyer for Barrack and Colony, Daniel Petrocelli of O’Melveny & Myers, said the Luxembourg investment company that Colony used for the transaction paid all taxes owed under Luxembourg and European Union law. “The Prosecutor’s claim was without any basis and was asserted even though Italy was not the applicable taxing jurisdiction under the operative treaties and rules existing in the European Union,” he said in a statement to Bloomberg.
To avoid a prolonged dispute, a Colony investment company settled with Italian tax authorities last year, paying 22.7 million euros, Barrack’s lawyer said. However, that didn’t put an end to the criminal probe.
Neither Barrack, 70, nor the 32 other individuals and companies named as suspects by the prosecutor in the filing, have been charged with any crime. The prosecutor’s 24-page filing is a notice that he’s concluded a preliminary investigation and marks the final stage before he can request formal indictments. The document replaces a previous notice the prosecutor had filed in October.
If the case were to proceed, a judge would be asked to rule on the prosecutor’s request to pursue a criminal trial. The Guardian reported on the probe on May 29.
The investigation focuses on Colony’s sale of four hotels, a golf course, marina and some undeveloped land on Sardinia’s Costa Smeralda to Qatar Holding, the investment arm of the Persian Gulf country’s sovereign-wealth fund. According to the prosecutor, Barrack and others used a Luxembourg company to artificially load their Sardinia firm with debt, falsely reducing the taxes due from the resort sale.
In response, Barrack’s lawyer said, “The use of Luxembourg companies to conduct business throughout the European Union is common and perfectly lawful.” Colony was advised in the transactions “by the most sophisticated international legal and accounting professionals.”
