President-elect Joe Biden is set to take office with his son under federal criminal investigation, creating immediate practical and ethical challenges for his fledgling administration while giving ammunition to his political enemies.
Biden’s transition team attempted to control the narrative on Wednesday by issuing a brief statement that the U.S. Delaware attorney was investigating Hunter Biden’s tax cases, saying they only learned about it this week.
But the investigation into Hunter Biden’s foreign business transactions has been ongoing since 2018 and involves not only the Justice Department but the Internal Revenue Service as well, according to two people familiar with the matter who discussed the sensitive investigation under on condition of anonymity. The investigation focuses on Hunter Biden’s trade relationship with China, as CNN reported earlier, and Joe Biden is not a target, according to a third person.
The U.S. Attorney’s Office leaked the investigation to Hunter Biden, a decision that reveals he is their target and that investigators have entered a new, more aggressive phase in which they need to contact his lawyers. The Department of Justice and the Delaware attorney general’s office declined to comment.
The disclosure means Joe Biden and his team can no longer simply ignore or downplay Republican allegations of his son’s bribery. And insofar as the investigation concerns Hunter Biden’s relations in China, it could complicate the next president’s approach and policies towards Beijing.
Some Republican lawmakers have used the disclosure of the investigation to call on Attorney General William Barr to appoint a special advocate to investigate the case, a move that would ensure the investigation continues at least into Biden’s early presidency .
No evidence has emerged to support President Donald Trump’s claims that Joe Biden benefited or participated in his son’s overseas businesses. Still, it will become more difficult for the president-elect to say that there is nothing in his enemies’ questions about his son’s affairs.
Trump demanded ahead of the Nov. 3 election that Barr announce investigations into Joe and Hunter Biden. But the investigation, which began before Barr became attorney general in 2019, has remained a secret to the public.
“I first learned yesterday that the Delaware attorney’s office informed my legal counsel, also yesterday, that they were investigating my tax cases,” Hunter Biden said in a statement Wednesday. “I take this matter very seriously, but I am confident that a professional and objective examination of these matters will demonstrate that I have managed my affairs in a legal and proper manner, including with the benefit of professional tax advisers.”
The Justice Department pursues cases it thinks it can win, said Mike Sullivan, a former IRS auditor who has worked with US attorneys on tax cases.
“No government agency like this is going to do this unless they have enough information to feel confident,” Sullivan said. “The DOJ doesn’t take cases at random because it makes them stupid.”
It is not known how far investigators have gone or if they plan to file an indictment. However, when prosecutors file a complaint, they almost always win. DOJ’s Criminal Taxation Division recorded a 97% conviction rate in fiscal 2019, according to ministry data.
“It’s a really big deal for anyone. It very clearly appears to have potential criminal implications, ”said Joseph Opich, tax attorney at law firm Paul Hastings. “It’s not that something was just left out on a tax return.”
Many of the Justice Department’s tax cases deal with the concealment of income and unreported offshore bank accounts, Opich said. Congress has passed tougher laws in recent years requiring more reporting of foreign income and increasing penalties for those who do not disclose this information to the IRS.
The president-elect’s transitional office issued a statement of support for his son, whose struggles with drug addiction and foreign relations have been repeatedly criticized by Trump.
“President-elect Biden is deeply proud of his son, who has battled difficult challenges, including vicious personal attacks in recent months, to come out stronger,” the transition office said in a statement.
Ahead of the election, Trump’s presidential campaign sought to highlight the claims of a man named Tony Bobulinski, who said Hunter Biden recruited him to help run an investment firm called Sinohawk Holdings, supported by CEFC China Energy Co., and that he had personally discussed the plans. with the former vice president in an hour-long meeting in 2017, after Biden left public office. But Bobulinski – whom Trump invited to appear before the second and final presidential debate – said the business was never funded.
In an interview earlier this year with the New Yorker, Hunter Biden admitted receiving a 2.8-carat diamond from CEFC founder Ye Jianming, but said he gave the stone to associates.
A report released by Republicans on the Senate Homeland Security Committee in September criticized Hunter Biden’s foreign activities, alleging he had created a potential conflict of interest for his father. The report acknowledged, however, that it was “not clear” whether the young Biden had an impact on the policy of the Obama-Biden administration, and it did not allege that the former vice president or her son had broken the law.
During the campaign, Trump’s personal lawyer Rudy Giuliani released documents to some news outlets allegedly from a laptop that Hunter Biden had left in a repair shop in Wilmington, Delaware. The president’s campaign said the documents, the origin of which has not been verified by Bloomberg News, contradicted Joe Biden’s claims that he and his son had never discussed foreign trade relations.
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