Senate Investigating Harlan Crow’s Superyacht Tax Deductions

On Tuesday, Ron Wyden, the chair of the Senate Finance Committee, detailed new evidence uncovered by investigators probing billionaire Harlan Crow and his relationship with Supreme Court Justice Clarence Thomas.

Dodgy dealings

Warning, whisper, stop, secret — Illustration. Image credit: Depositphotos

According to the evidence, which Wyden included in a letter to Crow’s attorneys, the billionaire claimed tax deductions on a superyacht that was actually registered as a personal pleasure vessel.

Clear crime

Illustration. Image credit: Shutterstock

“Any effort to mischaracterize a yacht used as a pleasure craft as a business is a run-of-the-mill tax scam,” Wyden wrote in the letter. “Plain and simple.”

Raises questions

“I fail to see how it is appropriate for a taxpayer to assert to the Internal Revenue Service that a superyacht with registrations indicating it is not engaged in trade can generate losses from purported for-profit yacht charter services,” Wyden wrote.

Registration

The superyacht, which is called the Michaela Rose, sails under a British flag. According to a spokesperson for the UK’s Maritime and Coastguard Agency, “The Michaela Rose is registered solely as a pleasure vessel under part 1 of the UK Ship Register.”

The rules

“Pleasure vessels are vessels used for sport or recreational purposes,” the British merchant shipping regulations read. They “do not operate for financial gain.”

Same story

Similarly, CNBC reported that the Michaela Rose is registered in the US as a “pleasure boat,” per US government documents reviewed by reporters.

The necessary paperwork

An official for the US Coast Guard told the Senate Finance Committee that the Michaela Rose did not have a certificate that would allow it to engage in coastal trade in the US. Such trade would include commercial charter boat trips.

Seemingly not possible

Close-up Of A Male Lawyer With Arms Crossed In Office

Without these certificates, and registered as a pleasure vessel, it is “unclear how the Michaela Rose carried out the commercial chartering business that would be necessary if the vessel were going to qualify for the tax deductions taken by Crow’s company,” CNBC noted.

Losing money

Illustration. Image by Depositphotos.com

After analyzing tax records, investigative outlet ProPublica reported that Crow’s family formed a yacht chartering business called Rochelle Charter, Inc. Of the 13 years for which ProPublica obtained tax records, Crow reported millions of tax-deductable losses from the supposedly active company.

Just one example

For example, in 2014, Crow reported that Rochelle Charter lost $1.8 million, according to tax records analyzed by ProPublica. The alleged business losses allowed Crow and his family to save millions of dollars in taxes.

Widespread corruption

Illustration. Image credit: Depositphotos

Crow has taken Supreme Court Justice Clarence Thomas and his wife, Ginni, on multiple cruises aboard the 160-foot superyacht, including to Indonesia and New Zealand. Thomas did not disclose the trips as gifts, later arguing that they were just vacations with friends.

Major questions

Crow’s relationship with Thomas, first publicized by ProPublica last year, is part of a broader scandal in which members of the Supreme Court failed to disclose extensive networks of financial ties to wealthy conservative donors and activists. In June, End Citizens United published a partial list of “some recent corruption scandals that have been brought to light.”

Institutional problem

Law, Court, Flag — Image via Shutterstock.com

“Over more than two decades, the Supreme Court has gutted laws aimed at fighting corruption and at limiting the ability of the powerful to enrich public officials in a position to advance their interests,” Randell Eliason wrote in the New York Times in May. “As a result, today wealthy individuals and corporations may buy political access and influence with little fear of legal consequences, either for them or for the beneficiaries of their largess.”

What to be done

“The Constitution makes it virtually impossible to discipline or remove a corrupt Supreme Court justice,” Vox explained in May. In 2021, the then-head of the IRS reported that the US loses $1 trillion every year due to tax cheating.