President-elect Joe Biden is set to take office with his son under federal criminal investigation, creating immediate practical and ethical challenges for his nascent administration while giving ammunition to his political enemies.
Biden’s transition team attempted to control the narrative on Wednesday by issuing a short statement that the U.S. attorney in Delaware is investigating Hunter Biden’s tax affairs, saying they only learned about it this week.
But the investigation into Hunter Biden’s foreign business dealings has been underway since 2018, and involves not only the Justice Department but also the Internal Revenue Service, according to two people familiar with the matter who discussed the sensitive inquiry on condition of anonymity. The probe is focusing on Hunter Biden’s business dealings with China, as CNN reported earlier, and Joe Biden isn’t a target, according to a third person.
The U.S. attorney’s office disclosed the investigation to Hunter Biden, a move that reveals he’s their target and that investigators have moved into a new, more aggressive phase in which they needed to contact his lawyers. The Justice Department and the U.S. attorney’s office in Delaware declined to comment.
The disclosure means Joe Biden and his team can no longer simply ignore or downplay Republican allegations of corruption by his son. And to the extent the inquiry involves Hunter Biden’s dealings in China, that could complicate the next president’s approach and policies toward Beijing.
Some Republican lawmakers seized on the disclosure of the investigation to call on Attorney General William Barr to appoint a special counsel to investigate the matter, a move that would ensure the probe carries at least into Biden’s early presidency.
No evidence has surfaced to back claims by President Donald Trump that Joe Biden benefited from, or participated in, his son’s overseas ventures. Yet it will become more difficult for the president-elect to say there’s nothing to his foes’ questions about his son’s business affairs.
Trump’s Demand
Trump demanded before 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, remained a secret to the public.
“I learned yesterday for the first time that the U.S. attorney’s Office in Delaware advised my legal counsel, also yesterday, that they are investigating my tax affairs,” Hunter Biden said in a statement on Wednesday. “I take this matter very seriously but I am confident that a professional and objective review of these matters will demonstrate that I handled my affairs legally and appropriately, 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 worked with U.S. attorneys on tax cases.
“No government agency like this is going to do this unless they have enough information to feel confident,” Sullivan said. “DOJ doesn’t take random cases because it makes them look foolish.”
It’s not clear how far the investigators have gotten or if they plan to bring an indictment. However, when prosecutors do bring a case, they almost always win. The DOJ Criminal Tax Division had a 97% conviction rate in fiscal year 2019, according to department data.
‘Big Deal’
“This is a very big deal for anybody. It very clearly appears to have potential criminal implications,” said Joseph Opich, a tax lawyer at the law firm Paul Hastings. “This is not that something was just left off a tax filing.”
Many Justice Department tax cases deal with hiding income and unreported offshore bank accounts, Opich said. Congress has passed stronger laws in recent years requiring more reporting of foreign income and increasing the penalties for those who don’t disclose that information to the IRS.
The president-elect’s transition office issued a statement of support for his son, whose struggles with substance abuse and foreign dealings were repeatedly criticized by Trump.
“President-elect Biden is deeply proud of his son, who has fought through difficult challenges, including the vicious personal attacks of recent months, only to emerge stronger,” the transition office said in a statement.
Before the election, Trump’s presidential campaign sought to highlight claims by a man named Tony Bobulinski who said Hunter Biden recruited him to help run an investment firm to be called Sinohawk Holdings, backed by CEFC China Energy Co., and that he personally discussed the plans with the former vice president during 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 venture was never funded.
Gift Diamond
In an interview earlier this year with the New Yorker, Hunter Biden acknowledged 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 was critical of Hunter Biden’s foreign activities, alleging that he created a potential conflict of interest for his father. The report acknowledged, however, that it was “not clear” whether the younger Biden had any impact on policy in the Obama-Biden administration, and it didn’t allege that the former vice president or his son broke the law.
During the campaign, Trump’s personal lawyer, Rudy Giuliani, released materials to some news outlets purportedly from a laptop that Hunter Biden had left at a Wilmington, Delaware, repair shop. The president’s campaign said the materials, the origin of which wasn’t verified by Bloomberg News, undercut Joe Biden’s claims that he and his son never discussed overseas business dealings.
