By the time Chris Christie became governor of New Jersey, the state’s auditors and lawyers had been battling for several years to collect long-overdue taxes owed by the casinos founded by his friend Donald J. Trump according to New York Times.
The total, with interest, had grown to almost $30 million. The state had doggedly pursued the matter through two of the casinos’ bankruptcy cases and even accused the company led by Mr. Trump of filing false reports with state casino regulators about the amount of taxes it had paid.
But the year after Governor Christie, a Republican, took office, the tone of the litigation shifted. The state entertained settlement offers. And in December 2011, after six years in court, the state agreed to accept just $5 million, roughly 17 cents on the dollar of what auditors said the casinos owed.
Tax authorities sometimes settle for lesser amounts to avoid the costs and risks of further litigation, legal experts said, but the steep discount granted to the Trump casinos and the relationship between the two men raise inevitable questions about special treatment.
“You can’t tell whether there’s something problematic, but it’s pretty striking that this one was written down so much,” said David Skeel, a professor at the University of Pennsylvania Law School who specializes in bankruptcy law and reviewed the case at the request of The New York Times.
The refusal by Mr. Trump, the Republican presidential nominee, to release his personal income tax returns has become a growing issue in the campaign. He has also boasted of his success in lowering his tax burden as a businessman, declaring last year in an interview on Fox News that only “a stupid person, a really stupid person, is paying a lot of taxes.”
By that measure, the deal with New Jersey looks remarkably shrewd. The casinos did far better, for example, than those that benefited from a program Mr. Christie introduced in 2014 in which the state agreed to consider reducing penalties for delinquent taxpayers but only if they caught up on all overdue taxes and interest.
Public records do not create a clear picture of how the agreement was reached. A spokeswoman for Mr. Trump said she would be in touch regarding questions sent to her. But she did not reply further or respond to subsequent messages.
Brian Murray, a spokesman for Mr. Christie, said the governor had not been aware of the tax dispute and, therefore, could not comment on the terms of the settlement.
The New York Times stated that it discovered the agreement during a review of the thousands of documents filed in the bankruptcies of Mr. Trump’s casinos. The taxes went unpaid from 2002 through 2006, during which time Mr. Trump was leading the company as chairman and, until 2005, as its chief executive. He reaped millions of dollars in fees and bonuses from the company, even as it underperformed competitors, lost money every year and saw its stock collapse.
Mr. Trump and Mr. Christie met in 2002, when Mr. Christie was the United States attorney for New Jersey. Mr. Trump’s sister Maryanne Trump Barry, then a federal judge in the state, had mentioned to Mr. Christie that her famous brother would like to meet him. They struck up a friendship. Mr. Christie was invited to Mr. Trump’s third wedding in 2005, and Mr. Trump was a prominent guest at Mr. Christie’s inauguration in 2010. They have double dated with their wives.
Their bond has occasionally included financial largess from Mr. Trump. His foundation made large donations to the Drumthwacket Foundation, which funds maintenance and improvements to New Jersey’s historic governor’s residence, after Mr. Christie became its honorary chairman. Mr. Trump also made large contributions to the Republican Governors Association when Mr. Christie was its chairman.