By Meredith Lerner and Linnaea Honl-Stuenkel
July 13, 2020

Jared Kushner received a certificate from the government earlier this year allowing him to defer paying capital gains taxes on the sale of a major stake in a company that he co-founded. OGE determined that the sale was necessary in order to comply with conflict of interest laws and regulations. In an apparently unprecedented move, the Certificate of Divestiture (CD) has been withdrawn at his request.

Kushner’s CD related to Cadre, a real estate investment platform that he originally did not disclose his interest in, appears to be the first and only one the Office of Government Ethics (OGE) has ever withdrawn. When OGE issued the CD in February, it revealed that Kushner was going to divest 2,498,496 shares of Quadro Partners Inc., which does business as Cadre. Four months later, OGE withdrew the CD at Kushner’s request. CREW’s ethics experts have never seen a situation like this before.

A CD allows officials to “offset the tax burden of complying with the government’s conflict of interest requirements” by deferring capital gains taxes associated with income from selling assets that pose conflicts of interest. When an official requests a CD, they ordinarily commit to divest the assets at issue even if OGE does not grant a CD, making this reversal all the more troubling. 

While it could be possible that Kushner divested Cadre without taking advantage of the tax break associated with CDs, CREW has not been able to obtain a periodic transaction report documenting any sale of Cadre, which he would be required to file. It is also possible that Kushner did not divest his interest in the company, despite previous news reports to the contrary. If that is what happened, it would raise the question: Why would OGE let Kushner maintain his interest in Cadre when they so recently determined that divestiture was necessary for him to comply with conflict of interest laws?

Kushner’s attorney also cited potential conflicts of interest as the reason he chose to pursue divestiture, given Kushner’s broad foreign policy portfolio in the White House and Cadre’s business abroad. If, as it seems, both OGE and Kushner’s attorney believed he had a conflict of interest related to Cadre, why did OGE withdraw the CD?

OGE did not explain its rationale for withdrawing the CD, other than to note that Kushner requested the withdrawal. To learn more about why Kushner requested that OGE withdraw the CD and why OGE granted the unusual request, CREW submitted a Freedom of Information Act  request to OGE seeking all communications related to the decision to withdraw the CD. 

Kushner maintained a financial interest in Cadre for years while working in the White House, but reportedly recused himself from matters related to the company. Kushner’s relationship with Cadre attracted scrutiny almost immediately, because he failed to disclose his interest in the company in the financial disclosure report he filed when he joined the Trump administration. Beyond transparency issues, the Cadre shares also presented conflicts of interest issues. In January 2019, CREW filed a complaint asking the Department of Justice to investigate whether Ivanka Trump violated the primary federal conflict of interest law by participating in particular matters related to Opportunity Zones, a program Cadre participates in. Because Kushner and Trump are married, Kushner’s financial interests are legally considered to be shared with her.

By the time Kushner asked for a CD to divest from Cadre in February, the company’s value was significantly higher than when he joined the administration. The timing of Kushner’s request to divest raised questions about his motivations, since the conflict of interest had already been present for three years. Just a few weeks after he obtained the CD, the stock market crashed as a result of the coronavirus crisis. CREW filed another complaint asking OGE to investigate whether Kushner violated the Standards of Ethical Conduct for Employees of the Executive Branch by using nonpublic information related to the coronavirus pandemic to further his personal financial interests.

Kushner’s Cadre stock has always been an ethical landmine, and OGE’s withdrawal of the CD raises even more questions, including whether Kushner ever went through with divesting his interest in Cadre. The Trump family has not earned the benefit of the doubt when it comes to conflicts of interest, and Trump himself has managed to accumulate more than 3,200 conflicts so far during his presidency. With the example set by his father in law, it’s no surprise that Kushner is playing fast and loose with conflicts of interest.