Feds subpoenaed Hunter Biden during 2016 election, raising worry over unpaid taxes on Ukraine work
As the 2016 election kicked into full gear, Hunter Biden’s inner circle feared an impending federal criminal indictment of his long-time business partner might expose the then-vice president’s son to legal jeopardy because he had avoided paying taxes on income from the Ukrainian gas firm Burisma Holdings, according to emails on an abandoned laptop seized by the FBI.
The emails capture the real-time communications of Hunter Biden with defense lawyers and a corporate accountant after federal authorities subpoenaed some of his business records five years ago. The document demand sent his inner circle scrambling to develop a story to explain the unpaid taxes from 2014 and 2015 and prepare a “proffer” — an offer of testimony — to give to federal prosecutors and the FBI, IRS and Securities and Exchange Commission agents investigating his partner Devon Archer.
Hunter Biden revealed late last year he is under federal investigation for tax issues, but the emails obtained by Just the News show the president’s youngest son has been worried about federal exposure on taxes since April 2016, long before Donald Trump was elected president or Biden's Ukraine business dealings became the focus of scandal and an impeachment trial.
Emails written five years ago by Eric Schwerin, an executive inside the Rosemont Seneca business empire where Hunter Biden worked, show there was about $1 million in personal income — about $400,000 in 2014 and $600,000 in 2015 — that the younger Biden had earned as a board member and consultant for Burisma that had not been fully covered by U.S. tax payments.
“Hunter and I talked briefly this morning and feel good with where we are on the taxes and the narrative regarding that,” Schwerin wrote defense lawyers George Mesires and Michael MacPhail on April 14, 2016 as the team tried to secure a cooperation agreement with federal authorities.
The conversations were prompted by a subpoena to Hunter Biden from federal authorities a few weeks earlier, the emails show. "I received a SEC subpoena for any information I have related to the situation Devin [sic] is dealing with," Hunter Biden wrote a lawyer and Schwerin on March 23, 2016.
The inner circle devised a strategy for Hunter Biden to file an extension to file his 2015 taxes and “begin the process of amending the 2014 returns to reflect the Burisma payments from 2014,” the emails stated. The move would buy time so that Hunter Biden’s team could develop a proffer and produce documents to federal prosecutors to avoid becoming ensnared in the criminal case against Archer, the emails revealed.
At the time, FBI, SEC and IRS agents were bearing down on Archer, a longtime business partner who also served with Hunter Biden on the Burisma board. Agents arrested Archer a month later in May 2016 on charges he helped defraud an Indian tribe, a move that the emails show was closely monitored by Hunter Biden’s team.
Archer was convicted by a federal court in 2018, but his sentencing has been delayed by appeals. A federal appeals panel affirmed his conviction late last year and remanded the case for sentencing.
Hunter Biden’s scramble for a narrative in spring 2016 was triggered when federal agents sought documents from a company called Rosemont Seneca Bohai (RSB), where both Archer and Hunter Biden were collecting $83,333 each a month for their work for Burisma. The document request risked exposing Hunter Biden’s tax problems, the emails show.
“Given that I will be out of the country starting Monday we wanted to make sure any time we spend between now and the 20th focused mostly on the main issues that the SEC and DOJ are concerned with — the emails, proof of payments out of RSB and talking points for your proffer — and not let ourselves get overly bogged down in the minutiae of tax issues that might not even come up in the immediate,” Schwerin wrote the lawyers on April 14, 2016. “We feel like we have a good story to tell there and have a good handle on that now.”
Mesires, who remains Hunter Biden’s counsel today, quickly wrote back: “Understood. We will get the proposed document production to you for your/hunt's review as well as draft talking points.”
Mesires and Schwerin did not respond to requests from Just the News for comment or to challenge the authenticity of the emails. MacPhail declined comment.
The memos also provide new details on how Hunter Biden landed his gig in 2014 with Burisma, a Ukrainian gas company that the Obama-Biden administration believed was corrupt and that was under investigation by Ukrainian authorities during much of the time he worked for it.
For instance, they show Hunter Biden had been paying a monthly “finder’s fee” to a Ukrainian-born man in New York City who had helped the vice president’s son land the lucrative gig in Ukraine. One email estimated the monthly finder’s fee at $25,000 while another document put it closer to $10,000.
Beyond providing potential insights into why the FBI may have opened a criminal probe into Hunter Biden, the newly recovered emails also undercut a key Democratic talking point justifying Trump’s impeachment in fall 2019 and his early 2020 Senate trial, where the president was acquitted.
Democratic House members then — and President Biden and his defenders since — have argued Trump abused his power as president and had no reason to ask Ukraine’s president to investigate the Biden-Burisma deal in summer 2019 because Hunter Biden had done nothing wrong.
“Nothing was unethical,” Joe Biden declared during the last presidential debate of the 2020 campaign, referring to his son’s overseas business dealings.
In fact, the email exchanges between Schwerin and the lawyers make clear they believed Hunter Biden had failed to pay taxes on the Burisma money, something Ukraine’s chief prosecutor tried to bring to light to U.S. authorities starting in fall 2018.
Former Prosecutor General Yuriy Lutsenko said in a series of interviews in 2019 he tried to get a visa issued from the U.S. embassy in Kiev to come to the United States to talk to federal prosecutors about concerns Hunter Biden may have violated U.S. tax laws.
Lutsenko said his travel credentials were denied, so he and other Ukrainian prosecutors reached out to two Americans lawyers trying to get the potential evidence to the U.S. Attorney’s office in New York, which had investigated Archer.
One of those lawyers, former Little Rock, Ark., U.S. Attorney Bud Cummins, delivered information to prosecutors in Manhattan in fall 2018. The other, Trump attorney and former New York City Mayor Rudy Giuliani, made contacts in Ukraine to investigate the allegations further and tried to enlist the help of the U.S. State Department, eventually triggering House Democrats' impeachment investigation.
The emails recovered from an abandoned Hunter Biden laptop seized by the FBI from a Delaware computer repair shop show the tax issues were already well known to Hunter Biden’s inner circle well before the 2016 election was settled.
For instance, on April 11, 2016, Schwerin sent a detailed email with the subject line “Tax Analysis” to Hunter Biden with a copy to Mesires that read: “For the first 10 months of 2015, total pre-tax Burisma payments through RSB [amounted to] $606,666.”
“RSB Agreed to Hold Back $245,498 of the above amount to cover taxes (approx. 38%) which left you with $361,168 in “post-tax” dollars to draw down,” Schwerin wrote.
The executive warned that Hunter Biden “drew down $51,835 more than [he] should have” meaning that Hunter Biden was not setting aside enough of his Burisma income for taxes.
Schwerin noted that in November and December 2015 “you withheld the appropriate taxes yourself” and that it was “only the first 10 months of 2015 that need to be taken care of.”
Months later, as Trump was about to enter the White House in January 2017, Schwerin would prod Hunter Biden again, reminding him he had still not paid the back taxes for 2014, according to an email Just the News first reported last December. The email was eventually confirmed by NBC News as well.
“In 2014 you joined the Burisma board and we still need to amend your 2014 returns to reflect the unreported Burisma income,” Schwerin wrote on Jan. 16, 2017. “That is approximately $400,000 extra so your income in 2014 was closer to $1,247,328.”
Schwerin’s April 2016 analysis also identified another side story to Hunter Biden’s Burisma narrative: Every month for the first eight months of 2015, RSB kicked $27,778 of Biden’s and Archer’s monthly Burisma payments back to a Ukrainian-American who helped them land the job. The memo referred to the payments as a “board finder’s fee.”
That fee was deducted as an expense by Rosemont Seneca Bohai, meaning Hunter Biden would “need to figure out a way to capture that expense so that [he was] only paying taxes on $55,555 a month in income through the end of August 2015 instead of the full $83,333,” Schwerin wrote. He added he assumed “the accountants can take care of that.”
Hunter Biden’s lawyers had questions about the analysis, the emails show. “Please let us know when you are available for a call tomorrow to discuss this,” replied Mesires on April 12, 2016.
The next day, Mesires contacted Biden and Schwerin again seeking wire transaction records for the Burisma payments. “We understand that you are not able to find all the records of wire transfers supporting the Burisma payments,” Mesires began before suggesting that they contact Hunter’s bank to get a report of incoming wires. Doing so could produce a “discreet report” and eliminate the need to produce bank statements, which, according to Mesires was something they were “trying to avoid.”
Less than one month later, in May 2016, Archer was arrested and charged with conspiracy to commit securities fraud for the $60 million tribal bond scheme that lasted from March 2014 through April 2016.
Archer’s arrest immediately caused concern in the Biden camp. Karen Tramontano of Blue Star Strategies, an American firm assisting Burisma, forwarded excerpts from a Ukrainian news site covering Archer’s arrest to Hunter’s assistant with a terse comment, “In the Ukrainian press.” Schwerin then forwarded the email to Hunter Biden.
By June 2016, Archer’s legal woes had led to a significant shakeup of the Archer-Biden business relationship both in Ukraine and in China. The Chinese executives of Bohai Harvest RST (BHR) — the billion-dollar private equity venture backed by the Chinese Communist Party’s state-owned Bank of China — did not want the negative publicity of Archer’s legal troubles. Archer needed to resign from the BHR board and sell (or transfer) his stake, the emails stated.
“BHR Directorship Issues,” read the subject line of the June 7, 2016 email from BHR’s Xin Wang to George Mesires and Matthew Schwartz, Archer’s attorney at the firm Boies Schiller Flexner (which also happened to employ Hunter Biden).
“I am writing to follow up on the status of Devon’s resignation from BHR’s board / remuneration committee and the appointment of a replacement,” Wang wrote. Frustration mounting, the Chinese executive continued, “I would also like to understand how Devon would like to deal with his shareholding in BHR through Rosemont Seneca Bohai.” Rosemont Seneca Bohai, it turns out, was not only a pass-through for Burisma income, it also held a stake in the billion-dollar BHR Chinese private equity firm.
Wang explained that BHR had already filed laborious documentation as required by Chinese regulators for Archer — an American — to possess an ownership stake in BHR. "The process took altogether more than a year,” Wang lamented. Due to Archer’s “present circumstances,” Wang recommended that RSB’s ownership stake be transferred to an entity unconnected to Archer, “to avoid potential complications for our U.S. M&A deals and/or U.S. fundraising activities.”
By July 2016, BHR’s executives in China were growing impatient with the Archer situation. Wang followed up with Mesires and Schwartz: “We have been fending inquiries regarding RSB and Devon’s involvement in ongoing SEC and Justice Department investigations and we urgently need to remove Devon for the time being from our director roster to avoid interruptions to BHR businesses.”
Archer submitted a draft resignation letter a few days later and sought to appoint Hunter Biden as RSB’s replacement. On July 7, 2016, Wang confirmed receipt of Archer’s resignation but seemed curious about the appointment of Hunter Biden as a replacement.
Noting that “Hunter is an existing director of BHR,” Wang inquired about the specifics of transferring Archer’s ownership stake through RSB and concluded his transmission, “Upon your confirmation, we will proceed to make the relevant filings with the PRC regulators.”
Mesires sent an email to Archer’s attorney, Schwartz, confirming that the appointment of Hunter Biden as a replacement into a “second position” does not “comport with our view of how (and the manner by which) the board should be reconstituted.” Instead, Eric Schwerin and Thornton Group’s Jim Bulger would join Hunter Biden (who would become BHR’s “Vice Chair”) on the board, the emails stated.
Discussions about how to extricate Archer from Hunter Biden’s tangled web of international business interests continued into August 2016 as the race between Donald Trump and Hillary Clinton for the presidency was dominating most Americans’ attention.
Rosemont Seneca Bohai’s interests would be transferred to Skaneateles, a limited liability corporation in which Hunter Biden held a 75% stake and Schwerin held a 25% stake, the emails show.
Since Hunter Biden’s Burisma income flowed through Rosemont Seneca Bohai, he would be credited with enough money for a zero-cash transfer of the BHR stake from RSB to Skaneateles. But this transfer, and Schwerin’s stake in Skaneateles presented new questions, according to the emails.
“Will Eric be receiving a 25% interest in the 10% BHR equity transferred by RSB to Skaneateles in accordance with the current ownership structure of Skaneateles? Will the basis for the equity grant be on account of exchange for services Eric provided to Hunter or on some other basis?” Mesires inquired before referring Schwerin and Biden to an associate attorney to discuss the “potential tax implications” of the transfer.
Amid the confusion, in late 2016 Hunter Biden was in the process of a messy divorce from his wife Kathleen. Emails to and from his lawyer reveal Hunter Biden’s corporate interests were far more complex and extensive. For instance, an October 2016 email from Schwerin listed more than a dozen entities that were owned by, or paying money to, Hunter Biden.
In December 2016, as his father was preparing to leave the vice president’s office, Hunter Biden and Schwerin had come up with a plan to pay child support to his estranged wife and fund other family expenses. The email mentions that Hunter Biden still owed “back taxes” among other outstanding bills.