The Feds are investigating billionaire Carl Icahn’s role advising the Trump administration

Carl Icahn could be in hot water with federal investigators.Reuters

• Federal investigators are probing Carl Icahn’s advisory role to President Donald Trump’s White House.
• His investment firm, Icahn Enterprises L.P., revealed in a financial filing that the government had subpoenaed information relating to the firm and Icahn’s activities relating to federal biofuel policy.
• Icahn quit his role with the Trump in administration in August, right around the time The New Yorker published a story suggesting Icahn could be in legal jeopardy for using his role to influence regulations that would benefit his firm’s investments.

Back in August, Carl Icahn quit his role advising President Donald Trump’s administration — right around the time The New Yorker reported he could be in legal jeopardy for his attempts to change biofuel policy that would benefit his investments.

Now, the feds are investigating Icahn’s informal advisory role to the Trump administration in connection with his investment firm, Icahn Enterprises L.P., which has a significant stake in a fuel refiner that would benefit from regulatory changes that Icahn reportedly lobbied for.

In a filing with the Securities and Exchange Commission, Icahn Enterprises announced the US Attorney’s office for the Southern District of New York had issued a subpoena seeking information related to the firm and Icahn’s activities while he was an advisor to Trump:

“The U.S. Attorney’s office for the Southern District of New York recently contacted Icahn Enterprises L.P. seeking production of information pertaining to our and Mr. Icahn’s activities relating to the Renewable Fuels Standard and Mr. Icahn’s role as an advisor to the President. We are cooperating with the request and are providing information in response to the subpoena. The U.S. Attorney’s office has not made any claims or allegations against us or Mr. Icahn. We maintain a strong compliance program and, while no assurances can be made, we do not believe this inquiry will have a material impact on our business, financial condition, results of operations or cash flows.”

How did Icahn wind up in the sights of federal investigators?

Here’s a rundown of some key takeaways from Patrick Radden Keefe’s August profile in The New Yorker that details Icahn’s attempts to change the Renewable Fuels Standard:

• Icahn has a 82% stake in CVR, a refiner.
• Refiners have to blend ethanol into their products, or buy credits, called Renewable Identification Numbers (RIN), from refiners that do. The cost of these RINs has increased, costing CVR more and more money.
• Icahn haslobbied vocally against the policy that forces refiners like CVR to buy RINs, arguing in favor of changing the “point of obligation,” which would force other parties to buy them instead. Inan oped in The Wall Street Journal, he likened RINs to the mortgage-backed securities that fueled the financial crisis.
• In December, it was announced that Icahn would be a special adviser to Trump, then the president-elect, with a focus on regulation. “His help on the strangling regulations that our country is faced with will be invaluable,” Trump said at the time.
• According to The New Yorker, Icahn told Bob Dinneen, the head of the Renewable Fuels Association, which had been supporting the existing RIN policy, in February that an executive order would change the rules. Dinneen told Keefe that while Icahn never said explicitly that he was talking on behalf of Trump, “Icahn had a title I couldn’t ignore.”
• “Icahn was always talking about an ‘executive order’—that was his vernacular,” Dinneen told The New Yorker. According to Icahn’s lawyer, Icahn only expressed “hope” that Trump would agree with his view on RINs.
• Either way, Dinneen said he would propose to his board that the Renewable Fuels Association would end its opposition to the “point of obligation” change. When news leaked of the potential change in the association’s stance, there was an outcry from the ethanol industry.
• A spokeswoman for the White House later denied that there was any plan to shift the point of obligation.
• Keefe reported that an official in the Trump administration told him that there was a draft executive order, but that it was “something Icahn sent to us.” Icahn’s lawyer denied that Icahn had prepared the executive order.
• According to Richard Painter, a Bush administration ethics lawyer, Icahn walked “right into possible criminal charges,” because of “a federal statute that makes it illegal for executive-branch employees to work on any matter in which they may have a direct financial interest.” As a reminder, Icahn had the title “special adviser to the president.”
• Icahn’s lawyer told Keefe the relevant law does not apply to Icahn: “Unlike a government employee, Mr. Icahn has no official role or duties and he is not in a position to set policy.”