Allen Weisselberg and The Trump Organization Indictment Redux
The Trump Organization and its longtime finance chief, Allen Weisselberg, have been indicted on charges from a years-long investigation by the Manhattan district attorney’s office that has involved prosecutors obtaining former President Trump’s tax returns. Prosecutors allege a 15-year scheme (from 2005 through this year) in which the Trump Organization compensated Weisselberg in a manner that allowed the company and the executive to evade taxes.
The company and an entity called Trump Payroll Corporation were charged with 10 felony counts and Weisselberg with 15 felony counts including a scheme to defraud, conspiracy, criminal tax fraud, and falsifying business records. Weisselberg was also charged with grand larceny and offering a false instrument for filing. The 73-year-old Weisselberg has intimate knowledge of the Trump Organization’s financial dealings from nearly five decades at the company. The charges against him could enable prosecutors to pressure him to cooperate with the investigation and tell them what he knows.
Naomi Jagoda of The Hill explains:
According to the indictment, Weisselberg received indirect compensation from the Trump Organization over a number of years of about $1.76 million. The company avoided reporting the income to tax authorities and withholding taxes from it, and Weisselberg hid the income from his tax preparer and didn’t report it on his tax returns, prosecutors claim.
“During the period of the scheme, Weisselberg thereby evaded approximately $556,385 in federal taxes, approximately $106,568 in state taxes, and approximately $238,159 in New York City taxes, and he falsely claimed and received approximately $94,902 in federal tax refunds and approximately $38,222 in state tax refunds, to which he was not entitled,” the indictment said.
Jagoda explains again:
Prosecutors also allege that the Trump Organization monitored the amount of indirect compensation it was providing to Weisselberg but nonetheless did not report the income to tax authorities.
Weisselberg was authorized to receive annual compensation of a set amount. The Trump Organization tracked how much it spent on indirect compensation in the forms of rent, automobile and tuition payments, and “treated many of them as part of his authorized annual compensation, ensuring that he was not paid more than his pre-authorized, fixed amount of gross compensation,” the indictment stated.
Still, the indirect compensation wasn’t included in forms that reported Weisselberg’s gross income, so the executive’s income was underreported to federal, state and local tax authorities, the document added.
While it’s rare for prosecutors to bring charges against businesses that commit minor violations of tax rules governing fringe benefits for employees, according to University of Chicago Law Professor Daniel Hemel, it wouldn’t be unusual for prosecutors to bring charges against a business or its top officers over a substantial amount of off-the-books pay. Paying your CFO a million dollars under the table would qualify as substantial.
Blatant and Purposeful Action
The alleged crimes detailed by prosecutors are particularly blatant and that those accused of carrying out the offenses were likely knowledgeable about tax rules. According to Scott Michel, an attorney at Caplin and Drysdale who has done defense-side criminal tax work for 40 years, what’s alleged is a “well-thought-out structure to pick out a variety of ways to generate income for Weisselberg in a way that would skirt the tax rules,”
Weisselberg’s son Barry — who managed a Trump-operated ice rink in Central Park — paid no reported rent while living in a Trump-owned apartment in 2018, and he was charged just $1,000 per month — far below typical Manhattan prices — while living in a Trump apartment from 2005 to 2012, the indictment said. Allen Weisselberg lived for years in a modest home on Long Island but continued to claim residency there despite living in a company-paid Manhattan apartment, prosecutors said. By doing so, Weisselberg concealed that he was a New York City resident, and he avoided paying hundreds of thousands in federal, state and city income taxes while collecting about $133,000 in refunds to which he was not entitled, prosecutors said.
According to the indictment, Weisselberg paid rent on his Manhattan apartment with company checks and directed the company to pay for his utility bills and parking, too. The company also paid for private school tuition for Weisselberg’s grandchildren with checks bearing Trump’s signature, as well as for Mercedes cars driven by Weisselberg and his wife, and gave him cash to hand out tips around Christmas. Such perks were listed on internal Trump company documents as being part of Weisselberg’s compensation but were not included on his W-2 forms or otherwise reported, and the company did not withhold taxes on their value, prosecutors said.
Trump’s company also issued checks, at Weisselberg’s request, to pay for personal expenses and upgrades to his homes and an apartment used by one of his sons, such as new beds, flat-screen TVs, carpeting and furniture, prosecutors said. Barry Weisselberg’s ex-wife has been cooperating with investigators and given them reams of tax records and other documents. Two other Trump executives who were not identified by name also received substantial under-the-table compensation, including lodging and the payment of automobile leases, the indictment said.
The indictment doesn’t charge the former president with any crimes, but prosecutors say their investigation is ongoing noting he signed some of the checks at the center of the case. One top prosecutor, according to Michael R. Sisak and Tom Hays of the AP, said the 15-year scheme was “orchestrated by the most senior executives” at the Trump Organization.
The Trump Organization is the entity through which the former president manages his many ventures, including his investments in office towers, hotels and golf courses, his many marketing deals and his TV pursuits. Trump’s sons Donald Jr. and Eric have been in charge of day-to-day operations since he became president. In addition to exposing the Trump Organizations to fines, the criminal case could make it more difficult for the business to secure bank loans or strike deals — a hit that comes at a particularly bad time, with the company already reeling from lost business because of the coronavirus and the backlash over the Jan. 6 attack on the Capitol.
In a statement, Trump condemned the case as a “political Witch Hunt by the Radical Left Democrats.” The case is being led by Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James, both Democrats.
Michael Cohen, the former Trump lawyer who has been cooperating with Vance’s investigation, wrote in his book “Disloyal” that Trump and Weisselberg were “masters at allocating expenses that related to non-business matters and finding a way to categorize them so they weren’t taxed.” Cohen said Weisselberg was the one who decided how to secretly reimburse him for a $130,000 payment to Stormy Daniels, the porn star who said she had sex with Trump.