Trump’s business charged with ‘audacious’ tax fraud
Indictment could lay groundwork for wider inquiry targeting ex-President
The Trump Organisation, the real estate business that catapulted Donald Trump to tabloid fame, television riches and ultimately the White House, was charged yesterday with running a 15-year scheme to help its executives evade taxes by compensating them with fringe benefits that were hidden from authorities.
The Manhattan district attorney’s office, which has been conducting the investigation alongside the New York attorney general, also accused a top executive, Allen H. Weisselberg, of avoiding taxes on US$1.7 million ($2.43m) in perks that should have been reported as income.
Weisselberg, Trump’s longserving and trusted chief financial officer, faces grand larceny, tax fraud and other charges.
“To put it bluntly, this was a sweeping and audacious illegal payments scheme,” Carey Dunne, general counsel for the Manhattan district attorney, Cyrus Vance, said during an arraignment in State Supreme Court in Manhattan.
Dunne and the indictment described a deliberate effort by senior executives to under-report their income, in concert with the Trump Organisation, by accepting secret perks that did not show up on tax documents. In the case of Weisselberg, the indictment said, the company kept his benefits off its books but recorded them in an internal spreadsheet.
The charges against the Trump Organisation and Weisselberg — whom Trump once praised for doing “whatever was necessary to protect the bottom line” — ushered in a new phase of the district attorney’s inquiry into the business practices of Trump and his company. And while the indictment was narrowly focused on the tax scheme, the charges could lay the groundwork for the next steps in the wider investigation, which will focus on Trump.
The indictment took square aim at Weisselberg after months of increasing pressure on him to offer information that could help that broader inquiry. Prosecutors had subpoenaed Weisselberg’s personal tax returns and bank records, reviewed a raft of his financial dealings and questioned his ex-daughter-in-law — all part of an effort to gain his co-operation. That effort is expected to continue, and now Weisselberg is under even greater pressure: He could face more than a decade in prison if he is convicted.
Trump was not charged, and no other executives were accused by name of wrongdoing.
In a brief interview with the New York Times after the indictment was unsealed, Trump called the accusations a “continuation of the witch hunt that started when I came down the escalator”, referring to the 2015 event at Trump Tower when he announced his presidential campaign.
Asked if he was worried about the pressure being put on Weisselberg, he said only that his longtime lieutenant was an “honourable man”. “I’m with him all the way,” he said. Weisselberg pleaded not guilty. “He will fight these charges in court,” said his lawyers, Mary E. Mulligan and Bryan C. Skarlatos.
Lawyers for the Trump Organisation called the case inappropriate and unjustified, saying it should be resolved by civil tax authorities.
“In our view, this case was brought because the company’s name is Trump,” the lawyers, Alan S. Futerfas, Bettina Schein and Susan R. Necheles, said in a statement.
“This case signals that it is now open season for local prosecutors to target federal political opponents and adversaries.”
The 15-count indictment — which charged the Trump Organisation with committing a scheme to defraud, criminal tax fraud and falsifying business records — also accused the company of avoiding its own obligations by not paying payroll taxes on the benefits.
It charged Weisselberg with failing to pay taxes on leased Mercedes-Benzes, bonuses and a rent-free apartment paid for by the company.
After Trump personally paid private school tuition for Weisselberg’s grandchildren, Weisselberg directed that the notations “per Allen Weisselberg” be removed from the ledger recording the checks.
And the indictment charged Weisselberg with grand larceny for obtaining tax refunds to which it said he was not entitled.
In the next phase of the broader investigation into Trump and his company, prosecutors are expected to continue scrutinising whether the Trump Organisation manipulated property values to obtain loans and tax benefits, among other potential financial crimes, according to people familiar with the matter.
Letitia James, the New York attorney general, said the investigation will continue.
An accountant who began his career working for Trump’s father nearly a half-century ago, Weisselberg has served as the Trump Organisation’s financial gatekeeper for more than two decades and recently ran the business with Trump’s adult sons while Trump was serving as President in the White House.
Famously hardworking — he once said he took “no vacations” — Weisselberg gained an unparalleled view into the inner workings of the company and its bare-knuckled brawls with business partners.
Weisselberg “knows of every dime that leaves the building”, Corey Lewandowski, a former Trump campaign official, wrote in the book he coauthored, Let Trump Be Trump.
Weisselberg, 73, still could cooperate with the prosecutors.
If he ultimately pleads guilty and strikes a deal, he could do considerable damage to Trump, who for decades has depended on his unflinching loyalty, once declaring with “100 per cent” certainty that Weisselberg had not betrayed him.
The indictment laid bare a number of incidents in which prosecutors say Weisselberg abused his position at the company to benefit himself and his family, including getting the company to pay for personal expenses such as new beds, televisions and furniture for his Florida home.
The company also helped Weisselberg falsely claim he lived outside New York City, easing his tax burden, the indictment said.
At the year-end holidays, Weisselberg used cash from the company to hand out tips to people in his personal life, the indictment said.
The plan worked like this: Weisselberg led the company to issue cheques to another employee, who then cashed them and gave him the money for “his personal use”.
The company recorded the cash on its ledgers as “holiday entertainment”, but on internal spreadsheets, the money was reflected as compensation, the indictment said.
The Trump Organisation said in a statement yesterday that criminal cases centred on fringe benefits are extremely rare. Indeed, lawyers with expertise in tax crimes told the Times they could think of no recent example of a similar case.
“The district attorney is bringing a criminal prosecution involving employee benefits that neither the IRS nor any other district attorney would ever think of bringing,” the statement said. “This is not justice; this is politics.”
Still, Dunne, the general counsel, said the acts alleged in the indictment were not “standard practice in the business community” or the work of a rogue employee.
The indictment said an unindicted co-conspirator — a participant in the conspiracy who was not charged or mentioned by name — also engaged in the tax avoidance scheme.