Trouble towers at Trump firm
Tax fraud indictment could make it more difficult for business to form new deals
NEW YORK — The criminal tax fraud charges unsealed against Donald Trump’s company Thursday are a blow to a business already reeling from canceled deals following the insurrection at the U.S. Capitol and the impact of the coronavirus pandemic on hotels and clubs.
The indictment may make it harder for Trump to strike new deals, get bank loans and bring in new money to his sprawling and indebted business.
The former president himself was not charged by prosecutors, but investigations are ongoing.
Here’s a look at the company and the challenge it now faces:
The company is a business entity encompassing hundreds of firms and partnerships that own or manage office buildings, hotels, residential towers, golf clubs, branding rights, licensing deals and other assets around the world.
Those various businesses share staff with the Trump Organization, including Trump’s two adult sons, Donald Jr. and Eric, both executive vice presidents, and Allen Weisselberg, the indicted chief financial officer.
A grand jury indictment charged the Trump Organization with conspiring to help top executives cheat on their taxes by not reporting compensation like free use of apartments and cars, payments of school tuition or reimbursement for personal expenses.
The company pleaded not guilty, as has Weisselberg, one of Trump’s most loyal and longest-serving employees.
The company says neither it nor Weisselberg did anything wrong and claimed the charges are politically motivated.
Weisselberg is also accused of cheating on his taxes by disguising that his full-time residence was in New York City, where he was subject to the city’s income tax.
If the Trump Organization is convicted, it would have to pay a fine of double the amount of unpaid taxes, or $250,000, whichever is larger.
But even absent a conviction, the indictment could pose problems.
“Companies that are being indicted, whether they are private or public, big or small, face serious collateral consequences,” said Daniel Horwitz, a white collar defense lawyer at McLaughlin and Stern and former prosecutor at the Manhattan district attorney’s office.
“Companies in the financial services industry are reluctant to do business with them,” Horwitz said.
The Trump Organization could find it more difficult to strike deals to put the Trump name on buildings or products, attract tournaments to its golf courses and borrow money.
It may be able to withstand the blows. It is a sprawling company, but its operations are simple and behind the scenes: It runs golf clubs and hotels, collects checks from companies occupying offices it owns, and charges licensing fees to buildings and others using its name.
Although some companies have collapsed after criminal indictments, others have survived or even thrived, including Bank of America, which was convicted for reckless mortgage lending practices. Others that received what’s called deferred criminal charges have done well afterward, including drug giant Bristol-Myers Squibb, which was accused of accounting fraud.