Trump Organization Is Charged With Running 15-Year Employee Tax Scheme

Trump Organization Is Charged With Running 15-Year Employee Tax Scheme
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The Trump Organization, the real estate business that catapulted Donald J. Trump to tabloid fame, television riches and ultimately the White House, was charged Thursday with running a 15-year scheme to help its executives evade taxes by compensating them with fringe benefits that were hidden from the 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 $1.7 million in perks that should have been reported as income. Mr. Weisselberg, Mr. Trump’s long-serving and trusted chief financial officer, faced 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 R. Vance, Jr., said during an arraignment in State Supreme Court in Manhattan.

Mr. Dunne and the indictment described a deliberate effort by senior executives to underreport their income, in concert with the Trump Organization, by accepting secret perks that did not show up on tax documents. In the case of Mr. Weisselberg, the indictment said, the company kept his benefits off its books but recorded them in an internal spreadsheet.

The charges against the Trump Organization and Mr. Weisselberg — whom Mr. 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 Mr. 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 Mr. Trump.Read the Indictment

The Trump Organization and a top executive were charged by the Manhattan district attorney’s office on Thursday with fraud and tax crimes.READ DOCUMENT 25 PAGES

The indictment took square aim at Mr. Weisselberg after months of increasing pressure on him to offer information that could help that broader inquiry. Prosecutors had subpoenaed Mr. 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 cooperation. That effort is expected to continue, and now Mr. Weisselberg is under even greater pressure: He could face more than a decade in prison if he is convicted.

Mr. 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, Mr. 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 Mr. Weisselberg, he said only that his longtime lieutenant was an “honorable man.”

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“I’m with him all the way,” he said.WHAT WE KNOWThe indictment against the Trump Organization and a top official, explained.

Mr. Weisselberg pleaded not guilty. “He will fight these charges in court,” his lawyers, Mary E. Mulligan and Bryan C. Skarlatos, said in a statement.

Lawyers for the Trump Organization called the case inappropriate and unjustified, saying it should be resolved by civil tax authorities. “In our view, this case was brought because the companies’ 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 Organization 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 Mr. Weisselberg with failing to pay taxes on leased Mercedes-Benzes, bonuses and a rent-free apartment paid for by the company. After Mr. Trump personally paid private school tuition for Mr. Weisselberg’s grandchildren, Mr. Weisselberg directed that the notations “per Allen Weisselberg” be removed from the ledger recording the checks. And the indictment charged Mr. Weisselberg with grand larceny for obtaining tax refunds to which it said he was not entitled.

Although Mr. Trump was not accused of a crime, an indictment of the company that carries his name strikes a blow to the former president just as he has resumed holding rallies. Even if Mr. Trump parlays the charges into some immediate good will from his supporters, he could face the costly distraction of a trial if he attempts to mount another presidential campaign.

Mr. Weisselberg has worked for the Trump family since the 1970s and has been under increasing pressure to cooperate with an investigation into their business dealings.
Mr. Weisselberg has worked for the Trump family since the 1970s and has been under increasing pressure to cooperate with an investigation into their business dealings.Credit…Evan Vucci/Associated Press

The charges could also jeopardize his company’s relationship with business partners who had stood by the Trump Organization even after the Jan. 6 Capitol riot, which prompted a backlash against the former president.

Mr. Trump won the presidency by portraying himself as a political outsider with the business acumen to shake up Washington. But the company whose name he made famous on his reality television show, “The Apprentice,” might eventually be associated as much with criminal charges as it is with the hotels and golf courses that bear his name. If the company is found guilty, it could face fines or other penalties.

In the next phase of the broader investigation into Mr. Trump and his company, the prosecutors are expected to continue scrutinizing whether the Trump Organization 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 in a statement that the investigation will continue.

An accountant who began his career working for Mr. Trump’s father nearly a half-century ago, Mr. Weisselberg has served as the Trump Organization’s financial gatekeeper for more than two decades and recently ran the business with Mr. Trump’s adult sons while Mr. Trump was in the White House.

Famously hard-working — he once said he took “no vacations” — Mr. Weisselberg gained an unparalleled view into the inner workings of the company and its bare-knuckled brawls with business partners. Mr. Weisselberg “knows of every dime that leaves the building,” Corey Lewandowski, a former Trump campaign official, wrote in the book he co-authored, “Let Trump Be Trump.”

Mr. Weisselberg, who is 73 years old, still could cooperate with the prosecutors. If he ultimately pleads guilty and strikes a deal, he could do considerable damage to Mr. Trump, who for decades has depended on his unflinching loyalty, once declaring with “100 percent” certainty that Mr. Weisselberg had not betrayed him.

The two started working together closely in the late 1970s, with Mr. Weisselberg putting in time on nights and weekends to handle projects for Mr. Trump, the ambitious son of his boss, Fred Trump. Mr. Weisselberg said in a 2015 deposition that he had been helping with Mr. Trump’s tax returns since at least the 1990s, when Mr. Trump made him the organization’s chief financial officer.

Mr. Weisselberg has remained steadfastly loyal to the company even as his own name surfaced during congressional and federal investigations into Mr. Trump. While Mr. Weisselberg was never a target of those investigations, he has been a central focus of the district attorney’s inquiry, which began in August 2018.

The indictment laid bare a number of incidents in which prosecutors say Mr. 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, flat-screen televisions and furniture for his Florida home.

The company also helped Mr. Weisselberg falsely claim he lived outside New York City, easing his tax burden, the indictment said.

At the year-end holidays, Mr. Weisselberg used cash from the company to hand out tips to people in his personal life, the indictment said. The plan worked like this: Mr. Weisselberg led the company to issue checks 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 Organization said in a statement Thursday that criminal cases centered 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 I.R.S. nor any other district attorney would ever think of bringing,” the statement said. “This is not justice; this is politics.”

Still, Mr. 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.

Cyrus R. Vance Jr., the Manhattan district attorney and a Democrat, has been investigating Mr. Trump and his business practices since August 2018.
Cyrus R. Vance Jr., the Manhattan district attorney and a Democrat, has been investigating Mr. Trump and his business practices since August 2018.Credit…Jefferson Siegel for The New York Times

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.

Even if Mr. Weisselberg declines to cooperate, the charges represent a major milestone for Mr. Vance, a Democrat who twice beat Mr. Trump at the U.S. Supreme Court in a battle to obtain the former president’s tax records. That victory reinvigorated the investigation, touching off months of grand jury subpoenas and witness testimony.

As president, Mr. Trump had refused to release his tax returns, breaking with decades of tradition. Questions about the legality of tax avoidance schemes by Mr. Trump and his company surfaced in reporting by The Times in 2018 that showed how Mr. Trump helped in a family effort to siphon millions of dollars from his aging father’s real estate business to avoid gift and inheritance taxes.

And last year, the Times obtained and published years of tax return data for Mr. Trump and his companies, revealing how he used hundreds of millions of dollars in losses and deductions to pay no federal income taxes at all for years.

Of all the investigations that have loomed over Mr. Trump and his inner circle in the past few years — two impeachments, one special counsel inquiry into ties with Russia and criminal charges against a half dozen former aides — only Mr. Vance’s case has reached into the top rungs of the Trump Organization and taken aim at the company itself.

Still, the stakes remain high for Mr. Vance. Although he is not seeking re-election after three terms, the district attorney has faced criticism in the past for treading lightly with other powerful defendants. The Trump investigation will arguably be the most enduring part of his legacy.

When Mr. Vance’s office opened its broader investigation, it began with an examination of hush-money payments made during the 2016 presidential campaign to two women who said they had affairs with Mr. Trump. In particular, the prosecutors scrutinized how the company accounted for $420,000 it gave Michael D. Cohen, Mr. Trump’s former personal lawyer, partly as reimbursement for money he paid to buy the silence of one of the women, Stormy Daniels, a pornographic film actress who said she had an affair with Mr. Trump.

Mr. Cohen is cooperating with Mr. Vance’s investigation, which grew out of 2018 federal charges against him.

In congressional testimony two years ago, Mr. Cohen pinned blame on Mr. Weisselberg, saying that he had helped devise a strategy to mask the Trump Organization’s reimbursements to Mr. Cohen.

For years, Mr. Weisselberg kept a low profile at the Trump Organization, often eclipsed by his bombastic boss. One of Mr. Weisselberg’s rare moments in the spotlight came during a cameo as a judge on “The Apprentice,” in which he discussed dog grooming.

Mr. Weisselberg’s family has also long been entwined with Mr. Trump. One of Mr. Weisselberg’s sons, Barry, has been the manager of Trump Wollman Rink in Central Park, and another son, Jack, works at Ladder Capital, one of Mr. Trump’s biggest lenders.

Neither of Mr. Weisselberg’s sons was accused of wrongdoing in the indictment.

Prosecutors have also questioned Mr. Weisselberg’s former daughter-in-law, Jennifer Weisselberg, who is in the midst of a court battle with her ex-husband, Barry, over custody of their children.

source: https://www.nytimes.com/



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