Trump ordered his companies to fight a criminal tax evasion case


(Bloomberg) — The criminal tax evasion case against two Trump Organization companies that unfolded in a Manhattan courtroom this month went to trial because of one man: Donald Trump.

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Companies under criminal investigation often enter into agreements to reduce or avoid prosecution in exchange for payment of a fine and a change in behavior. But because Trump’s two business units should have said their employees knowingly committed tax evasion, the boss wouldn’t let them make a plea deal with prosecutors, according to a person familiar with the ruling who asked not to. be named discussing a private matter.

The Manhattan District Attorney’s Office alleges the two Trump companies ran a tax evasion scheme for more than a decade, offering executives, including longtime CFO Allen Weisselberg, perks – like apartments luxuries and private school tuition – as hidden compensation to the government.

Read more: Star Witness Against Trump Firm Testifies They Cheated Together

The defense says Weisselberg went rogue and companies did not profit from his actions. Trump, who is not charged, called the case a baseless blood feud.

By choosing to fight, the Trump Companies risk being convicted on the strongest charges the prosecutor’s office could muster — and the public airing of the inner workings of the Trump Organization in open court. And Trump runs those risks even as he runs for president, having entered the race on Tuesday.

But rolling the dice on a trial offers the possibility of a triumphant acquittal, an attractive prospect for the self-proclaimed fighter calling the probes facing him and his political business maneuvers. The case is being jointly prosecuted by Manhattan District Attorney Alvin Bragg and New York Attorney General Letitia James. Trump, the Republican Party’s most powerful figure, called it “another witch hunt” by James, who, like Bragg, is a Democrat.

The financial penalty the court could impose if the DA wins a guilty verdict is only around $1.6 million – the sum of the various fines attached to the various counts the defendant companies face, including including conspiracy and tax evasion.

Trump spokesman Taylor Budowich did not respond to a text message and phone call seeking comment on the case. Trump Organization attorney Alan Garten did not respond to an email. A spokesperson for Bragg had no comment.

Risky move

Yet trial by jury is still a gamble. If the two companies, Trump Corp. and Trump Payroll Corp., are found guilty, this could trigger a cascade of consequences.

“These are not petty lawsuits,” given the claim that defendants flouted the law for years, said Bennett Gershman, a professor at Pace University School of Law. If found guilty, he said, the Trump Organization itself could face “a host of intangibles.”

“The parent company, as a criminal, could be barred from having contracts with government agencies,” Gershman said, “and that could make it more difficult to do business with banks.”

“It’s a big deal,” he said.

If the jury returns a guilty verdict, the Trump Organization is likely to argue that it cannot be held criminally responsible, as a whole, for the actions of the two affiliates.

And the fallout from a conviction might not be so dire, said Daniel R. Alonso, who was chief assistant in the Manhattan district attorney’s office and is now a partner at Buckley LLP. State law is weak to hold companies criminally responsible, Alonso said.

Some convicted companies have been given “conditional discharge,” a series of demands such as cleaning up compliance programs or agreeing to the imposition of a court-appointed monitor, Alonso said.

Read more: Trump knew about alleged tax scam, comptroller says CFO told him

Trump has a decades-long legal fight history. He began fighting the case when the prosecutor’s office issued a subpoena for his 2019 tax returns, and fought that request for information all the way to the U.S. Supreme Court, where he sued. lost.

More serious threats

The case has changed significantly since Bragg inherited it from his predecessor, Cyrus Vance Jr. The two lead prosecutors in the case were planning to secure an indictment against Trump himself early this year. Bragg didn’t believe they had a strong enough case against the former president. Both prosecutors have resigned.

More serious threats loom over Trump. In addition to criminal investigations into the Mar-a-Lago newspapers and efforts to nullify the 2020 election, the lawsuit comes amid a $250 million civil lawsuit against the Trump Organization by James. The AG says Trump and three of his children inflated the value of the company’s assets and is calling for sanctions, including a permanent ban on the four companies operating in the state.

As for reputation, marketing expert Allen Adamson has no problem with Trump fighting a jury fight in the Bragg case. Quite the contrary.

“It reinforces his brand of passing the test – win, lose or draw,” Adamson said. “There is no downside to fighting. Even if he loses, he pays a small fine, instead of being put in an orange jumpsuit. Given the greater legal threat Trump might have faced over the alleged activity, he said, “it’s not even a blow.”

Loyalty to Trump

An unusual aspect of the trial is the loyalty some prosecution witnesses may feel towards the Trump Organization. Weisselberg, the prosecutor’s star witness, pleaded guilty in August and agreed to testify honestly in exchange for a 100-day jail sentence. But he’s still on his full $640,000 salary and has worked for the family since 1973, starting with Trump’s father, Fred Trump.

Prosecutors found their first witness, Trump Organization comptroller Jeffrey McConney, so evasive that they sought to have him declared a hostile witness. On a dramatic day in court on Monday, the judge granted that request, giving them more leeway to question him.

So far, Weisselberg’s testimony has been the highlight of the trial.

Questioned by prosecutor Susan Hoffinger, Weisselberg confirmed that he defrauded tax authorities by hiding $1.7 million in income, and he said his crimes benefited himself and the Trump companies on trial.

Under aggressive cross-examination by Trump Payroll attorney Alan Futerfas, Weisselberg tearfully admitted that he had let down the Trump family, who had employed him for nearly 50 years and had in no way conspired with Donald Trump or his sons Eric and Don Jr. .

Still, while being questioned by Hoffinger on Friday, Weisselberg told jurors that Trump corporations benefited from his misconduct. When it was his turn, Futerfas hammered the former Trump CFO, insisting the fraud benefited Weisselberg alone. Futerfas argued that the savings Trump companies made — in unpaid payroll taxes of 1.45% of the $1.7 million he hid from tax authorities — were minimal.

“Do you agree that 1.45% of $1.7 million equals $24,650? asked Futerfas.

“I don’t calculate it, but if you did, I’d say it’s correct, yes,” Weisselberg said.

The case is People v. Trump Organization, 01473-2021, Supreme Court of the State of New York (Manhattan).

Read more

  • Trump CFO demoted to ‘birthday cupcake’ after plea

  • Trump Benefits for the Weisselbergs Included Free Rent, Tax Preparer

  • Trump firm’s tax evasion lawsuit promises ex-CFO star witness role

(Updates with Weisselberg’s testimony.)

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