Trump's Family Business, CFO Weisselberg Are Charged With Tax Crimes

Jul 1, 2021
Originally published on July 1, 2021 4:10 pm

Updated July 1, 2021 at 6:22 PM ET

Former President Donald Trump's family business and its longtime chief financial officer, Allen Weisselberg, have been charged by the Manhattan district attorney's office in a case involving an array of alleged tax-related crimes.

In an indictment unsealed Thursday, prosecutors allege that starting from as early as 2005 and up until last month, the Trump Organization and Weisselberg have committed tax fraud and falsified business records as part of a scheme to compensate executives at the Trump Organization "off the books." The goal, prosecutors claim, was to avoid paying hundreds of thousands of dollars in taxes by compensating employees with lavish perks in addition to their regular pay.

Weisselberg allegedly received indirect compensation — including housing expenses, home furnishings and leases for two Mercedes-Benz automobiles — with a total value of around $1.76 million and is accused of evading more than $901,000 in federal, state and local taxes combined. Private school tuition for two of Weisselberg's family members, according to the indictment, was paid with personal checks signed by Trump. Weisselberg, an employee of the Trump Organization since 1973, is also alleged to have arranged for various Trump businesses to make payments to him and to other executives as independent contractors, conferring tax benefits on retirement accounts.

If convicted, the Trump Organization is in very, very serious trouble. - Robert Gottlieb, a former assistant district attorney in Manhattan

What if the Trump Organization is convicted of a felony?

Of the charges levied in New York State Supreme Court, the most serious one facing Weisselberg is second-degree grand larceny, a Class C felony that carries a maximum sentence of 15 years.

The most serious charge for the Trump Organization is criminal tax fraud. A corporation found guilty of criminal tax fraud under New York law may be fined "double the amount of the underpaid tax liability resulting from the commission of the crime" or $250,000.

A felony conviction for the Trump Organization would make it "very difficult for them to do business," including obtaining bank loans and certain insurance policies, says Robert Gottlieb, a former assistant district attorney in Manhattan who is now a criminal defense lawyer.

"There are many deals that an organization like the Trump Organization would like to enter into," Gottlieb adds. "If it's convicted of a felony, they're gonna be barred by the governmental agency that supervises any particular projects. So, they could be debarred from conducting certain businesses. If convicted, the Trump Organization is in very, very serious trouble."

Trump has long denied any wrongdoing

Weisselberg and attorneys for the Trump Organization pleaded not guilty to the charges Thursday. During an arraignment in New York City, Weisselberg surrendered his passport and was released without having to post bail.

Trump has long denied any wrongdoing. In a statement Thursday afternoon, the former president said:

"The political Witch Hunt by the Radical Left Democrats, with New York now taking over the assignment, continues. It is dividing our Country like never before!"

The investigation by Manhattan District Attorney Cyrus Vance Jr. began in 2018, around the time Trump's former personal lawyer, Michael Cohen, pleaded guilty to campaign finance charges related to payments of hush money. These were made in the final months of the 2016 presidential campaign, as Cohen put it in court, "in coordination with, and at the direction of, a candidate for federal office." The goal was to block two women who claimed they had extramarital affairs with Trump — former Playboy model Karen McDougal and adult film star Stephanie Clifford, whose stage name is Stormy Daniels — from telling their stories publicly.

New York state Attorney General Letitia James' office launched its own probe in 2019 after Cohen testified in a congressional hearing that Trump manipulated property values to lower his tax obligations and to obtain bank loans. James' investigation was initially focused on potential civil charges, but it recently expanded to include a criminal probe in partnership with Vance.

This year, the investigators have homed in on noncash payments made to top officials in Trump's companies, including Weisselberg.

The U.S. Supreme Court paved the way for the charges, declining in February to block a subpoena from Vance's office seeking Trump's financial records. Vance first requested tax filings and other financial records from Trump's accounting firm, Mazars USA, in 2019.

In a statement released in May, Trump said the New York-based investigations were part of a "Witch Hunt," adding, with a reference to how his presidential campaign started in 2015: "It began the day I came down the escalator in Trump Tower, and it's never stopped."

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ARI SHAPIRO, HOST:

The Trump Organization and its longtime chief financial officer have been charged with more than a dozen financial crimes by the state of New York. This case has been three years in the making, and it's included a fight over access to former President Donald Trump's tax returns and an ongoing investigation by a New York grand jury. Now there are criminal charges. Reporter Andrea Bernstein has been following the case for NPR. Good to have you back.

ANDREA BERNSTEIN, BYLINE: Hey, great to talk to you, Ari.

SHAPIRO: Tell us what's alleged here.

BERNSTEIN: So it's a pretty extensive indictment that was unsealed today. Fifteen counts are charged against Trump's former chief financial officer, Allen Weisselberg, or - and/or the Trump organization. The most serious is grand larceny in the second degree, which is a Class C felony. And in New York, that carries a possible five to 15-year prison sentence against Weisselberg. Today in court, the assistant district attorney, Carrie Dunn, stood up and really spelled it out. He said this was a - and I'm quoting him now. He said, quote, "this was a 15-year-long tax fraud scheme involving off-the-books payments," which is a type of crime that's charged against companies and executives all the time. Contrary to today's assertion by the company's former CEO - that would be Donald Trump - this is not a standard practice in the business community, nor was it the act of a rogue or isolated employee.

SHAPIRO: Can you explain what exactly this CFO Weisselberg is accused of doing in this 15-year scheme?

BERNSTEIN: Yes. Basically, he's charged with stealing hundreds of thousands of dollars from taxpayers by paying himself, instead of with cash, with things like apartments, Mercedes-Benz leases, private school tuition - things that were deemed company expenses in an alleged scheme to defraud taxpayers. He also lied about his place of residence, according to the indictment, saying he didn't live in New York City when he did, so he would have had to pay those taxes. And one of the really interesting things that was unsealed today is that he actually - or the Trump Organization actually kept a ledger of this non-cash compensation that was allegedly untaxed, where it was balanced against cash compensation, which was reduced by the same amount.

SHAPIRO: So you say this could bring a five to 15-year prison sentence. I mean, how serious are the offenses that are alleged here?

BERNSTEIN: So I was able to speak to several criminal lawyers after the court appearance today who say, really, once you get to a C felony, it is very serious. And it is also, they say, not uncommon for a prosecutor to go after a broad tax scheme like this in pieces, so they may have more information. They likely do after this three-year investigation that has involved two trips to the Supreme Court. So it could even get more serious for Trump or for his business.

SHAPIRO: Because this was such a long time coming and it is such a high-profile target, tell us about what the scene was like at the courthouse.

BERNSTEIN: Yeah, so the Manhattan Criminal Courthouse is not Trump Tower and it is not the White House. There is no pomp. There is no guilt. There was chipped paint. It was very shabby. And into the courtroom walks Allen Weisselberg. He's been an employee of the Trump Organization of Donald or Fred Trump since 1973 - kind of like Donald Trump's corporate alter ego. And he walks in in handcuffs. It was a pretty dramatic moment for a company where neither Trump nor any current employees have ever faced criminal charges until now.

SHAPIRO: And how is the Trump organization responding to this?

BERNSTEIN: So the Trump organization pleaded not guilty, as did Allen Weisselberg. They were quite terse in court. Trump's lawyer, Ron Fischetti - and Trump is not charged in this indictment - said in a statement after the indictment, in my 50 years of practice, I have never seen this office bring a case like this, and quite frankly, I am astonished. The DA is supposed to be apolitical, but everyone knows the only reason they are proceeding with this case is because it is Trump.

SHAPIRO: And although these are the first criminal charges in the case, with the grand jury still investigating, it sounds like these may not be the last.

BERNSTEIN: Yeah, the DA's office said notably that the case is ongoing. And in court, the assistant district attorney sought a protective order and received one to, they said, protect this ongoing investigation against information being divulged.

SHAPIRO: And former President Trump, no surprise, referred to it in a statement as a witch hunt.

BERNSTEIN: That is no surprise, and I expect we'll hear more of that. The prosecutors really took that on, and they do have at their back two rulings by the U.S. Supreme Court that really dismissed that argument and said that it was, in essence, a legitimate investigation. There may be more because the New York attorney general has a separate civil case, and that may put more pressure on Allen Weisselberg, the Trump Organization or perhaps on Donald Trump.

SHAPIRO: Reporter Andrea Bernstein, thanks for your reporting.

BERNSTEIN: Great to join you. Transcript provided by NPR, Copyright NPR.