Prosecutors: Trump Organization and CFO Allen Weisselberg dodged taxes for 15 years
WASHINGTON — The Trump Organization, an international showcase for gaudy wealth that made Donald Trump a household name long before he ran for president, has been dodging taxes for years, according to Manhattan prosecutors who unveiled the first criminal charges against the company on Thursday.
The organization is charged with criminal tax fraud and scheming to defraud the government. Allen Weisselberg, Trump’s longtime accountant and keeper of his financial secrets, faces the same charges plus grand larceny and falsifying records, according to the 15-count indictment.
Carey Dunne, an assistant district attorney, said the scheme “was orchestrated by the most senior executives, who were financially benefiting themselves and the company, by getting secret pay raises at the expense of state and federal taxpayers.”
Weisselberg, who appeared in court wearing handcuffs after surrendering at the courthouse, pleaded not guilty, as did the Trump Organization.
As New York prosecutors dig further into Trump Organization’s finances, the former president’s fate may depend on his accountant, Allen Weisselberg.
The indictment did not name Trump or any of his relatives, but it could prove debilitating for their company if it becomes harder to find business partners or obtain bank loans. Trump called the prosecution a continuation of the “witch hunt” that he’s faced for years, and his lawyers criticized the charges as politically motivated.
“If the name of the company was something else, I don’t think these charges would be brought,” Alan Futerfas, an attorney for the Trump Organization, said outside the courthouse after the arraignment.
The indictment, which was returned by a grand jury on Wednesday and unsealed on Thursday, accuses Weisselberg of avoiding more than $900,000 in taxes on $1.7 million of income that he received in the form of leased Mercedes-Benz vehicles, private school tuition for family members and rent-free apartments. Weisselberg even charged the company for beds, televisions, carpeting and furniture at his Florida home, according to the indictment.
Prosecutors allege the Trump Organization kept internal spreadsheets tracking the payments, then deducted them from his official income. Although other executives also received “off the books” compensation, according to the indictment, no one was named besides Weisselberg, who was described as “one of the largest individual beneficiaries” of the scheme, which allegedly dates to 2005. Also involved was someone identified only as “unindicted co-conspirator #1.”
New York Atty. Gen. Letitia James, who has been working with Manhattan Dist. Atty. Cyrus Vance Jr. on the case, said the indictment was “an important marker in the ongoing criminal investigation” of Trump’s business. Prosecutors have also been examining whether Trump improperly inflated the value of his properties to obtain loans or deflated them to avoid taxes.
“It requires little imagination to infer that the former president is someone who prosecutors are scrutinizing,” said Jeffrey Robbins, a former federal prosecutor.
The Trump Organization is a sprawling yet tightly held collection of businesses that includes golf courses, hotels, real estate and licensing deals. Although Trump’s business dealings have been mired in controversy and scandal before — including infamous bankruptcies in Atlantic City, fraud lawsuits over the Trump University training program, and election-year hush-money payments to women who said they had slept with Trump — the indictment represents a new level of legal peril for the company.
Experts said “collateral consequences” from the indictment could ultimately cripple the Trump Organization if it’s not able to obtain financing from banks, which can face internal and regulatory roadblocks when dealing with companies facing criminal charges.
Will Thomas, a law and business professor at the University of Michigan, said the company may ultimately survive because it’s not facing racketeering-style charges that suggest it engaged in a larger criminal enterprise. In addition, potential partners have long known the company’s reputation.
“The sorts of people willing to do business with the Trump Organization are not going to be meaningfully impacted by this,” Thomas said.
An indictment of his namesake company could imperil the future of former President Trump’s businesses while he’s already under financial strain.
Weisselberg could face significant prison time, maybe two to five years, if convicted of the grand larceny charge, especially given the length and size of the alleged scheme.
Daniel Horwitz, a former Manhattan prosecutor, said the charge was “a bit of a game changer,” providing “the kind of incentive a prosecutor can use effectively with someone to flip him into being a cooperator.”
The Trump Organization issued a statement Thursday calling Weisselberg a “loving and devoted husband, father and grandfather” who was “being used by the Manhattan district attorney as a pawn in a scorched earth attempt to harm the former president.”
Weisselberg appears unwilling to help the prosecution after spending nearly five decades working for the Trump family. He was hired by Trump’s father, Fred, to work in the company’s Brooklyn office in 1973. When Trump became president, he left his company in the hands of his eldest sons, Donald Jr. and Eric, and Weisselberg, a sign of the trust the family has placed in the chief financial officer.
Weisselberg’s life is deeply intertwined with the Trumps. One of his sons, Jack, works for Ladder Capital, an important lender to the Trump Organization. The other, Barry, worked for the organization itself, managing an ice skating rink in Central Park.
Barry apparently received lucrative perks of his own. The indictment says one of Weisselberg’s family members employed by the Trump Organization — a description that matches Barry — lived for nearly a decade in a company-owned apartment near Central Park and paid only $1,000 per month in rent.
Even though Weisselberg may never cooperate with the district attorney’s office, a schism within his family helped push the investigation along. Jennifer Weisselberg, the ex-wife of one of Weisselberg’s sons who is engaged in a child custody battle with him, provided prosecutors with financial records and granted them several interviews.
“We’ve provided a mountain of evidence to them,” said Duncan Levin, a lawyer for Jennifer.
Virginia race, coming a year after Biden won on a wave of anti-Trump sentiment, will test the parties’ strength ahead of the 2022 midterm election.
The indictment’s effect on Trump’s political stature is uncertain. It will probably provide more ammunition to the minority of Republican leaders who have grown weary of Trump’s influence on the party. And the charges could become a costly and embarrassing distraction at a time when Trump is laboring to maintain his political relevance since being replaced in the White House and being banned from Twitter, Facebook and other powerful social media platforms that were key to his political rise and dominance of the public stage.
“Trump losing even marginal amounts of support will be devastating to those relying on his coattails to win,” said Mike Madrid, a California Republican strategist and co-founder of the anti-Trump Lincoln Project. “Like so much with Trump, it doesn’t end well for those who support him.’
But Trump’s supporters have stuck with him through all manner of scandals that would have crippled another politician, including being caught on video saying crude and demeaning things about women and multiple allegations of sexual assault.
As president, he maintained loyalty from Republicans while battling investigations into Russian support for his candidacy and into hush-money payments, as well as during two separate impeachments over his push for Ukraine to investigate Joe Biden and his incitement of the Jan. 6 attack on the Capitol. He was acquitted in both instances in the Senate.
Now the criminal charges are unlikely to shake the faith of his die-hard supporters. He’s already flirted with the possibility of running for president again, holding a rally in Ohio last week to support a primary challenge to a House Republican who voted to impeach him. And he traveled to the U.S.-Mexico border in Texas on Wednesday to criticize Democrats’ immigration policy, meeting with about two dozen members of Congress and revisiting his false claims that the last election was stolen from him.
After years of controversy, views on Trump from different sides of the political spectrum might as well be etched in stone.
“For Trump’s opponents, this indictment simply validates everything they already believed,” said Neil Newhouse, a Republican pollster. “But for Trump’s supporters, this indictment doesn’t even scratch the surface of his image in their eyes. On the contrary, it fires them up as they point to the poison of partisan Democrat politics at play.”
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