Trump Organization to face criminal tax fraud charges in New York court on Monday

Former CFO is expected to testify about off-the-books compensation scheme to evade paying payroll taxes

The Trump Organization is set to face criminal tax fraud charges on Monday in New York in a trial that could start to tease out the many allegations against the company and by extension its patriarch, Donald J Trump.

It comes as the former US president faces a maze of legal troubles and mounting costs – by some estimates running at close to $4m a month to his leadership Pac – over his attempts to overturn his 2020 election loss, the removal of government documents from the White House when he left office and a defamation case relating to a rape allegation.

Monday’s case is centered on charges that his Manhattan-headquartered real estate company defrauded New York tax authorities by awarding “off the books” compensation over 15 years to company executives, including lease payments for cars, apartment rent and tuition fees for relatives in lieu of some salary, enabling the company to evade paying payroll taxes.

If found guilty, the company, which is run by Donald Trump Jr and Eric Trump, could face $1.6m in fines and find its ability to operate hotels, golf courses and other assets impeded.

But the trial will likely be most interesting for its subplots and how it intersects with a separate, civil investigation by New York state attorney general Letitia James that harvested a 200-page indictment last month accusing the Trump Organization, Trump and three of his adult children of overstating property values and Trump’s net worth to get favorable bank loans and insurance coverage.

The Manhattan investigation into Trump’s company has followed its own rocky path to a jury trial. It began under district attorney Cyrus Vance Jr and is now in the hands of his successor, Alvin Bragg. Two prosecutors who led the investigation resigned in February, with one saying felony charges should be brought against the former president.

Lawyers for the Trump Organization have claimed the case is a “selective prosecution” motivated by opposition to Trump’s political views – a claim that the judge overseeing the case, Juan Merchan, has rejected. They also said that prosecutors are seeking to punish Trump’s company because “a handful of its officers allegedly failed to report fringe benefits on their personal tax returns”.

But the stakes for both parties – prosecutor and defendant – are high. Unlike Trump’s floundering efforts to challenge the 2020 election results, the Trump Organization has brought in an A-team of lawyers to counter claims by a matched array of prosecutors to meet a high burden of proof in criminal trials.

Eyes and ears will be on the testimony of the Trump Organization’s then chief financial officer Allen Weisselberg, 75, who was charged in the DA’s 2021 indictment but has since pleaded to 15 counts ranging from grand larceny to tax fraud to falsifying business records in exchange for his testimony.

Weisselberg has been subpoenaed to testify but he is not a cooperating witness. Still, his five-month sentence agreed to with prosecutors depends on truthful testimony. Crucially, the Manhattan DA ensured that Weisselberg’s sentencing would be deferred until after the case.

To prove the company is guilty, the government is entitled to impute liability from not only Weisselberg but also other executives at the firm, potentially including Donald Trump himself, who they may try to show were aware of the alleged tax scheme.

“It’s strategically a really difficult case both for Weisselberg and Trump because they could end winning the battle and losing the war,” says Andrew Weissmann, a former federal prosecutor who now teaches law at New York University.

“If they do a typical defense cross-examination of Weisselberg and they catch him in some sort of lie then his deal is over and the pressure on him to flip [on Trump] is going to be that much greater.”

Under the circumstances, the Trump Organization’s lawyers can’t simply try to eviscerate the credibility of Weisselberg, Weissmann points out, without potentially rewarding investigators with evidence that their larger quarry, Trump himself, knew of the arrangements to reward executives with untaxed compensation.

“The idea that Trump didn’t know is going to be the critical thing that Weisselberg is asked about. If he denies that Donald Trump knew, you can see the judge saying, ‘I don’t believe it and I’m going to take that into account when I sentence you.’”

Under those circumstances, Merchan could kick Weisselberg’s sentence up to 15 years in prison, not five months on Rikers Island – an onerous sentence for a 75-year-old.

Further, Letitia James’s civil complaint makes an allegation that Weisselberg committed fraud by make false representations to the Zurich North American insurance company. In theory, Weisselberg could be still charged by Bragg if his testimony is deemed untruthful.

“Clearly, they still want Weisselberg to cooperate,” Weissmann says.

But as the trial gets under way next week, there is a sense that Bragg’s case could be easier to prove than James’s complaint, which centers on building valuations but requires a lower burden of proof.

“Bragg’s allegations are much more concrete because they allege making payments that were clearly part of the person’s salary, keeping track of them, but only reporting what was listed as salary,” Weissmann says.

“The problem for the defense is that if they say this is a gray area and isn’t a crime, they have to say that Weisselberg is lying. If the judge agrees, Weisselberg is in a tough position.”


Edward Helmore

The GuardianTramp

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