Former CFO expected to testify about off-the-books compensation scheme to avoid paying payroll taxes
The Trump organization is set to face criminal tax fraud charges on Monday in New York in a trial that could begin to tease out multiple charges 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 rising costs - with some estimates approaching $4 million per month for his PAC leadership - over his efforts to overturn the 2020 election loss, removal of government documents from the White House when he left office and a defamation case. well as relating to allegations of rape. Monday's case centered on allegations that his Manhattan-based real estate company defrauded New York tax authorities by providing company executives with 15 years of "off-the-books" compensation, including rent payments for cars, apartment rentals and tuition fees for relatives in lieu of salary. allows companies to avoid paying payroll taxes.
If found guilty, the company, which is run by Donald Trump Jr and Eric Trump, could face a $1.6 million fine and find its ability to operate hotels, golf courses and other assets hampered.
But the trial will likely be most interesting for its subplot and how it intersects with a separate civil investigation by New York state attorney general Letitia James that produced a 200-page indictment last month accusing the Trump Organization, Trump and their three adult children. overstating Trump's property value and net worth in order to secure favorable bank loans and insurance coverage.
The Manhattan investigation into Trump's company has followed its own difficult path to jury trial. It started under district attorney Cyrus Vance Jr and is now in the hands of his successor, Alvin Bragg. Two prosecutors leading the investigation resigned in February, with one saying felony charges should be brought against the former president.
Lawyers for the Trump Organization have claimed that the case is a "selective prosecution" motivated by opposition to Trump's political views - a claim denied by the judge overseeing the case, Juan Mercan. They also said that prosecutors were seeking to punish Trump's company for "some of its officials allegedly failed to report additional benefits on their personal tax returns".
The stakes for both parties – the prosecutor and the accused – are high
But the stakes for both parties – prosecutors and defendants – are high. Unlike Trump's failed attempt to challenge the 2020 election results, the Trump Organization has brought in a team of A lawyers to challenge claims by a number of suitable prosecutors to meet the 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 indicted in a 2021 DA indictment but has since filed 15 charges ranging from grand theft to tax fraud to falsification of business records in exchange for his testimony. Weisselberg has been called to testify but he is not a cooperating witness. However, his five-month sentence approved by prosecutors is conditional on honest testimony. Most importantly, the Manhattan DA ensured that Weisselberg's sentence would be suspended until the case was closed.
To prove the company guilty, the government has the right to hold responsibility not only for Weisselberg but also for other executives at the company, potentially including Donald Trump himself, whom they may try to demonstrate knowledge of the alleged tax scheme.
"Strategically, this is a very difficult case for Weisselberg and Trump because they can end the battle and lose the war," said Andrew Weissmann, a former federal prosecutor who now teaches law at New York University.
"If they do a typical Weisselberg defensive cross-check and they catch him in some kind of lie then the deal is over and the pressure on him to turn [Trump] around is going to be a lot bigger."
In such a situation, the Trump Organization's lawyers could not simply try to undermine Weisselberg's credibility, Weissmann pointed out, without potentially rewarding investigators with evidence that their larger mine, Trump himself, was aware of arrangements to reward executives with inadequate compensation. taxed.
"Ideas that Trump doesn't know about will be important things to ask Weisselberg. If he denies that Donald Trump knows, you can see the judge saying, 'I don't believe it and I'll consider it when I convict you.'”
Under such circumstances, Mercan could have kicked Weisselberg's sentence of up to 15 years in prison instead of five months on Rikers Island – a harsh sentence for a 75-year-old.
Subsequently, Letitia James's civil suit alleges that Weisselberg committed fraud by making false statements to the North American insurance company Zurich. In theory, Weisselberg could still be sued by Bragg if his testimony was found to be untrue.
"Obviously, they still want Weisselberg to work together," Weissmann said.
But as the trial progresses next week, there's a sense that Bragg's case could be easier to prove than James' complaint, which centers on building appraisals but requires a lower burden of proof.
"Bragg's allegations are much more concrete because they allege making payments that are clearly part of the person's salary, recording them, but only reporting what is listed as salary," Weissmann said.
“The problem for defense is they say this is a gray area and not a crime, they have to say Weisselberg is lying. If the judge agrees, Weisselberg is in a difficult position."