Trump Organisation, CFO indicted on tax fraud charges

By Asianet Newsable English | First Published Jul 2, 2021, 11:47 AM IST

This is the first criminal case to come out of a two-year investigation conducted by New York authorities into the business dealings of the Trump Organisation.

Ex-US President Donald Trump's company and its financial chief were charged with a tax fraud scheme wherein the executive collected more than $1.7 million in off-the-books compensations, including apartment rent, car payments and school tuition.

Prosecutors called the scheme sweeping and audacious.

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Trump was not charged, but prosecutors noted that he signed some of the cheques central to the case.

A top prosecutor said that the 15-year scheme was allegedly orchestrated by the most senior executives at the Trump Organisation.

The Trump Organisation is the company through which Trump manages many of his ventures, including investments in office towers, hotels and golf courses along with marketing deals and television projects. His sons Donald Jr and Eric have been in charge since he occupied office. The criminal case could also make it more difficult for the company to secure bank loans in the future or strike deals, with the company already dealing with losses due to the pandemic and the backlash over the attack on the Capitol.

This is the first criminal case to come out of a two-year investigation conducted by New York authorities into the business dealings of the organisation.

From 2005 till this year, Allen Weisselberg, the CFO, cheated tax authorities by conspiring to pay senior executives off the books using lucrative fringe benefits and other means, said the indictment. He, alone, was accused of defrauding the federal government, state and city out of more than $900,000 in paid taxes and undeserved tax refunds.

The biggest charge against Weisselberg is grand larceny and carries a 5-15 year jail term. The tax fraud charges are punishable by a fine of double the amount of taxes not paid or $250,000, whichever is the larger amount.

Weisselberg has intimate knowledge of the company's financial dealings from at least five decades, and the charges against him could allow prosecutors to pressure him to give out more information. Weisselberg and lawyers representing the Trump Organisation pled not guilty, and the former was ordered to surrender his passport and released without bail.

Trump condemned the case as a political witch-hunt by the radical Left Democrats while Weisselberg's lawyers said that he would fight these charges. The case is led by Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James, who are both Democrats.

Vance has been investigating multiple issues with Trump and his organisation, like hush-money payments made to women on Trump's behalf.

He is also probing whether the company falsified the value of its properties in order to obtain loans or reduce tax bills.

This comes at a time where Trump has been serious in discussing his possible run for president in 2024 and has upped his public appearances, including his first rally since leaving office.

Weisselberg came under suspicion partly due to his son's use of a Trump apartment at little to no cost. His son Barry who was manning a Trump-operated ice rink in Central Park paid no reported rent despite living in a Trump-owned apartment in 2018.

He was charged only $1000 a month, which was far below typical city prices while living in the apartment from 2005-2012. Prosecutors reported that Weisselberg himself claimed to be still living in his Long Island home, which he had lived in for years, whilst residing in a company-paid Manhattan apartment. In the process, he concealed that he was a New York City resident and avoided paid thousands in federal, state and city income tax whilst collective about $133,000 in refunds to which he was not entitled.

According to the indictment, he paid rent on his Manhattan apartment with company checks and directed the company to pay for utility ad parking bills as well. The company also paid private school tuition for his grandchildren with cheques that had Trump's signatures on them, along with Mercedes cars driven by him and his wife and cash for tips around Christmas.

Prosecutors said that such perks were listed on the internal Trump company document as being part of Weisselberg's compensation but were not mentioned on his W-2 forms, and the company didn't withhold tax on their values.

At Weisselberg's request, the company issued cheques to pay for personal expenses and upgrades to his homes. It also issued cheques for refurbishing an apartment used by one of his sons, such as new beds, flat-screen TVs, carpeting and furniture. His son, Barry Weisselberg's ex-wife, has been cooperating with investigators and given them reams of tax records and other documents.

Two other unnamed executives were also receiving substantial under the table compensation. Weisselberg is extremely loyal to Trump and the organisation. So the chances of him cooperating with law enforcement are narrow.

Trump has said that his company's actions were standard practice and in no way a crime. The organisation accused the district attorney's office of using the CFO as a pawn in a bid to harm the former president.

It said that the DA's office and the IRS have never before brought criminal charges against a company over employee benefits. Vance fought long for Trump's tax records and has been subpoenaing documents and interviewing company executives along with other Trump insiders.

Michael Cohen, a former Trump lawyer who has been cooperating with Vance's investigation, wrote in his book 'Disloyal' that Trump and Weisselberg were 'masters at allocating expenses that related to non-business matters and finding a way to categorise them, so they were not taxed'.

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