Trump Organization Is Charged With Running
15-Year Employee Tax Scheme
The company was accused of helping its executives evade
taxes on compensation by hiding luxury perks and bonuses.
By Ben
Protess, William K. Rashbaum and Jonah E. Bromwich
July 1,
2021
The Trump
Organization, the real estate business that catapulted Donald J. Trump to
tabloid fame, television riches and ultimately the White House, was charged
Thursday with running a 15-year scheme to help its executives evade taxes by
compensating them with fringe benefits that were hidden from the authorities.
The
Manhattan district attorney’s office, which has been conducting the
investigation alongside the New York attorney general, also accused a top
executive, Allen H. Weisselberg, of avoiding taxes on $1.7 million in perks
that should have been reported as income. Mr. Weisselberg, Mr. Trump’s
long-serving and trusted chief financial officer, faced grand larceny, tax
fraud and other charges.
“To put it
bluntly, this was a sweeping and audacious illegal payments scheme,” Carey Dunne,
general counsel for the Manhattan district attorney, Cyrus R. Vance, Jr., said
during an arraignment in State Supreme Court in Manhattan.
Mr. Dunne
and the indictment described a deliberate effort by senior executives to
underreport their income, in concert with the Trump Organization, by accepting
secret perks that did not show up on tax documents. In the case of Mr.
Weisselberg, the indictment said, the company kept his benefits off its books
but recorded them in an internal spreadsheet.
The charges
against the Trump Organization and Mr. Weisselberg — whom Mr. Trump once
praised for doing “whatever was necessary to protect the bottom line” — ushered
in a new phase of the district attorney’s inquiry into the business practices
of Mr. Trump and his company. And while the indictment was narrowly focused on
the tax scheme, the charges could lay the groundwork for the next steps in the
wider investigation, which will focus on Mr. Trump.
The
indictment took square aim at Mr. Weisselberg after months of increasing
pressure on him to offer information that could help that broader inquiry.
Prosecutors had subpoenaed Mr. Weisselberg’s personal tax returns and bank
records, reviewed a raft of his financial dealings and questioned his
ex-daughter-in-law — all part of an effort to gain his cooperation. That effort
is expected to continue, and now Mr. Weisselberg is under even greater
pressure: He could face more than a decade in prison if he is convicted.
Mr. Trump
was not charged, and no other executives were accused by name of wrongdoing.
In a brief
interview with The New York Times after the indictment was unsealed, Mr. Trump
called the accusations a “continuation of the witch hunt that started when I
came down the escalator,” referring to the 2015 event at Trump Tower when he
announced his presidential campaign. Asked if he was worried about the pressure
being put on Mr. Weisselberg, he said only that his longtime lieutenant was an
“honorable man.”
Mr.
Weisselberg pleaded not guilty. “He will fight these charges in court,” his
lawyers, Mary E. Mulligan and Bryan C. Skarlatos, said in a statement.
Lawyers for
the Trump Organization called the case inappropriate and unjustified, saying it
should be resolved by civil tax authorities. “In our view, this case was
brought because the companies’ name is Trump,” the lawyers, Alan S. Futerfas,
Bettina Schein and Susan R. Necheles, said in a statement. “This case signals
that it is now open season for local prosecutors to target federal political
opponents and adversaries.”
The
15-count indictment — which charged the Trump Organization with committing a
scheme to defraud, criminal tax fraud and falsifying business records — also
accused the company of avoiding its own obligations by not paying payroll taxes
on the benefits.
It charged
Mr. Weisselberg with failing to pay taxes on leased Mercedes-Benzes, bonuses
and a rent-free apartment paid for by the company. After Mr. Trump personally
paid private school tuition for Mr. Weisselberg’s grandchildren, Mr.
Weisselberg directed that the notations “per Allen Weisselberg” be removed from
the ledger recording the checks. And the indictment charged Mr. Weisselberg
with grand larceny for obtaining tax refunds to which it said he was not
entitled.
Although
Mr. Trump was not accused of a crime, an indictment of the company that carries
his name strikes a blow to the former president just as he has resumed holding
rallies. Even if Mr. Trump parlays the charges into some immediate good will
from his supporters, he could face the costly distraction of a trial if he attempts
to mount another presidential campaign.
The charges
could also jeopardize his company’s relationship with business partners who had
stood by the Trump Organization even after the Jan. 6 Capitol riot, which
prompted a backlash against the former president.
Mr. Trump
won the presidency by portraying himself as a political outsider with the
business acumen to shake up Washington. But the company whose name he made
famous on his reality television show, “The Apprentice,” might eventually be
associated as much with criminal charges as it is with the hotels and golf
courses that bear his name. If the company is found guilty, it could face fines
or other penalties.
In the next
phase of the broader investigation into Mr. Trump and his company, the
prosecutors are expected to continue scrutinizing whether the Trump
Organization manipulated property values to obtain loans and tax benefits,
among other potential financial crimes, according to people familiar with the
matter.
Letitia
James, the New York attorney general, said in a statement that the
investigation will continue.
An
accountant who began his career working for Mr. Trump’s father nearly a
half-century ago, Mr. Weisselberg has served as the Trump Organization’s
financial gatekeeper for more than two decades and recently ran the business
with Mr. Trump’s adult sons while Mr. Trump was in the White House.
Famously
hard-working — he once said he took “no vacations” — Mr. Weisselberg gained an
unparalleled view into the inner workings of the company and its bare-knuckled
brawls with business partners. Mr. Weisselberg “knows of every dime that leaves
the building,” Corey Lewandowski, a former Trump campaign official, wrote in
the book he co-authored, “Let Trump Be Trump.”
Mr.
Weisselberg, who is 73 years old, still could cooperate with the prosecutors.
If he ultimately pleads guilty and strikes a deal, he could do considerable
damage to Mr. Trump, who for decades has depended on his unflinching loyalty,
once declaring with “100 percent” certainty that Mr. Weisselberg had not
betrayed him.
The two
started working together closely in the late 1970s, with Mr. Weisselberg
putting in time on nights and weekends to handle projects for Mr. Trump, the
ambitious son of his boss, Fred Trump. Mr. Weisselberg said in a 2015
deposition that he had been helping with Mr. Trump’s tax returns since at least
the 1990s, when Mr. Trump made him the organization’s chief financial officer.
Mr.
Weisselberg has remained steadfastly loyal to the company even as his own name
surfaced during congressional and federal investigations into Mr. Trump. While
Mr. Weisselberg was never a target of those investigations, he has been a
central focus of the district attorney’s inquiry, which began in August 2018.
The
indictment laid bare a number of incidents in which prosecutors say Mr.
Weisselberg abused his position at the company to benefit himself and his
family, including getting the company to pay for personal expenses such as new
beds, flat-screen televisions and furniture for his Florida home.
The company
also helped Mr. Weisselberg falsely claim he lived outside New York City,
easing his tax burden, the indictment said.
At the
year-end holidays, Mr. Weisselberg used cash from the company to hand out tips
to people in his personal life, the indictment said. The plan worked like this:
Mr. Weisselberg led the company to issue checks to another employee, who then
cashed them and gave him the money for “his personal use.” The company recorded
the cash on its ledgers as “holiday entertainment,” but on internal spreadsheets,
the money was reflected as compensation, the indictment said.
The Trump
Organization said in a statement Thursday that criminal cases centered on
fringe benefits are extremely rare. Indeed, lawyers with expertise in tax
crimes told The Times they could think of no recent example of a similar case.
“The district attorney is bringing a criminal prosecution involving employee
benefits that neither the I.R.S. nor any other district attorney would ever
think of bringing,” the statement said. “This is not justice; this is
politics.”
Still, Mr.
Dunne, the general counsel, said the acts alleged in the indictment were not
“standard practice in the business community” or the work of a rogue employee.
The
indictment said an unindicted co-conspirator — a participant in the conspiracy
who was not charged or mentioned by name — also engaged in the tax avoidance
scheme.
Even if Mr.
Weisselberg declines to cooperate, the charges represent a major milestone for
Mr. Vance, a Democrat who twice beat Mr. Trump at the U.S. Supreme Court in a
battle to obtain the former president’s tax records. That victory reinvigorated
the investigation, touching off months of grand jury subpoenas and witness
testimony.
As
president, Mr. Trump had refused to release his tax returns, breaking with
decades of tradition. Questions about the legality of tax avoidance schemes by
Mr. Trump and his company surfaced in reporting by The Times in 2018 that
showed how Mr. Trump helped in a family effort to siphon millions of dollars
from his aging father’s real estate business to avoid gift and inheritance
taxes.
And last
year, the Times obtained and published years of tax return data for Mr. Trump
and his companies, revealing how he used hundreds of millions of dollars in
losses and deductions to pay no federal income taxes at all for years.
Of all the
investigations that have loomed over Mr. Trump and his inner circle in the past
few years — two impeachments, one special counsel inquiry into ties with Russia
and criminal charges against a half dozen former aides — only Mr. Vance’s case
has reached into the top rungs of the Trump Organization and taken aim at the
company itself.
Still, the
stakes remain high for Mr. Vance. Although he is not seeking re-election after
three terms, the district attorney has faced criticism in the past for treading
lightly with other powerful defendants. The Trump investigation will arguably
be the most enduring part of his legacy.
When Mr.
Vance’s office opened its broader investigation, it began with an examination
of hush-money payments made during the 2016 presidential campaign to two women
who said they had affairs with Mr. Trump. In particular, the prosecutors
scrutinized how the company accounted for $420,000 it gave Michael D. Cohen,
Mr. Trump’s former personal lawyer, partly as reimbursement for money he paid
to buy the silence of one of the women, Stormy Daniels, a pornographic film
actress who said she had an affair with Mr. Trump.
Mr. Cohen
is cooperating with Mr. Vance’s investigation, which grew out of 2018 federal
charges against him.
In
congressional testimony two years ago, Mr. Cohen pinned blame on Mr. Weisselberg,
saying that he had helped devise a strategy to mask the Trump Organization’s
reimbursements to Mr. Cohen.
For years,
Mr. Weisselberg kept a low profile at the Trump Organization, often eclipsed by
his bombastic boss. One of Mr. Weisselberg’s rare moments in the spotlight came
during a cameo as a judge on “The Apprentice,” in which he discussed dog
grooming.
Mr.
Weisselberg’s family has also long been entwined with Mr. Trump. One of Mr.
Weisselberg’s sons, Barry, has been the manager of Trump Wollman Rink in
Central Park, and another son, Jack, works at Ladder Capital, one of Mr.
Trump’s biggest lenders.
Neither of
Mr. Weisselberg’s sons was accused of wrongdoing in the indictment.
Prosecutors
have also questioned Mr. Weisselberg’s former daughter-in-law, Jennifer
Weisselberg, who is in the midst of a court battle with her ex-husband, Barry,
over custody of their children.
Kate
Christobek and Sean Piccoli contributed reporting.
Ben Protess
is an investigative reporter covering the federal government, law enforcement
and various criminal investigations into former President Trump and his allies.
@benprotess
William K.
Rashbaum is a senior writer on the Metro desk, where he covers political and
municipal corruption, courts, terrorism and broader law enforcement topics. He
was a part of the team awarded the 2009 Pulitzer Prize for breaking news.
@WRashbaum • Facebook
Jonah E.
Bromwich is a courts reporter for the Metro desk. @jonesieman
Sem comentários:
Enviar um comentário