New York prosecutors on Thursday revealed the first counts in their grand jury investigation into the Trump organization, blaming the former president’s company and his chief financial officer (CFO). Allen WeisselbergAllen Howard WeisselbergFive Things You Should Know About Charges Against Trump Organization Trump Sends Charges Against Organization At Florida Rally Weisselberg Indictment Puts Potential Dangers To Trump MORE, with tax offenses.
Prosecutors claim a 15-year plan in which the Trump organization compensated Weißelberg in a way that allowed the company and management to evade taxes. The defendants deny any wrongdoing and argue that the charges are politically motivated.
The allegations stem from a year-long investigation by the Manhattan prosecutor, with prosecutors earlier President TrumpDonald TrumpJD Vance says he regrets past criticism of Trump Five Big Questions on January 6th Special Committee First Republican Announces Candidate for Massachusetts Governor MORE‘s tax returns. Thursday’s indictment does not accuse the former president of any crimes, but prosecutors say their investigations are ongoing.
Here are five things you should know about the prosecution.
Prosecutors say Weisselberg avoided taxes on about $ 1.7 million in income
According to the indictment, Weisselberg received indirect compensation of around $ 1.76 million from the Trump organization over several years. The company avoided reporting the income to the tax office and withholding taxes from it, and Weisselberg hid the income from his tax advisor and did not show it in his tax return, the public prosecutor claims.
“As a result, during the life of the program, Weisselberg evaded approximately $ 556,385 in federal taxes, approximately $ 106,568 in state taxes, and approximately $ 238,159 in taxes in New York City, and he falsely evaded approximately $ 94,902 in federal tax refunds and claimed approximately $ 38,222 in state taxes and received refunds he was not entitled to, ”the indictment reads.
Much of the untaxed compensation, more than $ 1.1 million from 2005 to 2017, came from the Trump Organization, which paid the rent and related expenses for an apartment in Manhattan that Weisselberg lived in. While the apartment was Weisselberg’s primary residence as of 2005, the CFO falsely alleged to the tax authorities that he had not been a New York City resident for a number of years and only started paying the city’s income tax after selling a house on Long Island in 2013 pay, according to court records.
The untaxed compensation took other forms, including payments for lease payments for Mercedes-Benz automobiles for Weisselberg and his wife and private schooling for his family members, the prosecution said.
Indictment alleges that the Trump organization kept fake records
Prosecutors also claim that the Trump Organization monitored the amount of indirect compensation it granted to Weisselberg but did not report the proceeds to tax authorities.
Weißelberg was authorized to receive annual compensation in a fixed amount. The Trump Organization kept track of how much it was spending on indirect compensation in the form of rent, vehicle and tuition fees, and “treated many of them as part of its approved annual compensation to ensure that he did not exceed his pre-approved, set amounts received ”. Gross compensation ”, it says in the indictment.
However, indirect compensation was not included in forms showing Weißelberg’s gross income, so the executive’s income was not adequately reported to federal, state and local tax authorities, the document added.
Tax experts say the alleged crimes are substantial
Tax law experts told The Hill that the indictment alleged significant tax offenses.
Daniel Hemel, a law professor at the University of Chicago, said prosecutors rarely bring charges against companies that commit minor violations of employee fringe tax rules. However, he said it was not uncommon for prosecutors to indict a company or its officers on substantial amounts of non-literal salaries.
“If you pay your CFO a million dollars under the table, it becomes an indictment,” said Hemel.
Tax experts also said the alleged crimes listed by prosecutors were particularly blatant and that those accused of committing the crimes were likely to be familiar with tax rules.
Allegedly, “an elaborate structure to find a variety of income-generating opportunities for Weisselberg that circumvent the tax rules,” said Scott Michel, an attorney at Caplin and Drysdale who has been on the defense side of criminal tax law for 40 years.
The Trump organization screams badly
The Trump Organization and Weißelberg have pleaded not guilty to charges against them.
The company argues that the charges are only being brought because of the Democratic prosecutors’ desire to prosecute Trump. Company officials also argue that it is unusual to bring cases that focus on employee benefits and that the focus of the indictment indicates that prosecutors have not found evidence of more serious crimes.
“After years of investigating and collecting millions of documents and providing the resources of dozens of prosecutors and outside consultants, is that all they have?” Ron Fischetti, a lawyer representing the Trump organization, said in a statement after the charges emerged.
A spokesman for the Trump Organization said in a statement hours before the indictment was unsealed, Weisselberg was “being used by the Manhattan prosecutors as a pawn in a scorched earth attempt to harm the former president.”
“The district attorney is filing a criminal prosecution with employee benefits that neither the IRS nor any other district attorney would ever think of,” a company spokesman said.
The former president also interfered, calling the charges against his company and CFO the continuation of a “political witch hunt”.
Further fees could come
The Manhattan Attorney General and the New York Attorney General have been investigating the Trump Organization for several years, and the work of the prosecutors does not end with the charges announced last week.
“This investigation is ongoing and we will obey the facts and the law wherever they lead,” New York attorney general Letitia James (D) said in a statement Thursday.
Many observers suspect that the charges against Weißelberg, who has worked for the Trump family for decades, were brought in to persuade him to cooperate with the prosecution’s investigations against Trump.
A big question going forward is whether Thursday’s indictments are strong enough “to move Weiselberg to negotiate,” said Philip Hackney, a law professor at the University of Pittsburgh.