Allen Weisselberg, the chief financial officer of the Trump Organization with close ties to former President Donald Trump, is at the center of an alleged tax-fraud scheme that spans more than a decade, according to an indictment unsealed last week in New York.
Prosecutors say that the Trump Organization paid Weisselberg with lavish perks such as New York City apartments, luxury cars, private school tuition and other personal expenses, in addition to his base salary, and did not report that compensation to tax authorities, evading more than $900,000 in federal, state and local taxes.
Attorneys for Weisselberg and the company pleaded not guilty in the case on Thursday, and said they plan to fight the charges.
The case against Weisselberg and the Trump Organization
From 2005 to 2017, the indictment says that Weisselberg and other company executives were compensated “off the books” in order to pay less in local, state and federal taxes. Weisselberg received more than $1.7 million in the alleged scheme.
The Trump Organization gave Weisselberg about $1.2 million for rent, utilities and related expenses for an apartment in Manhattan, where Weisselberg and his wife lived, the indictment alleges.
Authorities allege that Weisselberg also lied about not being a New York City resident, despite his permanent residence being in the city. He and the company did not report his compensation to local tax authorities and evaded about $200,000 in New York City income taxes from 2005 to 2013, according to the indictment.
The company paid for private school tuition for some of Weisselberg’s family members, the indictment alleges, and used personal checks signed by Trump. The Trump Organization also paid for two Mercedes Benz vehicles for Weisselberg and his wife, according to the indictment.
The Trump Organization allegedly underreported Weisselberg’s income on tax forms, excluding the payment he received through lodging, tuition payments and vehicles.
“The government is claiming [that] there were two sets of books,” Beverly Moran, a law professor at Vanderbilt University and an expert on tax law, told Yahoo News. “There was a set of books that showed these payments as compensation, and there was another set of books that didn’t reflect these payments, so that there was no information reported.”
Could Weisselberg go to prison?
Weisselberg and the company are charged with 15 counts of criminal tax fraud, grand larceny, falsifying business records and a slew of other related offenses that can result in prison time.
“With the amount that they’ve charged, it is serious enough for prison time,” Jennifer Rodgers, a former federal prosecutor, told Yahoo News. Rodgers, now a lecturer at Columbia Law School and a CNN contributor, said that the charges against Weisselberg would “realistically put him in the neighborhood of two to four years.”
“It's not heavy time,” she said, “but he’s  years old.”
Rodgers said it’s somewhat unusual for a case that involves “under the table” compensation to be charged criminally. After Weisselberg’s arraignment on Thursday, an attorney for the Trump Organization told reporters, per the New Yorker, that the case is a civil issue and should have never been brought in criminal court.
This kind of issue would typically result in a civil settlement with the Internal Revenue Service, Rodgers said. But she noted that the case, which stems from an investigation by Manhattan District Attorney Cyrus Vance Jr. into Trump’s business practices, isn’t a “one-off” situation, but rather a “pattern of behavior” that continued for over a decade and concerns a hefty sum of money.
“You don't often see cases like this, if they’re smaller,” she said. “But given the scope of the conduct, the amount [of money] and the fact that I think it’s going to get bigger with more people, I’m not surprised.”
Is Donald Trump in trouble too?
The case’s proximity to the former president raises the question of whether Trump will play a role in the proceedings. But Trump has not been charged in connection with the case, and because it’s a criminal matter, he can’t be forced to testify, Rodgers said.
But Trump’s business has been indicted, Rodgers said, so there may be “potential harms coming his way, in that sense.”
“If the company is convicted, of course the company can’t go to prison,” Rodger said. So the company would likely be punished by hefty fines, she said, which could hurt Trump financially.
Could other people be charged?
The indictment indicates that people close to Weisselberg and unnamed executives benefited from the alleged tax fraud scheme. Moran said it’s possible that prosecutors don’t yet have enough to indict other people, but are “hoping that the CFO will give them the information that they need” to possibly charge others.
“I actually expect that other people will be charged,” Rodgers told Yahoo News. “The indictment was clear that there were others involved in the scheme, both as beneficiaries and also as participants. So I do expect that additional defendants will be added to this [case].”
If the case deals with federal tax evasion, then why aren’t the feds involved?
Weisselberg and the company allegedly withheld about half a million dollars in taxes from the federal government, according to the indictment, but whether the federal government will get involved remains to be seen.
“Clearly, under the Trump administration that was never going to happen, for obvious reasons,” Rodgers said. “Now that Biden’s in charge and Merrick Garland is in charge, the question is: Is there an appetite at the DOJ to do that case?”
One legal expert, Cono Namorato, who worked in the tax division of the Justice Department under former President Barack Obama, told NBC News that this is a case he “would have authorized.” Weisselberg “was clearly a tax-conscious and tax-motivated individual,” Namorato said.
The timing of a federal case would likely rely on coordination between local and federal authorities, Rodgers said.
“If you’re the U.S. attorney in Manhattan and you want to bring this [case] and you get the OK from Department of Justice, you would want to sit down with Vance and his team and figure out the best way to charge it — you don’t want to mess up their case,” Rodgers said. “On the other hand, you can’t wait forever, because the statute [of limitations] is always ticking.”
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