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Mr. Trump became President Trump, and suddenly tax prep changed

Jurors in the trial of the Trump Corporation and its payroll arm heard from one official about how the company avoided taxes by the creative ways it compensated employees.

MANHATTAN (CN) — Jeff McConney chalked it up to a coincidence but testified Thursday at the trial of his employer about how tax preparation practices at the company changed after his boss became the U.S. president.

By the time Donald Trump entered the White House in 2017, McConney had been with the real estate mogul's namesake company for 30 years. McConney started in 1987 as assistant controller at Trump Corporation, went on to become controller, and ultimately assumed his current role of senior vice president.

Over the years, he said, he was instructed to file tax forms for the company that failed to declare that certain of its employees lived in New York City — a detail that would have required them to pay a city tax — despite being aware of these employees' city residences. 

After the election, McConney received new orders.

”Nobody told me specifically that this change was because Mr. Trump became President Trump,” McConney said. “I was instructed to make numerous changes, but they didn’t tell me why, what the trigger was.”

Both the Trump Corporation and Trump Payroll, another subsidiary of the Trump Organization, are charged in the trial with tax fraud. The former president is not himself named in the filing, but prosecutors seek to prove that the alleged fraud went all the way to the top. 

Per a provision of McConney's contract, any legal fees he incurs for this and other investigations into Trump business dealings will be paid by his employers.

Prosecutors showed the jury tax forms, internal ledger and emails, some from more than a decade ago, some of which appear to demonstrate Trump’s involvement in shifting pay practices. 

In a letter dated March 13, 2012, for instance, Trump asked McConney to reduce the salary of one executive by $72,000. McConney confirmed that it was Trump’s signature on the document. 

Jurors also got a glimpse at Trump’s personal general ledger, which prosecutors say was changed before it was provided in response to a grand jury subpoena. A 2013 copy of the documents included a payment to a school attended by the grandkids of Trump’s longtime financial chief, Allen Weisselberg, along with the note, “per Allen Weisselberg.” 

The version of the form printed out in March of 2021 doesn’t include that memo. 

 “Somebody went into the system in the general ledger program,” McConney testified. “You can change descriptions at any point in time.” 

McConney said it was unlikely he was the one to make the change. “It’s probably something I would remember,” he said. 

Weisselberg, 75, already pleaded guilty in connection the fraud scheme. He is expected to testify at this trial for the government. 

Trump's defense lawyers want the jury to believe that Weisselberg went rogue and acted for his own benefit. Their cross-examination of McConney focused on Weisselberg’s tendency to “micromanage” him even decades into his tenure. 

“Basically he told me that President Trump brought him in to run the company,” McConney said of Weisselberg, describing how the defendant was insistent on doing things his own way.

“He was fair, he was just tough to work for," McConney continued. "He was demanding. But he was still a good boss.” 

McConney testified about a conversation in which Weisselberg told him that he and Trump discussed that his salary would be lowered in the same amount the Trump Organization was paying Weisselberg in other benefits. 

“Yes, that’s what Allen told me,” McConney said. 

In addition, some executives, including Weisselberg, were paid as both salaried employees and contractors. Assistant District Attorney Joshua Steinglass pointed out that the two classifications allow for different retirement fund opportunities that wouldn’t be available to someone working in a single capacity. 

The Trump Corporation also did not have to pay Medicare tax on those payments, McConney testified. 

Steinglass signaled during direct examination that the corporation’s leaders knew something was amiss with that payment scheme. After 2011 it stopped paying general counsel Jason Greenblatt as a contractor. Steinglass asked McConney what might have precipitated that. 

“It had something to do with, he could lose his legal license,” McConney testified. “I’m not a lawyer, I’m not sure what it meant.” 

McConney began his testimony last week following opening statements, but his own Covid diagnosis delayed the trial by more than a week. His cross-examination will continue on Monday.

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