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Monday, June 24, 2024 | Back issues
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New York lays out Trump Organization tax-cheating case

The trial of Donald Trump’s corporate entities has been three years in the making, but Trump still says it's wrong to have it in an election year.

MANHATTAN (CN) — Kicking off long-awaited opening arguments this morning, defense lawyers asked jurors Monday why a real estate empire should be held liable for the admitted crimes of the Trump Organization's loyal money man.

“Allen Weisselberg has admitted to cheating on his taxes,” exclaimed Michael Van Der Veen, a Philadelphia-based lawyer for Trump Payroll.

“His taxes,” Van Der Veen reiterated, punctuating his words with a rapid pounding on the lectern.

“The meat of our defense is that Allen Weisselberg did not act at all with the intention to benefit the Payroll Corporation. Weisselberg intended to benefit Weisselberg.”

Two corporate entities under the Trump Organization umbrella — Trump Corporation and Trump Payroll — are charged with tax fraud in the criminal case brought by the Manhattan District Attorney’s Office in July 2021. While former President Donald Trump is not named as a party, one of his most trusted and loyal executives since the 1970s already pleaded guilty to collecting more than $1.7 million in off-the-books compensation between 2005 and 2021.  

Allen Weisselberg made a million dollars per year at his peak with the company that he had been with since the 1970s. The Trump Corporation continues to employ Weisselberg, Van Der Veen explained, but he is no longer chief financial officer and is currently on a leave of absence.

The 75-year-old entered his guilty pleas just two months before the case was set to go to trial, admitting to his receipt of untaxed perks like years of rent on a Trump-branded apartment on Manhattan's Upper West Side, car payments, school tuition and nearly $30,000 in cash. In exchange for a lenient sentence — he agreed to serve five months in state prison plus probation — Weisselberg is required to testify under oath against the company. Trump himself is not slated to testify. 

Like the lawyer for Trump Payroll, Trump Corporation attorney Susan Necheles focused her opening statement on the company not being liable for the crimes to which the ex-CFO has pleaded guilty.

“When Allen Weisselberg caused the Trump Corporation to underreport his income, he did this with the intent to benefit himself,” Necheles said. “He was only concerned about himself, about paying less taxes, about having more money.”

Assistant District Attorney Susan Hoffinger alleged meanwhile that Trump’s companies engaged in a payroll scheme to shower their “already highly paid top executives” with further wealth and benefits from illegal untaxed perks.

“Why,” posited Hoffinger, who previously worked for decades as a private, white-collar defense attorney. “The answer is — and evidence will show — doing it legally would have cost the Trump Organization more.”

Prosecutors aim to show jurors portions of Donald Trump’s general ledgers, kept by the companies’ accounting staff.

“This case is about greed and cheating, cheating on taxes,” Hoffinger said. “It was a clever scheme; it just wasn’t legal.”

Presiding Judge Juan Manuel Merchan expects the organization’s criminal tax fraud trial, dense with financial spreadsheets and expert testimony, to last up to six weeks into December 2022. 

If that schedule holds, the Trump Organization will be on trial during the upcoming November midterm elections where Trump’s Republican Party could win control of one or both houses of Congress.  

At the same time, Trump has been laying the groundwork for a potential comeback campaign for president in 2024.   

As jury selection was underway last week, Trump railed against the timing of a trio of legal woes on his Truth Social online platform. “In breaking with a long standing and powerful tradition where cases involving politicos are not to be brought or tried just prior to, or during, a major Election (the Midterms), I have THREE, all run and inspired by Democrats, who absolutely refused to move the date,” the former president wrote. “They demanded it be now. So much for tradition and unwritten rules and laws!!!” 

Having repeatedly tried to block and stall the various investigations he faces in New York, Trump has himself played a sizable role in the timing. The 76-year-old was still in the White House when New York Attorney General Letitia James began her civil investigation of Trump’s business practices. There are several areas where the investigation by James overlaps with the criminal one started by Cy Vance, the Manhattan DA who left office in December. Both notably examine whether Trump or his businesses manipulated the value of assets — inflating them in some cases and minimizing them in others — to gain favorable loan terms and tax benefits. 

To date, the Manhattan District Attorney’s Office prevailed over at every challenge from Trump. In July 2020, the U.S. Supreme Court joined the Second Circuit in upholding a scathing ruling against Trump from the trial judge. The Second Circuit handed Trump another defeat leading up to the 2020 election that he would ultimately lose. There was yet another Supreme Court defeat, after which Vance’s office gained access to Trump's tax records.  

The Trump Organization, which operates Trump’s international hotels, golf courses and real estate businesses, has said it did nothing wrong and that it looks forward “to having our day in court.”   

In August, New York Attorney General Letitia James announced a sprawling $250 million civil case that named Trump and his three eldest children, Donald Jr., Ivanka and Eric Trump, along with Trump Corporation controller Jeff McConney as defendants on counts of “persistent and repeated fraud,” insurance fraud, falsifying business records and related conspiracy counts.   

McConney, a current senior vice president at the Trump Organization, was the first witness called by Manhattan prosecutors Monday afternoon.

A grand jury witness in the case, McConney has reportedly been given immunity from prosecution under New York state law.

He testified that the Trump Corporation is paying for his lawyer, Patricia Pileggi, who is representing other potential witnesses who also work for the company.

Weisselberg waived his right to fight his conviction before a state appellate court as part of his plea deal. He must also repay nearly $2 million in taxes due to the state of New York. Weisselberg remains free on bail meanwhile, with sentencing set for after the trial.

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Categories / Business, Criminal, Trials

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