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Wednesday, May 15, 2024 | Back issues
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Prosecution lays out benefits to Trump Organization from execs’ tax fraud

With closing arguments out of the way, a New York City jury will begin deliberating next week on whether the Trump Organization is criminally liable for years of tax evasion by several of the company’s top financial executives.

MANHATTAN (CN) — Donald Trump was “explicitly sanctioning tax fraud” when he authorized salary reductions for top executives, the Manhattan district attorney’s office argued on Friday, making its final argument in a trial on the use of untaxed fringe benefits as employee compensation at the former president's company.

While former President Trump himself is not on trial, New York prosecutors argue that his namesake company is liable for the tax evasion scheme because the two of the company top executives — longtime finance chief Allen Weisselberg and controller Jeffrey McConney — were “high managerial” agents entrusted to act on behalf of the company and its various entities.

In his summation Friday, Assistant District Attorney Joshua Steinglass told jurors to “put aside the elephant that’s not in the room.” But he also unambiguously linked Trump to the executives’ bookkeeping scheme during his argument.

"Donald Trump is explicitly sanctioning tax fraud. That’s what this document shows," he told jurors on Friday, displaying a 2012 memo on Trump Corporation letterhead in which then-Trump Org CEO Donald Trump approved a salary reduction of $72,000 for the company’s chief operating officer, Matthew Calamari, to cover the rent on a Manhattan apartment paid for by the corporation. "This whole narrative that Donald Trump is blissfully ignorant is just not real,” the prosecutor said.

Attorneys for Trump Payroll and the Trump Corporation — the two Trump Org subsidiaries that are on trial in this case — maintain that Weisselberg went rogue and acted for his own benefit when he cheated on his personal taxes by not reporting off-the-books perks like rent on Upper West Side apartment, luxury cars and private school tuition for his grandchildren.

“Weisselberg did it for Weisselberg,” Trump Payroll attorney Michael Van Der Veen repeated throughout trial.

When Steinglass began the prosecution’s closing argument on Thursday afternoon, he told jurors that Weisselberg’s tax scheme was less of a betrayal of the Trump Org and more like a conspiracy with the company.

“Weisselberg’s interests and the corporate interests are entirely aligned,” Steinglass told jurors on Thursday. “Allen Weisselberg didn’t steal from the company, Allen Weisselberg stole with the company.”

Trump Organization “cultivated a culture of fraud and deception,” the prosecutor continued, in which the company deliberately concealed their wrongdoing from their accountants and then scapegoated those some finance professionals for not catching the misconduct.

“It wasn’t that they didn't know it was illegal. They didn’t care,” he said.

Steinglass said the practice of paying bonuses to Trump Organization executives through 1099 checks, meant for independent contractors, dates back to the era when Donald Trump’s father, Fred, was at the helm of the real estate empire.

"The smorgasbord of benefits designed to keep these executives happy" also saved the corporation money on its bottom line, Steinglass said.

Lawyers for the Trump Organization objected to prosecution's invocation of the former president, but Judge Juan Manuel Merchan overruled them. He said the company’s defense opened the door by asserting in their closing arguments that Trump was ignorant of the scheme.

Steinglass also conceded in his closing summation that prosecutors ultimately had to barter their opportunity to prosecute one of Weisselberg’s co-conspirators because investigators needed to pressure them to corroborate evidence.

“The real shame here is that we had to call Jeffrey McConney before the grand jury to authenticate the documents,” Steinglass said, referencing with slight disdain the grand jury immunity afforded to the Trump Org controller who helped Weisselberg fudge the payroll records.

“That guy lies like the wind blows,” he added. "He wants to protect Donald Trump at all costs."

Weisselberg testified at trial as the prosecution’s lead witness, pursuant to a plea agreement, after he pleaded guilty over the summer to collecting more than $1.7 million in off-the-books compensation between 2005 and 2021.

“There was some benefit to the company,” he testified, “but primarily it was, you know, my greed.”

Trump’s election led to a financial cleanup at the company, after which it stopped paying bonuses as if its employees were self-employed. 

By that time, at least Eric Trump and Donald Trump Jr., who formally took over operations, knew about the fraud. No executives were fired, said Weisselberg, whose attorneys are paid for by Trump Corp.

Prior to his guilty plea, Weisselberg’s lawyers had been coordinating a joint defense with the Trump Organization, which is still paying him $640,000 a year with the possibility of a $500,000 bonus at the end of the year.

The jury will begin deliberations on Monday, Dec. 5.

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Categories / Business, Employment, Financial, Trials

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