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Tax fraud was a boon to Trump Organization, former CFO testifies

The longtime accountant who already pleaded guilty to a felony conceded what prosecutors allege — that an employer would reap benefits from their workers receiving off-the-books compensation.

BROOKLYN (CN) — Testifying in the tax fraud trial against the Trump Organization, former CFO Allen Weisselberg said he knew his tax crimes would benefit the company as well as himself, an admission that could muddy the organization’s defense strategy. 

Prosecutors seek to prove that two entities of the organization, Trump Corporation and Trump Payroll Corp., had something to gain from Weisselberg’s scheme. Defense attorneys said the former executive, who is still on the company’s payroll making $1.14 million per year, acted alone. 

Weisselberg pleaded guilty to taking $1.7 million off the books for personal expenses — an Upper West Side apartment, tuition for his grandchildren, and Mercedes Benzes for himself and his wife. 

While Weisselberg agrees he was mainly driven by self interest, he didn’t back down after testifying that the businesses also benefited from the practice, which he says dated back to the 1980s before he worked at the Trump Organization. 

Defense attorney Susan Necheles probed Weisselberg’s mindset at the time he asked the company's controller, Jeff McConney, to lower his salary to make up for the pretax compensation he was earning. She asked whether it crossed his mind that he could be helping his employer. Weisselberg said it had. 

“I think we considered that there was going to be some small benefit,” Weisselberg testified. “It was understood that by having less payroll, you have less payroll taxes.”

Necheles asked Weisselberg if he felt he was “caught between two positions,” trying to make good on his deal with prosecutors without placing blame on the company. 

Weisselberg seemed to thread the needle throughout his testimony. 

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

Defense attorneys say any savings to the Trump businesses were minimal. Necheles pointed out that Weisselberg never calculated the size of the corporate benefit. 

Also at issue is who at the Trump Organization knew about the illicit scheme. Several executives besides Weisselberg received bonuses as independent contractors, rather than employees, trial evidence shows. 

Former President Donald Trump paid school tuition for Weisselberg’s grandkids out of his own pocket, and he knew that Weisselberg was living in a company apartment. Weisselberg said he didn’t know about the shady dealings surrounding those benefits. 

Trump signed his executives’ bonus checks, round numbers that could indicate taxes weren’t taken out, being paid by outside Trump entities like the subsidiary used to run an ice-skating rink in Central Park once owned by the Trumps. The checks were delivered in Christmas cards that Trump also signed. 

Weisselberg still claims Trump wasn’t aware of the longstanding company practice of paying those bonuses outside of the payroll. 

“They were checks. He didn’t know the relationship,” Weisselberg testified. 

The reason Weisselberg reduced his own salary to make up for the other compensation, he said, was that he felt he was taking too many perks. 

“I thought it was too much. I had to reimburse the company. It was the right thing to do,” Weisselberg said. 

Following Trump’s election, the company underwent a financial cleanup, 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.

Weisselberg cracked the courtroom tension Friday after a prosecutor asked if his team includes some of the best lawyers in New York City. 

“I hope so,” Weisselberg said, getting a hearty laugh from both well and gallery. Then, more seriously: “The answer is yes.” 

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