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Trump Corp. ‘hostile witness’ walks back tax fraud testimony in criminal trial

After last week recalling a conversation in which he was told Donald Trump knew about tax fraud at his company, a government witness who's still on the company's payroll walked it back, now saying Trump may have been blindly signing invoices without realizing his top executives were gaming the system.

MANHATTAN (CN) — Jeff McConney is a government witness in the New York tax fraud case against the Trump Corporation. He’s also a senior vice president at the company, which is paying for his attorney in Trump business investigations, and has met with the business’s own lawyers multiple times since his testimony began. And now, he’s a hostile witness in the ongoing criminal trial.  

Judge Juan Manuel Merchan had twice denied prosecutors’ request to consider McConney adverse and to ask him leading questions. He changed course Monday during redirect examination after the government argued McConney’s evasive answers, demeanor and feigned inability to understand questions proved he was playing hard for the Trump team. 

“He has a hard time, frankly, giving very credible answers,” Merchan said.

Defense attorney Susan Necheles argued that McConney wasn’t trying to get out of answering questions, and was in fact admitting to tax fraud he’d committed while working for the Trump Corporation. Those include lowering salaries to allow executives to fund their personal lives pre-tax, and filing tax forms that failed to declare certain employees lived in New York City so they could get out of a city tax. 

McConney, who testified in front of a grand jury at least twice in this matter, as well as for other unspecified investigations, has immunity for those crimes. 

“I think it’s pretty clear to the average observer that he is very helpful to you,” Merchan told Necheles. “When he doesn’t understand the question, he tries to understand the question.” 

The judge noted that at one point during cross-examination, McConney “went off on such a tangent to be helpful to you” that Merchan struck the whole response. 

With the witness declared adverse, Merchan also overruled an objection to Assistant District Attorney Joshua Steinglass using air quotes when referring to Necheles’ “cross-examination” as he stood, arms crossed, facing McConney on the stand.  

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. Former President Donald Trump is not named as a party, but prosecutors aim to prove that dirty dealings went all the way to the top. 

The Trump Corporation pins much of the blame on the company’s former CFO Allen Weisselberg, who admitted the company paid him more than $1.7 million in off-the-books compensation including rent, car payments and school tuition for his grandkids. 

Weisselberg pleaded guilty to all counts against him and is expected to testify for the government. 

During cross-examination Necheles sought to demonstrate that McConney’s fraudulent filings helped out Weisselberg and other top executives, but not the company itself. 

On Monday, McConney walked back previous testimony about how much Trump himself knew of the scheme. Previously, 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. 

Now, McConney says he doesn’t remember Trump’s name coming up in that conversation, and said otherwise only because he thought he wasn’t allowed to deviate from his grand jury testimony. 

Further claiming the fraud was kept under wraps, McConney said he never told anyone at the Trump Corporation what he was doing until he was asked for documents during an internal investigation. Weisselberg was angry that McConney had been keeping notes, McConney testified. 

But Trump had to sign invoices reflecting the changes, Steinglass pointed out. McConney agreed, with a caveat: maybe Trump was blindly signing invoices and didn’t notice his top executives were committing fraud.

“That doesn’t mean he doesn’t have a stack and just signs them,” McConney said. “If he had a stack on his desk, I don’t know if he’s looking at invoices or just approving them.” 

“Are you suggesting that Donald Trump was unaware that some of these items were being backed out of the compensation?” Steinglass asked.

“Yes," McConney replied.

McConney’s redirect will continue Tuesday.

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