Tax law experts see a “strong” case against Trump Org. CFO

NEW YORK (AP) – Companies provide benefits to their employees all the time. Many senior executives at Fortune 500 companies have access to a business jet for personal use, a corporate apartment, or an expense account for fine dining. Even lower-level employees regularly have access to perks such as reimbursement of tuition fees or money to join a gym.

But the extravagant perks prosecutors said the Trump organization lavished on its CFO Allen Weisselberg – apartments, cars, cash for vacation tips, tuition for his grandchildren to name a few – a few – are well beyond the pay level of an esteemed employee, some tax law experts have said. .

And the case against Weisselberg appears to be much stronger than initially expected by those watching the progress of the Manhattan District Attorney’s investigation into the Trump Organization, its employees and its namesake leader.

“This is an extremely solid case,” said Daniel Hemel, professor of law at the University of Chicago.

According to indictment unsealed Thursday, Weisselberg tricked the tax authorities into taking a significant portion of his annual compensation into employee benefits. They say that over 15 years, those unofficial benefits were worth almost $ 1.8 million.

Weisselberg alone has been accused of defrauding the federal, state and city governments of more than $ 900,000 in unpaid taxes and unearned refunds. He pleads not guilty.

“Mr. Weisselberg intends to plead not guilty and he will challenge these charges in court,” Weisselberg attorneys Mary Mulligan and Bryan Skarlatos said in a statement.

Meanwhile, former President Donald Trump and his allies attempted to frame the indictment against Weisselberg and the Trump Organization as a “witch hunt” by Manhattan District Attorney Cyrus Vance Jr. and the district attorney. New York General Letitia James, both Democrats. They said the benefits involved were standard for successful American businesses.

But the case against Weisselberg is not necessarily unusual. Some have compared the indictment to a tax evasion case involving another real estate mogul from 30 years ago: Leona Helmsley, the so-called ‘Queen of Wickedness’ who tried to charge to his real estate empire a $ 3 million home renovation in the 1980s.

Trump himself called Helmsley a “The shame of humanity” for fraudulently avoiding taxes all those years ago.

“The dollar figures and the charges are more serious than what we had thought over the past few days with the little information we had,” said Daniel R. Alonso, former deputy chief prosecutor in the district attorney’s office. Manhattan district. “In particular, the alleged tax loss is $ 900,000. This is an amount of fraud that is certainly in the prison range for typical cases of this magnitude.”

Melissa Jampol, who as a former Manhattan assistant prosecutor specialized in prosecuting white-collar crimes, said the indictment allegations went well beyond the abuse allegations benefits that some had assumed to be the crux of the matter.

“I think the main takeaway is that there is a lot more going on here that is alleged in the indictment than people previously knew,” said Jampol, a lawyer at the Epstein law firm. Becker Green.

The indictment alleges that it was not just that Weisselberg had not correctly reported his salary. He says the Trump Organization, as a company, was an accomplice.

The company kept internal records that tracked employee compensation, and in those records, Weisselberg’s rent, grandchildren’s school fees, cars, and other things were all listed as part of its compensation program. The company even reduced Weisselberg’s paychecks to account for the indirect compensation he was receiving in free rent, according to the indictment.

But that compensation was recorded differently in the company’s general ledger and none of it was reported to tax authorities, prosecutors said.

“There is the set which was the official ledger and there is the set which was Weisselberg’s compensation calculations,” Jampol said.

Smaller cases involving similar practices appear quite frequently. A Queens based plumbing contractor was sentenced to 20 months in prison last month. Sergei Denko cashed $ 5 million in checks to fund a non-accountable payroll system, avoiding paying around $ 732,000 in labor taxes. On Long Island, a the owner of the restaurant was convicted in September to avoid $ 130,000 in employment taxes as well.

Thomas M. Cryan, Jr., a tax lawyer in Washington, said lawsuits over employee benefits are rare, but an unusually high volume of benefits and an intention to hide them as income could tip a civil case in criminal case.

Often times, cases involving employee benefit violations remain between the company and the Internal Revenue Service, and may simply result in an audit or back taxes with a penalty.

But some of the allegations against Weisselberg go far beyond the abuse of benefits. Weisselberg’s son Barry – who ran a Trump-operated ice rink in Central Park – paid no declared rent while living in a Trump-owned apartment in 2018, and he was only billed $ 1,000 per month – well below typical Manhattan prices – while living in a Trump Apartment from 2005 to 2012, according to the indictment.

Allen Weisselberg himself, an intensely private man who lived for years in a modest house on Long Island, continued to claim the residence there despite spending the majority of his time in an apartment in Manhattan paid for by the company, prosecutors said. In doing so, Weisselberg concealed that he was a resident of New York City and he avoided paying city income tax.

While some stand-alone tax offenses can be dealt with civilly or administratively, allegations of other misconduct – including robbery – help explain why prosecutors would view this scheme as meriting criminal prosecution, Jampol said.

But that doesn’t mean that the allegations, which will require proof of will, will be easy to establish in court.

“This will really be the burden that the prosecutor’s office will have to prove is that there was a ploy here, and that it was not just a series of mistakes or misunderstandings,” a- she added.


AP Justice writer Eric Tucker reported from Washington.

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