Trump Organization Tax Fraud Trial in Manhattan: Live News Updates


At the dawn of Donald J. Trump’s presidency, his family business appeared poised for a windfall: It unveiled new hotel lines, held ribbon-cuttings around the world and attracted major tournaments to its golf clubs, enough for Eric Trump, who ran the company while his father was in the White House, to remark, “The stars have all aligned.”

Five years later, those stars have faded. The former president’s company, grappling with legal and political scrutiny, has halted its expansion to concentrate on its existing properties. It even sold the Trump hotel in Washington, once the center of the MAGA universe.

This week will drive home that stark reversal of fortune as the company faces a highly public reckoning: a criminal trial in Manhattan, where the district attorney’s office will accuse it of tax fraud and other crimes.

Although Mr. Trump himself was not indicted, he is synonymous with the company he ran for decades, a business that bears his name and served as a launching pad for his presidency.

The trial in State Supreme Court will present an embarrassing scene for the former president, pushing to the forefront one of several criminal investigations swirling around him.

This case centers on special perks doled out by the former president’s business, the Trump Organization, which comprises a universe of more than 500 corporate entities. Last year, the district attorney’s office accused two of those entities — The Trump Corporation and Trump Payroll Corp. — of awarding off-the-books benefits like rent-free apartments and leased luxury vehicles to a few top executives who failed to pay taxes on the perks.

As jury selection begins on Monday, the district attorney, Alvin L. Bragg, appears to have the upper hand. The Trump Organization’s 75-year-old chief financial officer, Allen H. Weisselberg, recently pleaded guilty to conspiring with the two corporations to carry out the scheme — and agreed to testify at their trial, tipping the case in favor of Mr. Bragg, a Democrat.

The plea agreement prosecutors reached with Allen Weisselberg, center, left the Trump Organization in a difficult position at trial.Credit…Jefferson Siegel for The New York Times

“Having the company’s top financial officer as your star witness is a prosecutor’s dream,” said Daniel J. Horwitz, a former prosecutor in the district attorney’s office who is now a partner at McLaughlin and Stern, where he defends corporations in white collar crime cases.

Mr. Bragg’s tax case grew out of a broader investigation into the former president and whether he fraudulently inflated the value of his properties to obtain favorable deals from lenders and insurers. Seeking an insider to testify against the former president, the district attorney’s office leaned on Mr. Weisselberg, a loyal lieutenant who got his start with Mr. Trump’s father a half-century ago and served as the company’s financial gatekeeper for decades. When he resisted their pressure campaign, the office indicted Mr. Weisselberg and the two corporations for the special perks.

At the trial, which is expected to last more than a month, lawyers for the Trump corporations will say that Mr. Weisselberg went behind the Trump family’s back to avoid paying taxes on the perks, and was not conspiring with the company.

“Weisselberg’s acts were done to benefit himself and not done to benefit the company and we expect to show that at trial and be acquitted,” said one of the company’s lawyers, Susan R. Necheles. (While the prosecutors could argue that the scheme saved money for the company, which did not pay payroll taxes on the perks, the defense is expected to argue that in fact, the company lost money as a result of the arrangement.)

The lawyers might also argue that Mr. Weisselberg agreed to testify under duress, noting that he could have faced years in prison. The plea deal calls for him to serve five months in jail, but with good behavior, he is likely to spend only 100 days there.

Yet if he lied on the witness stand, the judge overseeing the case could impose up to a 15-year prison sentence, according to his lawyer, Nicholas A. Gravante Jr., a partner at Cadwalader, Wickersham & Taft, who said his client was meeting with both prosecutors and the company’s lawyers “to assure that his testimony goes smoothly.”

Mr. Weisselberg, who is on paid leave from the company, has still refused to cooperate with the broader investigation into the former president.

Mr. Trump, who was not accused of participating in the benefits scheme, has chalked up the case to a “witch hunt” against him, echoing the refrain he uses to leverage legal woes into a rallying cry for his political base.

And for his family business, a conviction would hardly constitute a death blow.

A company, of course, cannot be jailed, and Mr. Trump’s corporations are not publicly traded, so there will be no run on the business if the jury convicts. The potential punishments are also relatively minor: the two Trump corporations going to trial, which employ and pay the former president’s top executives, are facing a maximum of about $1.7 million in penalties, a rounding error for Mr. Trump, who typically notched hundreds of millions of dollars in revenue during his presidency.

While a guilty verdict may scare off some potential lenders and business partners, the former president’s business has survived years of scrutiny from prosecutors and lawmakers. It also rebounded from the pandemic, and recently generated hundreds of millions of dollars from selling the Washington hotel, which, along with other deals, enabled it to refinance or retire a significant portion of its debt.

Yet with its owner distracted by his political pursuits — and a drumbeat of investigations — the company appears to be running in place, tending to properties it has held for years, including office and apartment buildings in New York, a handful of hotels and 16 golf courses that it owns or manages. Although the company won’t stay in neutral forever, a conviction might further impede its growth.

The stakes are high for Mr. Bragg as well. The trial represents the highest-profile proceeding of his young tenure. And while a conviction may help endear him to his liberal Manhattan base, the trial will also serve as a daily reminder that he has not secured the bigger prize in this investigation: an indictment of Mr. Trump.

For Alvin Bragg, the Manhattan district attorney, a conviction could soften the criticism he received after his office did not indict the former president earlier this year. Credit…Sarah Blesener for The New York Times

Soon after Mr. Bragg took office in January, he balked at charging Mr. Trump in the broader investigation into how he valued his assets on annual financial statements. Mr. Bragg’s decision, which halted an ongoing presentation of evidence to a grand jury, prompted the resignation of two senior prosecutors and fueled a public uproar, even among some of the new district attorney’s supporters.

As Mr. Bragg’s investigation faded from public view, New York’s attorney general, Letitia James, ramped up her own civil investigation into Mr. Trump’s financial statements, recently filing a lawsuit that accused him, his children and his company of “staggering” fraud in how they “grossly inflated” his net worth. The suit seeks to bar the former president, as well as his children, Donald Jr., Eric and Ivanka, from ever running a business in the state again.

Lawyers from Ms. James’s office are also participating in the trial and in Mr. Bragg’s criminal investigation, which the district attorney recently said is “active and ongoing.”

It is one of several investigations looming over Mr. Trump, whose final days in office have drawn wide scrutiny. In August, the F.B.I. searched his Florida compound for sensitive documents he removed from the White House, while prosecutors in Washington and Georgia are examining whether he improperly meddled in the 2020 election results.

The tumultuous period after the election caused headaches for his company as well. After the attack on the U.S. Capitol on Jan. 6, 2021, banks and insurers fled.

It was a far cry from the period leading up to his presidency, during which the company embarked on years of expansion. It opened five-star hotels in Chicago and Las Vegas, and deployed some of Mr. Trump’s newfound riches from “The Apprentice” to snatch up golf courses. He also leveraged his growing celebrity to license his name to properties that other companies developed.

The growth continued through the final stretch of the 2016 presidential campaign, when Mr. Trump opened his Washington hotel, which soon became a magnet for Republican lobbyists and lawmakers.

But two years into Mr. Trump’s presidency, the company retreated. It shelved two planned hotel brands, and, in the span of a year, the Trump name came off hotels in Panama, Toronto and Lower Manhattan.

They blamed self-imposed ethics restrictions, including swearing off new foreign development, as well as Congressional and law enforcement investigations.

The Manhattan investigation began in earnest in the summer of 2019, when the then-district attorney, Cyrus R. Vance Jr., subpoenaed Mr. Trump’s accounting firm for his tax returns, prompting a battle that reached the Supreme Court and resulted in a victory for prosecutors in early 2021.

Later that year, prosecutors charged Mr. Weisselberg with reaping about $1.76 million in undisclosed compensation from the perks — including rent on his Upper West Side apartment, leased Mercedes-Benzes and private school tuition for his grandchildren — and evaded nearly a million dollars in taxes. Together, he and the company were charged with a scheme to defraud, conspiracy, tax fraud and falsifying business records.

Given his rank, Mr. Weisselberg is known as a high managerial agent of a company — an employee whose conduct generally represents the conduct of the company….



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2022-10-31 12:52:09

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