Explainer-The Trump Organization trial is nearing its end. What's the case about?

[December 01, 2022]  By Luc Cohen

NEW YORK (Reuters) - Closing arguments are set to begin on Thursday in the criminal tax fraud trial of Donald Trump's real estate company on charges of scheming to defraud tax authorities for 15 years, as the former U.S. president's legal woes mount.

Here are answers to questions about the accusations the Trump Organization faces.

WHAT IS THE TRUMP ORGANIZATION ACCUSED OF DOING?

The Manhattan district attorney's office in July 2021 charged two Trump Organization units and the company's chief financial officer, Allen Weisselberg, with paying the personal expenses of some executives without reporting the income, and falsely reporting bonuses as non-employee compensation.

Trump Payroll Corp and the Trump Corporation have been charged with nine counts of scheme to defraud, conspiracy, tax fraud and other crimes. They have pleaded not guilty.

Weisselberg in August pleaded guilty and agreed to testify at trial in exchange for a five-month prison term.
 

He admitted to concealing $1.76 million of income from the company, including rent for a Manhattan apartment, lease payments for two Mercedes-Benz vehicles and private school tuition for his grandchildren. He also received some of his bonuses as non-employee compensation from other Trump entities such as Trump's Florida club Mar-a-Lago and Trump International Golf Club.

WHAT MAKES THOSE PAYMENTS ILLEGAL?

Making bonus payments to executives as if they were independent contractors makes it possible for them to report the compensation as self-employment income, which comes with tax benefits.

It is not illegal for companies to pay employees through benefits instead of salaries, but those benefits must still be reported to tax authorities as income - with the exception of minor perks like free coffee at the office, said Jay Soled, a lawyer and accounting professor at Rutgers Business School in New Jersey.

The companies are also charged with falsifying business records. Weisselberg testified that he asked the company's controller, Jeffrey McConney, to subtract the payments for his personal expenses from his salary in tax forms. As a result, those forms falsely underreported his income from 2005-2017, he admitted.

McConney, who testified at the trial as a prosecution witness, has not been charged. He was granted immunity to testify before a grand jury.

Former U.S. President Donald Trump speaks at a rally to support Republican candidates ahead of midterm elections, in Dayton, Ohio, U.S. November 7, 2022. REUTERS/Gaelen Morse

WHAT IS THE TRUMP ORGANIZATION'S DEFENSE?

Lawyers for the Trump Organization have sought to shift the blame to Weisselberg, saying he cheated on his personal tax returns to benefit himself, not the company. They said Weisselberg was under pressure to satisfy prosecutors.

Weisselberg appeared to provide some support for that argument when he testified that he was motivated to cheat on taxes by his own greed.

The company also has said Donald Bender, an outside accountant with the Mazars firm who handled the company's tax returns, should have caught the scheme and blown the whistle, though Justice Juan Merchan, the judge in the case, has said the company cannot make that argument to the jury.

"The highly paid accounting firm should have routinely picked these things up - we relied on them," Trump wrote on social media. "VERY UNFAIR!"

Bender was granted immunity from prosecution. Mazars cut ties with the Trump Organization this year.

WHAT COULD THE COMPANY'S PUNISHMENT BE?

Each of the tax fraud counts are punishable by up to $250,000 in fines, while the other counts each have maximum fines of $10,000. Together, the company's two units could be liable for $1.6 million in fines if convicted.

HAS TRUMP HIMSELF BEEN ACCUSED OF WRONGDOING?

Trump has not been charged with a crime.

Two prosecutors who had led the investigation resigned in February, and one, Mark Pomerantz, has said he believed felony charges should be brought against Trump but that Manhattan District Attorney Alvin Bragg indicated he had doubts.
 

Trump, a Republican who is again seeking the presidency in 2024, has called the prosecution politically motivated. Both Bragg and Cyrus Vance, his predecessor who began the investigation, are Democrats.

(Reporting by Luc Cohen in New York; Editing by Will Dunham and Noeleen Walder)

[© 2022 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.