Trump's company faces criminal tax trial as his legal woes mount
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[October 20, 2022]
By Luc Cohen and Karen Freifeld
NEW YORK (Reuters) - Donald Trump's family
company is set to face a criminal trial on tax fraud charges in New York
starting next week that could trigger fines and further complicate the
real estate firm's ability to do business as the former U.S. president's
legal woes mount.
The Manhattan district attorney's office in July 2021 charged the Trump
Organization and its then-chief financial officer Allen Weisselberg with
defrauding tax authorities by awarding "off the books" benefits to
company executives since 2005, allowing certain employees to understate
their taxable compensation and enabling the company to evade payroll
taxes.
Weisselberg, who has worked for Trump for half a century, pleaded guilty
in August to charges that he concealed $1.76 million in income. His plea
agreement requires him to testify at the trial against the Trump
Organization, which operates hotels, golf courses and other real estate
around the world.
Jury selection is scheduled to begin on Monday in Manhattan state court.
![](http://archives.lincolndailynews.com/2022/Oct/20/images/ads/current/countryfinancial_lda_PPP_2022.png)
Trump has not been charged in the case. But the trial of his namesake
company now run by two of his adult children - Donald Trump Jr. and Eric
Trump - comes as the Republican former president considers running again
in 2024. Trump faces other investigations by federal and state
prosecutors including ones into attempts to overturn his 2020 election
loss and the removal of government documents from the White House when
he left office.
The Trump Organization could face up to $1.6 million in fines for the
three tax fraud counts and six other counts that were brought. Two of
its subsidiaries - the Trump Corporation and Trump Payroll Corp - are
the entities charged in the case.
Lawyers for the Trump Organization have claimed the case is a "selective
prosecution" based on animosity by the prosecution toward Trump for his
political views, though the judge overseeing it has rejected that
argument. Manhattan District Attorney Alvin Bragg and his predecessor
who began the investigation, Cyrus Vance, are Democrats.
The company's lawyers also said prosecutors presented no evidence to the
grand jury that returned the indictment that the Trump Organization
evaded payroll taxes. They also said that prosecutors were seeking to
punish the company because "a handful of its officers allegedly failed
to report fringe benefits on their personal tax returns."
OFF-THE-BOOKS PAYMENTS
The fact that the Trump Organization kept making off-the-books payments
for so many years could help prosecutors show it intended to violate tax
laws, a key element of proving its guilt to the jury, said Bridget
Crawford, a law professor at Pace University in New York focusing on
income tax and corporations.
"Failure to report once might be a mistake. Failure to report over a
period of time is fraud," Crawford added. "If you know of your tax
obligations - which all experienced and savvy people do - and
consciously disregard them, that is intent to defraud the government."
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![](../images/102022PIX/news_j73.jpg)
Former U.S. president Donald Trump
speaks during a rally ahead of the midterm elections, in Minden,
Nevada, U.S., October 8, 2022. REUTERS/Carlos Barria/File Photo
![](http://archives.lincolndailynews.com/2022/Oct/20/images/ads/current/chicagost_sda_FHG_2022.png)
The criminal case is separate from the civil fraud lawsuit filed by
New York state Attorney General Letitia James on Sept. 21 against
the Trump Organization, Trump and three of his adult children,
accusing them of overstating asset values and Trump's net worth to
get favorable bank loans and insurance coverage.
Trump has called the civil suit brought by James as well as the
charges being pursued by Bragg politically motivated.
James, a Democrat, is seeking to recoup $250 million, remove the
Trumps from power at the Trump Organization, prevent it from buying
commercial real estate in New York for five years and install an
independent monitor to oversee its operations.
The Manhattan District Attorney's office is limited to seeking
financial penalties, noted Marc Scholl, a former prosecutor in the
office. A corporation can be fined up to $250,000 for each
tax-related count it faces and up to $10,000 for non-tax counts,
Scholl added.
The trial could make other companies wary of dealing with the Trump
Organization regardless of any punishment the judge may ultimately
hand down, said Miriam Baer, a professor at Brooklyn Law School
specializing in corporate compliance and white collar crime.
The Manhattan district attorney's office has brought criminal cases
against high-profile companies but trials are rare.
"It casts a pall of uncertainty over the company," Baer said, adding
that many companies seek to resolve allegations of criminal
wrongdoing before charges are even brought through agreements with
prosecutors.
WEISSELBERG'S PERKS
Prosecutors said Weisselberg received perks from the company in lieu
of some salary, including rent for a Manhattan apartment, lease
payments for two Mercedes-Benz vehicles and tuition for relatives,
with Trump signing the tuition checks. They added that Weisselberg
also used company money to buy personal items like televisions and
carpets, and falsely told tax authorities he was not a New York City
resident.
![](http://archives.lincolndailynews.com/2022/Aug/31/images/ads/current/dare_sda_FOOTBALL_2022_small.png)
Weisselberg avoided $900,000 in taxes by failing to declare those
perks as income, and collected $133,000 in refunds he did not
deserve, prosecutors said.
Two other Trump Organization employees received compensation in the
form of lodging and car leases, prosecutors said.
There is nothing illegal about receiving non-monetary compensation
from an employer, but those benefits must be reported as income,
with the exception of small perks like free coffee at the office,
said Jay Soled, a lawyer and accounting professor at Rutgers
Business School in Newark, New Jersey.
(Reporting by Luc Cohen and Karen Freifeld in New York; Editing by
Will Dunham and Noeleen Walder)
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