Trump Organization Charged With Fraud Over Alleged 15-Year Tax Avoidance Scheme
The business of former President Donald Trump has been indicted on 15 counts in an alleged scheme to avoid paying taxes on payroll, income and other business expenses over the course of more than 15 years.
The charges, handed down in New York state criminal court Thursday afternoon, represent a historic moment in the investigation of Trump's commercial real estate business, which prosecutors claim devised numerous ways of avoiding paying state, local and federal taxes.
The federal grand jury indictment was unsealed at the arraignment proceeding of Trump Organization Chief Financial Officer Allen Weisselberg, who was charged with grand larceny over the alleged receipt of approximately $1.76M in “indirect employee compensation from the Trump Organization,” according to the indictment.
After surrendering to authorities early Thursday morning, Weisselberg entered court later in the afternoon in handcuffs, wearing a dark suit and a light blue shirt. He pleaded not guilty to charges of grand larceny, surrendered his passport to the court and will be released on his own recognizance while he awaits trial.
The Trump Organization, represented by a team of lawyers, also pleaded not guilty to criminal charges of scheme to defraud in the first degree.
Trump and his lawyers have decried the investigation, carried out jointly by U.S. District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James — both Democrats — as being politically motivated, seeking to embarrass the 45th president.
“These are never charges in criminal cases and they shouldn’t have been here … All civil cases, they get in the room, they talk about it, they resolve things,” The Trump Organization’s attorney, Alan Futerfas, told reporters outside the courthouse after the arraignment. “If the name of the company was something else, I don’t think these charges would have been brought. In fact, I am fairly certain that these charges would not have been brought.”
Prosecutors disputed that argument, focusing on charges for a scheme they called "sweeping and audacious."
“It’s not about politics, politics has no role in a jury chamber and I can assure you, your honor, they played no role here,” Carey Dunne, the general counsel for Vance's office, said at the arraignment hearing.
The charges are the first from the investigation, which has been ongoing for years but took on greater urgency after the U.S. Supreme Court in February allowed Vance's office to subpoena Trump's tax returns. Vance's office has also indicated it is investigating the company over the way it has reported its property valuations to lenders and state tax assessors, but those allegations didn't appear in the 25-page indictment.
Instead, the indictment lays out an elaborate corporate scheme to avoid taxes by covertly paying for different expenses by company executives, particularly for Weisselberg, including tuition for Weisselberg's family members and paying for leased Mercedes-Benz cars and a flat-screen television.
At Thursday’s arraignment, Dunne claimed that the alleged 15-year-long scheme was “orchestrated by the most senior executives” at the Trump Organization — the indictment named an "Unindicted Coconspirator #1" — saying prosecutors have obtained digital drives that included corporate bookkeeping, statements of witnesses and banking statements.
Attorneys for the defense suggested that there were potentially “millions” of documents.
Prosecutors allege that the company kept two record systems when it came to keeping tabs of Weisselberg’s compensation — allowing the CFO to leave nearly $1.8M in taxable income out of his tax returns between 2005 and 2017.
“The Trump Organization tracked and treated many of them as part of his authorized annual compensation, ensuring that he was not paid more than his pre-authorized, fixed amount of gross income,” the indictment states. “However, corporate defendants falsified other compensation records so that the indirect compensation payments were not reflected in Weisselberg’s gross reported income.”
Prosecutors claim these documents were used when Weisselberg requested over $100K in tax refunds by excluding many of his financial job perks outside his base salary.
A similar record-keeping process extended to Weisselberg’s family members who worked for the company, prosecutors allege. One of those family members lived in a building that Trump owned along one of the priciest strips of Manhattan residential real estate — Central Park South — for just $1K, while another did so nearby on the Upper West Side while paying no rent, according to the indictment.
Attorneys for the defendants said that they object to the characterization of the claims in court Thursday.
Weisselberg has been a key focus of the criminal investigations and has been seen as a figure whose cooperation could open the door for more sweeping charges against the Trump family, The Wall Street Journal reported.
Futerfas said he doesn't expect the charges to impact the Trump Organization's ability to do business going forward.
“We’re very hopeful that there will not be significant effects,” Futerfas told reporters. “There are large financial institutions in New York City, very well-known financial institutions, that were the subject of criminal prosecutions, and that are regulated entities — we're talking banks, we're talking large financial institutions — and they’ve all survived very, very well.”
UPDATE, JULY 1, 6:25 P.M. ET: This story has been updated with additional reporting.