New York prosecutors charged the Trump Organization with multiple counts of tax fraud and falsifying business records on Thursday for hiding millions in unreported income for employees, surfacing a years-long investigation into the former president’s family business. Allen Weisselberg, the company’s longtime chief financial officer, received the same charges as well as a single count of grand larceny for his central role in the alleged scheme.
“Beginning from at least 2005 to on or about June 30, 2021, the defendants and others devised and operated a scheme to defraud federal, New York State, and New York City tax authorities,” prosecutors said in the indictment. “The scheme was intended to allow certain employees to substantially understate their compensation from the Trump Organization, so that they could and did pay federal, state, and local taxes in amounts that were significantly less than the amounts that should have been paid.”
Former President Donald Trump and his adult children were not charged in Thursday’s court filings, though prosecutors could bring additional charges and add more defendants down the road. The indictment alleged that Trump signed some of the checks that compensated Weisselberg but does not describe any further involvement in the scheme. As with the Russia investigation three years ago, evidence of his potential involvement may depend on the willingness of close associates like Weisselberg to cooperate in exchange for a lighter sentence.
That cooperation does not appear to be imminent. Weisselberg pleaded not guilty and released a brief statement saying he would fight the charges in court. In a separate statement, the Trump Organization praised Weisselberg and denounced Cy Vance Jr., the Manhattan district attorney. “[Weisselberg] is now being used by the Manhattan district attorney as a pawn in a scorched-earth attempt to harm the former president,” the company said. “The district attorney is bringing a criminal prosecution involving employee benefits that neither the IRS nor any other district attorney would ever think of bringing. This is not justice; this is politics.”
Even without charges against him personally, Thursday’s indictments are perhaps the most perilous legal threat that Trump has faced in his long public life. They pose a direct threat not just to one of Trump’s closest associates but also to the family-run business that Trump inherited from his father and planned to hand over to his own children someday. Without the gold-plated towers and luxury golf courses that bear his name, there’s not much foundation to the mythos that Donald Trump has built to sustain his public persona as a celebrity politician.
Thursday’s indictments marked the first public results from a years-long investigation into the Trump Organization by Vance’s office. The Manhattan district attorney’s inquiry remained a potent legal peril for Trump and his family even after other high-profile investigations fizzled out thanks to the jurisdictional and political forces at play. Both Vance and his successor, who will be elected later this year by a largely Democratic constituency, will face little political blowback for aggressively investigating Trump and his company. Trump was also unable to insulate himself from potential state-level charges with presidential pardons, and New York is unlikely to elect a sympathetic governor anytime soon.
The 25-page indictment unsealed on Thursday describes a 15-year scheme by Weisselberg and the company to funnel nearly $2 million in income and perks for himself through company expenses. They included rent and utility payments for an Upper West Side apartment since 2005, tuition for two of his children at a private school in Manhattan, lease payments for two Mercedes-Benz cars for Weisselberg and his wife, as well as a smattering of holiday bonuses and various personal expenses. In one instance, the Trump Organization reimbursed Weisselberg for carpeting and furnishing his own home in Florida.
“As a result of the defendants’ underreporting of Weisselberg’s income from 2005 through 2017, Weisselberg concealed approximately $1,760,630 in compensation from tax authorities, unlawfully evaded hundreds of thousands of dollars in federal, state, and local taxes, and requested and received refunds to which he was not entitled, including approximately $94,902 in refunds from the United States Internal Revenue Service and approximately $38,222 in refunds from the New York State Department of Taxation and Finance,” the indictment claimed.
To evade tax officials, prosecutors alleged that Weisselberg and the Trump Organization kept two sets of books for the company’s finances. “[The rent and utility] payments were not booked in the Trump Corporation’s general ledger as employee compensation, but were instead labeled and deducted as ‘rent expense’ in the general ledger,” the indictment claimed. “However, for certain years, the Trump Organization maintained internal spreadsheets that tracked the amounts it paid for Weisselberg’s rent, utility, and garage expenses.” Weisselberg’s direct compensation was then adjusted accordingly to reflect the illicit payments, prosecutors said.
Weisselberg is an important fixture in the small coterie of loyal advisers and associates who helped run Trump’s business holdings over the past few decades. The 73-year-old accountant began working for the company in 1973 when it was run by Fred Trump, Donald Trump’s father. Throughout the nearly half-century that followed, he played a quiet but ubiquitous role in keeping the financial workings of the Trump Organization running relatively smoothly, eventually becoming chief financial officer of the company.
That position made him a key figure in some of Trump’s personal and business scandals over the years. In 2018, Weisselberg became better known to the public for testifying before a federal grand jury about former Trump lawyer Michael Cohen’s role in a hush-money scheme involving Stormy Daniels, who received a $130,000 payment from Cohen in 2016. Weisselberg received a limited grant of immunity from prosecutors for his testimony; they later charged Cohen with campaign-finance violations for his role in the scheme and implicated Trump himself.
It’s unusual, but not unheard of, for businesses to face criminal indictments for wrongdoings committed by their employees. Such prosecutions became less common after the conviction of Arthur Andersen LLP, one of the world’s most prominent accounting firms, for obstruction of justice in the Enron scandal in 2002. The Supreme Court unanimously overturned the conviction in 2005, by which point the firm had already laid off tens of thousands of employees and effectively ceased to function. After the Arthur Andersen saga, the Justice Department advised federal prosecutors to consider alternatives to corporate prosecution before filing charges.
By charging the Trump Organization itself, prosecutors open the door to a variety of sanctions and penalties against the Trump family business if they secure a conviction. It wouldn’t be the first time that one of Trump’s self-named enterprises has faced serious legal consequences: The New York attorney general’s office forced Trump to shut down his charity foundation in 2018 after revealing it was essentially a large-scale grift for his personal benefit. A conviction against the family business would likely deal an even greater financial blow to the former president, who rose to power in 2016 in part because of his public image as a successful businessman.
The indictment comes as both Trump and his company enter choppy financial seas. Because the Trump Organization is not a publicly traded company, a comprehensive picture of its internal finances is not publicly available. But reporting by The New York Times over the last few years suggested the company—and the former president himself—are carrying large debt loads that will come due in the next few years. According to the Times, the Trump Organization has paid off little of a $100 million mortgage on the commercial space within Trump Tower; the full payment is due next year.
Like many similar businesses, the Trump Organization was hit hard by the Covid-19 pandemic, with a 38 percent drop in revenues in 2020. Thursday’s indictment may squeeze its finances even harder if the charges deter major banks from lending the company more money. And Trump himself may not be able to ride to his family business’s rescue, either: The New York Times reported that he himself is personally on the hook for at least $421 million in debts, most of which will reportedly come due over the next four years. With Thursday’s indictment, the path to financial stability for Trump and his empire just became a lot less clear.