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Trump Org. and top aide charged with 15-year scheme to defraud U.S. of taxes

Prosecutors described a conspiracy to compensate executives "off the books" to avoid paying taxes. The company pleaded not guilty.
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The Trump Organization and its chief financial officer, Allen Weisselberg, were charged Thursday in what prosecutors said was a sweeping, 15-year scheme to compensate top executives of former President Donald Trump's company “off the books” and help them avoid paying taxes.

The Trump Organization pleaded not guilty to charges that included tax fraud and falsifying business records. Weisselberg, 73, pleaded not guilty to grand larceny and tax fraud charges, among others, after prosecutors accused him of personally avoiding taxes on $1.7 million of his income.

Prosecutors say it was an "orchestrated" scheme to compensate executives "off the books" to avoid taxes.

"Contrary to today's assertion by the company's former CEO, this is not a 'standard practice in the business community' nor was it the act of a rogue or isolated employee," Carey Dunne, an assistant district attorney, said in court. "Instead, it was orchestrated by the most senior executives, who were financially benefiting themselves and the company by getting secret pay raises at the expense of state and federal taxpayers."

Weisselberg's attorney, Mary Mulligan, said before the hearing in a Manhattan court that he would fight the charges. The longtime Trump employee turned himself in early Thursday morning.

Trump, in a statement through his political PAC, criticized the charges as partisan.

"The political Witch Hunt by the Radical Left Democrats, with New York now taking over the assignment, continues," he said. "It is dividing our Country like never before!"

The organization echoed his remarks.

“Make no mistake — this is not about the law; this is all about politics,” a spokesperson for the Trump Organization said in a statement.

The grand jury indictments were obtained by the offices of Manhattan District Attorney Cyrus Vance and Letitia James, the New York state attorney general.

In the indictment "we allege, among other things, financial wrongdoing whereby the Trump Organization engaged in a scheme with Mr. Weisselberg to avoid paying taxes on certain compensation," James said in a statement. "This investigation will continue, and we will follow the facts and the law wherever they may lead.”

Weisselberg entered the courtroom Thursday in handcuffs alongside his attorney. The DA moved to secure Weisselberg's passport as part of the terms of his release. He surrendered his passport to investigators.

Weisselberg is not necessarily barred from traveling overseas but he has to ask the court's permission. The judge set the next court appearance for Sept. 20 at 9:30 a.m.

Vance’s office has been investigating criminal conduct, court documents have shown, such as falsifying business records, insurance fraud and tax fraud at the Trump Organization, which has its headquarters in New York City. NBC News reported in March that Vance was investigating whether Trump employees, including Weisselberg, were able to avoid paying taxes in exchange for fringe benefits, such as apartments.

In a statement Thursday morning, a spokesperson for the Trump Organization said that Weisselberg is “a loving and devoted husband, father and grandfather who has worked at the Trump Organization for 48 years.”

“He is now being used by the Manhattan District Attorney as a pawn in a scorched earth attempt to harm the former President,” the spokesperson 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.”

Weisselberg’s former daughter-in-law, Jennifer Weisselberg, told MSNBC on Wednesday that she’s been in touch with Vance’s office and has turned over documents and has named witnesses. Asked if her former father-in-law is not cooperating with the district attorney’s office because he’s trying to protect his family and the former president, she said, “Not exactly.”

“I think that they're already in trouble,” she said. “I think that he's not cooperating. I think when somebody doesn't cooperate it's because the other person might just have a lot of leverage on you, and that is a reason why you are afraid to flip.”

Pushed to elaborate, Jennifer Weisselberg said that she thinks the person who has leverage over Allen Weisselberg is “Donald."

Ron Fischetti, a lawyer for the Trump Organization, said last week that prosecutors were going after the company and its CFO because they "could not get Allen Weisselberg to cooperate and tell them what they wanted to hear and that’s why they are going forward."

“It looks like they are going to come down with charges against the company and that is completely outrageous. I've been practicing for over 50 years and I’ve never seen a case like this where they would indict or charge an individual or a company on tax evasion for using a company car or company apartment and then tie it to the company that he is working for without any evidence that what he did benefited the company," Fischetti said.

"It’s never been done and it hurts a lot of innocent people who are working at that company, and they are doing this just to get back at Donald Trump," he said.

Prosecutors are typically hesitant to indict companies because such a move can be a death blow to many innocent employees. The best-known example is that of the auditing firm Arthur Andersen in 2002. Its client was Enron and after that company collapsed in 2001 in an enormous accounting and securities fraud case, Andersen was indicted for obstruction of justice. Prosecutors alleged it had shredded crucial documents having to do with its work for Enron. The indictment of the firm, which had been considered the gold standard for ethics, meant it could no longer gain government contracts.

The firm collapsed after it was found guilty at trial and its 30,000 employees were thrown out of work.

Prosecutors may view the Trump Organization differently, however. It is not a sprawling entity with tens of thousands of employees potentially hurt by an indictment. New York City has already canceled contracts it struck with the Trump Organization to run a city-owned golf course, a move that is in litigation, and an ice skating rink in Central Park. The company does not rely heavily on government contracts that could be lost after an indictment.

The indictment of the Trump Organization, a private company which owns real estate, hotels and golf resorts, comes amid a troubled period for the company hit hard like many by Covid-related shutdowns.

In January, when Trump filed federal financial records of his holdings in his final such disclosure as president, many of the operations showed hemorrhaging revenues. Operations at the Trump National Doral golf resort in Miami were down 43 percent last year from 2019, the records showed, while revenues at Trump International Hotel in Washington's Old Post Office Building fell by 63 percent, to $15.1 million. Some of his golf courses generated single-digit sales increases, but most of the Trump properties registered declines in revenues last year from 2019.

Tax cases have been brought against New York hotel magnates before.

In 1988, real estate investor Harry Helmsley and his wife, Leona, were convicted of evading $1.2 million in federal taxes. They had billed Helmsley businesses for personal expenses ranging from her underwear to $3 million worth of renovations to their Connecticut estate. At its peak, their real estate empire was worth an estimated $5 billion.

During the Helmsley trial, a former housekeeper testified that she heard Leona Helmsley say: “We don’t pay taxes. Only the little people pay taxes.” Helmsley denied having said it, but the comment stuck.

The indictment was brought by then-Manhattan U.S. Attorney Rudy Giuliani. Then-businessman Trump blamed Leona Helmsley — who'd been dubbed "the queen of mean" — for her husband's troubles in a letter that was obtained by the New York Post.

"Without the veil of Harry Helmsley, you would be a non-entity. You would not be able to randomly fire and abuse people in order to make yourself happy," Trump wrote of Leona Helmsley. "What has happened to the legendary Helmsley reputation is indeed sad."