Updated July 1, 2021 at 6:22 PM ET
Former President Donald Trump's family business and its longtime chief financial officer, Allen Weisselberg, have been charged by the Manhattan district attorney's office in a case involving an array of alleged tax-related crimes.
In an indictment unsealed Thursday, prosecutors allege that starting from as early as 2005 and up until last month, the Trump Organization and Weisselberg have committed tax fraud and falsified business records as part of a scheme to compensate executives at the Trump Organization "off the books." The goal, prosecutors claim, was to avoid paying hundreds of thousands of dollars in taxes by compensating employees with lavish perks in addition to their regular pay.
Weisselberg allegedly received indirect compensation — including housing expenses, home furnishings and leases for two Mercedes-Benz automobiles — with a total value of around $1.76 million and is accused of evading more than $901,000 in federal, state and local taxes combined. Private school tuition for two of Weisselberg's family members, according to the indictment, was paid with personal checks signed by Trump. Weisselberg, an employee of the Trump Organization since 1973, is also alleged to have arranged for various Trump businesses to make payments to him and to other executives as independent contractors, conferring tax benefits on retirement accounts.
If convicted, the Trump Organization is in very, very serious trouble.
What if the Trump Organization is convicted of a felony?
Of the charges levied in New York State Supreme Court, the most serious one facing Weisselberg is second-degree grand larceny, a Class C felony that carries a maximum sentence of 15 years.
The most serious charge for the Trump Organization is criminal tax fraud. A corporation found guilty of criminal tax fraud under New York law may be fined "double the amount of the underpaid tax liability resulting from the commission of the crime" or $250,000.
A felony conviction for the Trump Organization would make it "very difficult for them to do business," including obtaining bank loans and certain insurance policies, says Robert Gottlieb, a former assistant district attorney in Manhattan who is now a criminal defense lawyer.
"There are many deals that an organization like the Trump Organization would like to enter into," Gottlieb adds. "If it's convicted of a felony, they're gonna be barred by the governmental agency that supervises any particular projects. So, they could be debarred from conducting certain businesses. If convicted, the Trump Organization is in very, very serious trouble."
Trump has long denied any wrongdoing
Weisselberg and attorneys for the Trump Organization pleaded not guilty to the charges Thursday. During an arraignment in New York City, Weisselberg surrendered his passport and was released without having to post bail.
Trump has long denied any wrongdoing. In a statement Thursday afternoon, the former president said:
"The political Witch Hunt by the Radical Left Democrats, with New York now taking over the assignment, continues. It is dividing our Country like never before!"
The investigation by Manhattan District Attorney Cyrus Vance Jr. began in 2018, around the time Trump's former personal lawyer, Michael Cohen, pleaded guilty to campaign finance charges related to payments of hush money. These were made in the final months of the 2016 presidential campaign, as Cohen put it in court, "in coordination with, and at the direction of, a candidate for federal office." The goal was to block two women who claimed they had extramarital affairs with Trump — former Playboy model Karen McDougal and adult film star Stephanie Clifford, whose stage name is Stormy Daniels — from telling their stories publicly.
New York state Attorney General Letitia James' office launched its own probe in 2019 after Cohen testified in a congressional hearing that Trump manipulated property values to lower his tax obligations and to obtain bank loans. James' investigation was initially focused on potential civil charges, but it recently expanded to include a criminal probe in partnership with Vance.
This year, the investigators have homed in on noncash payments made to top officials in Trump's companies, including Weisselberg.
The U.S. Supreme Court paved the way for the charges, declining in February to block a subpoena from Vance's office seeking Trump's financial records. Vance first requested tax filings and other financial records from Trump's accounting firm, Mazars USA, in 2019.
In a statement released in May, Trump said the New York-based investigations were part of a "Witch Hunt," adding, with a reference to how his presidential campaign started in 2015: "It began the day I came down the escalator in Trump Tower, and it's never stopped."
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