• July 2, 2021

How to understand Trump’s indictment

Former President Donald J. Trump’s business organization ran an illegal employee compensation scheme for fifteen years, implemented by its chief financial officer, Allen Weisselberg, according to a fifteen-count New York County grand jury. open indictment Thursday. The subtle clues in and around this document portend future legal trouble for Trump himself. Given that the grand jury is expected to meet three times a week for much of the year, we should expect a replacement indictment by the fall, one that could include other Trump Organization executives, including the sons of the President, Donald Trump, Jr. and Eric Trump. , as well as the former president himself

In the days before the indictment was opened and Weisselberg appeared in court in handcuffs, defense attorneys tried to dismiss him as little potatoes. However, the alleged crimes are quite serious, including a scheme to defraud, conspire, grand theft, criminal tax fraud, and falsification of business records. Weisselberg, 73, appeared in court Thursday and pleaded not guilty to all charges. A conviction could lead to many years in state prison.

Apparently, he didn’t just do what prosecutor Carey Dunne did at the arraignment call a “sweeping and audacious illegal payment scheme” was one of its biggest beneficiaries. The indictment reveals that Weisselberg enjoyed luxury cars, a luxurious Manhattan apartment, private school tuition and more, all provided by his employer, without paying a penny out of his own pocket and without reporting anything as income. But he was not the only beneficiary. Weisselberg, who has worked for the Trump family for half a century, helped the Trump Organization pay other executives off the books as well.

It’s easy to see what there was for Weisselberg and the employees making the equivalent of tax-free income. But how would Trump and his companies benefit from these giveaways? It is a way to give employees a higher salary at a lower cost to the company. Here is a simple, but not accurate, example of a New York employee. If the business pays an additional $ 100,000 in cash compensation, the net pay for that extra is about $ 72,000 after withholding and payroll taxes. The employee can then use that money to pay for expenses like private school tuition or car rental. But, if instead, the company directly pays $ 72,000 of the employee’s car and school expenses off the books, and the employee and company hide it, it only costs the company the $ 72,000 (which you can still get a deduction as some kind of business expense).

By hiding that fringe benefit income, by pretending you were not a New York City resident, and by claiming tax refunds you were not entitled to, as the indictment alleges, you deprived city tax authorities, the state and the federal government of approximately $ 1,034,236 together. A large sum, to be sure, but one that has likely already been or will soon be overshadowed by Weisselberg’s legal bills. Weisselberg supposedly owes more than half of that cool million on federal taxes. This was a surprising piece of information included in an indictment from New York City and New York State. Perhaps the inclusion of that fact was intended to propel federal enforcement into action. But so far, not a peep from either the Internal Revenue Service or the Merrick Garland Justice Department, though it’s hard to imagine Damian Williams, chosen by President Joe Biden to be the United States Attorney for the Southern District of New York, and Garland’s former secretary on the DC circuit, you won’t notice what looks like an invitation to press charges.

As an aside, is it any wonder that $ 1 trillion goes to uncollected federal taxes, most of which current IRS Commissioner Charles Retting testified is it due to tax traps? Retting claimed that the agency is “outgunned” by sophisticated tax evasion schemes. With all due respect, you don’t need a gun, just a pair of reading glasses. Certainly that is true in this case. As for Garland, he appears to be saving his ire for whoever leaked billionaires’ tax returns like Jeff Bezos to ProPublica who prioritize tax fraud and other white-collar crimes. So far President Biden’s plan to hold tax hoaxes accountable and increase $ 700 billion.

Beyond Weisselberg, the Trump Organization is also in a bind. The grand jury indicted Trump Corporation and Trump Payroll Corp. (both operating as the Trump Organization) on many counts, for crimes including plotting to defraud, conspiracy, tax fraud and falsifying business records.

Although corporations are not actually human beings, they can be criminally charged and convicted, and subject to financial penalties and even forced to dissolve on rare occasions. It is worth remembering that in 2018, at the request of the then Acting Attorney General of New York, Barbara Underwood, a court organized the dissolution of the Donald J. Trump Foundation, the nominally charitable foundation due to its embezzlement. Additionally, New York Attorney General Letitia James has the legal authority under New York corporate law to dissolve the Trump Corporation itself, as asked by Ron Fein, Legal Director for Freedom of Expression for Individuals, and Fordham Law Professor Jed Shugerman.

Under New York law, because Weisselberg had the authority to act on behalf of both corporations to formulate corporate policy and supervise employees, it may be considered a “senior management agent”. This legal designation means that Trump’s companies can be found guilty for actions that only Weisselberg took, authorized or even recklessly tolerated. Even the criminal conduct of ordinary employees could be attributed to Trump’s businesses under New York’s liberal interpretation of vicarious liability. Bankruptcy of Donald Trump’s business would be a huge victory for the Manhattan district attorney

And Trump himself? Although experts predicted that he would not appear in the indictment, they were wrong. And the way it appears is cunningly significant. There is a section of the indictment that charges Trump Corporation, Trump Payroll Corp. and Weisselberg with conspiracy in the fourth degree. Apparently they agreed with “Undenounced Co-conspirator # 1” (who appears to be someone who works for Weisselberg (so not The Donald) to implement the compensation scheme off the books. This part of the indictment goes on to list twelve separate overt acts that were carried out by the conspirators to further the conspiracy.

For people who are not lawyers, this is why this is important. Under many laws in New York and many other states, to establish the existence of an illegal conspiracy, prosecutors must show that there was an agreement between two or more people to commit a crime and at least one act in support of the conspiracy. objectives. The promotional acts may be benign in and of themselves, but they are significant in that they show that the conspirators were not just talking about a great game, but that they really meant to get down to business. Buying a pair of socks isn’t inherently good or bad, but if you bought them after agreeing with a friend to participate in liquor store robberies using socks as masks, that act would be enough to cement the conspiracy.

Well. Getting back to the Trump clues. The first open act that seems to indicate the participation of the former president was Donald Trump on behalf of the corporation that signed a lease around March 31, 2005 for a Manhattan apartment on Riverside Boulevard (the Trump Place building). That lease had a rider that allowed only Allen Weisselberg and his wife to occupy the apartment and use it as their primary residence.

Why is this lease clause important? Well, it reports that the grand jury knows that Donald Trump knew that Weisselberg was living in the apartment on company money. It also means that Manhattan District Attorney Cy Vance does not yet have sufficient evidence to present to the grand jury to show probable cause that Trump was part of the underlying agreement that formed the conspiracy. That said, Trump did himself no favors this week when he impulsively publicly proclaimed that running criminal compensation schemes off the books is “standard practice throughout the US business community.” It is not true, and as Prosecutor Dunne said in court today, this bold scheme is not standard practice. This talk that it was standard practice is not much different than what he said on NBC that he fired James Comey for Russia. Trump says the quiet part out loud.

District Attorney Vance deliberately rejected a press conference after the arraignment because it is an “active and ongoing investigation.” Attorney General James echoed the sentiment: “This investigation will continue and we will follow the facts and the law wherever they take us.” And since the end of February, they have been in possession of millions of pages of Trump’s personal and business financial records. Those investigations are fueled by suspicions that Trump and his businesses inflated the value of real estate by seeking bank loans and conservation easement tax credits, but deflated the values ​​by paying taxes. (Michael Cohen, Trump’s former attorney, laid this out in detail before Congress and publicly in spring 2019.) For a full overview of the possible criminal charges against Trump, this just released The Brookings report, “The Trump Inquiry of New York State: An Analysis of the Alleged Facts and Applicable Law” is instructive.

But still, many experts wonder why accuse now. Sure, indicting Weisselberg may pressure him to turn around and provide the necessary evidence of Trump’s membership in the conspiracy, if one exists.

And if that’s the reason, to put pressure on Weisselberg, why not wait for more evidence against Trump himself before indicting his companies? Generally, corporate entities are the last. Here are some non-legal speculations from a law professor who knows about white collar crimes. It could be a major psychological hurdle to ask the men and women of a grand jury to prosecute a former president. Perhaps the first step of charging their businesses will make them feel comfortable when they are later presented with evidence of Trump’s connection to the same or similar fraudulent schemes.

Who knows for sure? But what I’m sure of is this. For Trump, the worst is yet to come.

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