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Leadership

Why Trump Organization CFO could see a long prison sentence over luxury perks

By
David Voreacos
David Voreacos
,
Greg Farrell
Greg Farrell
, and
Bloomberg
Bloomberg
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By
David Voreacos
David Voreacos
,
Greg Farrell
Greg Farrell
, and
Bloomberg
Bloomberg
Down Arrow Button Icon
July 2, 2021, 6:39 AM ET

Trump Organization Chief Financial Officer Allen Weisselberg made $940,000 a year from 2011 to 2018, but much of that was “off the books,” Manhattan prosecutors claim.

Former President Donald Trump’s longtime right-hand man was furnished with a luxury Upper West Side apartment, leased Mercedes for him and his wife, private-school tuition for his grandchildren and other perks totaling $1.76 million which he and his employer hid from tax authorities, according to the 15-count indictment by Manhattan District Attorney Cyrus Vance.

Weisselberg, 73, and the Trump Organization both pleaded not guilty to all charges on Thursday. Though the basic outline of the charges had been known since last week — and downplayed as minor by Trump lawyers — legal experts said they were surprised by the breadth and seriousness of Vance’s allegations.

“It’s a longer, more extensive scheme than what we had been led to believe, mostly by Trump’s lawyers,” said Daniel Alonso, a former prosecutor in Vance’s office. “The likely outcome of a conviction is some amount of incarceration. I did not expect this indictment to put that much pressure on Weisselberg to cooperate.”

Weisselberg’s cooperation could lead to a more expansive case against the company and, possibly, a historic and politically charged prosecution of a former president. Vance has been probing possible bank and insurance fraud at the company as well, and Weisselberg, a Trump executive for four decades, has unique insight his boss’s finances and business dealings.

Substantial Prison Term

The CFO is looking at a substantial prison term based on charges that he cheated federal, state and city tax authorities out of nearly $1 million in a scheme that ran for 15 years, said John Moscow, former head of complex fraud investigations in the district attorney’s office. Moscow noted that Weisselberg was facing a count of second-degree grand larceny, which carries a maximum term of 15 years, for taking federal tax refunds on underreported income.

“When the CFO of a multimillion business falsely applies for refunds on taxes from the IRS, that’s not nothing,” Moscow said. “That’s a very bad thing.”

Starting last Friday, lawyers for the Trump Organization have been describing the allegations as overreach, claiming the Internal Revenue Service has never pursued such a case and that Vance, a Democrat, is politically motivated by animus toward Trump. The former president has also called the probe a political witch hunt.

Outside the courthouse Thursday, Susan Necheles, a defense lawyer for the company, suggested prosecutors were inflating a case in which a few people may have made mistakes on their personal tax returns.

“We will win this case, but this case should have never been brought,” Necheles said. “It’s a political prosecution.”

Biggest Perk

There was no mention of politics in the indictment, which depicted Weisselberg as an executive who enjoyed a luxurious lifestyle while flouting tax laws and falsifying company records.

The biggest untaxed perk that Weisselberg enjoyed was his apartment. While located in a formerly Trump-branded building facing the Hudson River, it was not owned by the company, which paid rent and related expenses of $1.17 million for its CFO from 2005 through 2017, according to the indictment. Despite his Manhattan residence, Weisselberg falsely claimed not to live in New York City, to avoid paying city income taxes, prosecutors allege.

According to the indictment, the Trump Organization also paid $196,245 to cover lease payments for two Mercedes and covered garage expenses for the cars as well. Private-school tuition for two Weisselberg family members were also paid by the company to the tune of $359,058 between 2012 and 2017. The CFO got $29,400 in cash between 2011 through 2017 for “personal holiday gratuities” and was also frequently drew “ad hoc personal expenses” from the company, including new beds, flat-screen televisions, carpet installation, and furniture for himself and family members.

None of this was treated as compensation by either Weisselberg or his employer, prosecutors claim. The company deducted the rent payments for Weisselberg as expenses, and booked the cash as “holiday entertainment.” According to the indictment, the company reduced direct compensation to Weisselberg in favor of the indirect payments that were hidden from tax authorities.

The indictment also notes that a Weisselberg family member lived in a company-owned apartment on Manhattan’s Central Park South from 2005 through 2012 for a heavily subsidized rent of $1,000 a month and lived for free for a year in another Trump apartment on East 61st Street. Bloomberg News previously reported that Weisselberg’s son Barry enjoyed such an arrangement and that the private-school tuition was for Weisselberg’s grandchildren.

According to the indictment, other Trump employees received untaxed perks in the form of New York City lodging and car leases. One is described as “Unindicted Co-conspirator #1,” suggesting others may be charged.

Samuel Buell, a Duke Law School professor and former federal prosecutor, noted that the amounts at issue weren’t as large as in many high-profile tax-fraud cases but said they would likely make a deep impression on those deciding the defendants’ fates.

“Salaried New York jurors and judges are not likely to see this as anything but serious, intentional misconduct deserving of punishment,” he said.

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