Prosecutors accused Trump’s company and Chief Financial Officer Allen Weisselberg of hiding about $1.7 million in off-the-books perks and cash bonuses to Weisselberg, his family members and other Trump employees. Weisselberg and the Trump Organization have pleaded not guilty.
Wittes said the conduct described was egregious and clearly deserved prosecution, but expressed surprise that prosecutors hadn’t yet surfaced with charges related to the Trump firm’s dealings with banks, insurance companies or the company’s own property and income tax bills.
Other legal experts counseled patience, saying that the indictment was part of a methodical process to build a broader case that could very well involve charges against Trump directly.
“Prediction: the charges brought today in Manhattan are the tip of the iceberg,” Andrew Weissmann, a former deputy to special counsel Robert Mueller, wrote on Twitter. “Note DA request for a protective order to keep discovery close to the vest while investigation continues.”
Asked about expectations for a broader case charging the company with tax, insurance and bank fraud in connection with its business deals, Weissmann said he thinks charges of that sort are still coming.
“This is not a sign that they didn’t find anything there and that part of the case is done,” he told POLITICO. “To me, it reads like: Why delay when they have this part of the case ready? They’re also sending a message to others involved that they’re not afraid to bring charges.”
Many lawyers said the suit doesn’t reflect all the evidence prosecutors have against the Trump Organization or Trump, but rather all the things they think they can prove against the 73-year-old Weisselberg.
“It is safe to say that prosecutors did not start their investigation into Donald Trump to dismantle a fringe benefit conspiracy amounting to significant dollars on its face, but a relatively small amount of money in the context of the Trump Organization,” said Jeremy Saland, a former prosecutor in the Manhattan DA’s office.
The 15 charges, which theoretically carry up to 80 years in prison if stacked end-to-end, could convince Weisselberg to tell prosecutors what he knows about Trump’s involvement in the other tax, insurance and bank fraud matters the district attorney’s office has been pursuing for two years. Weisselberg’s lawyers maintained that he intends to vigorously contest the charges, which they called politically motivated.
Efforts to flip witnesses to incriminate higher ups are common in criminal probes, although some attorneys said aspects of this week’s indictment are unusual.
Lawyers for the Trump Organization argued that state criminal charges are unheard of against a company over the sums at issue in the indictment — about $1.7 million in allegedly unreported income to Weisselberg over 15 years. As a result, prosecutors allege, the Trump Organization CFO underpaid his federal income tax by about $556,000, state tax by about $107,000, and New York City taxes by about $238,000.
“Never before has this District Attorney’s office, or even the IRS, criminally charged a company over employee benefits,” the Trump Organization said in a statement Thursday. “Everyday New Yorkers and Americans know exactly what this is: an inappropriate use of a local prosecutor’s vast and unchecked power to target a political opponent.”
However, some experts said the array of unreported tax-free benefits including private-school tuition, apartment rental and Mercedes lease payments described in the indictment made the allegations against the Trump Organization more damning than a garden-variety case. They also noted the allegations that Weisselberg and others took deliberate steps to cover up the perks and benefits.
“I’d say it’s a reasonable, righteous prosecution in the sense that they were doing bald-faced, problematic transactions that you cannot allow to be happening within any tax regime, or your tax regime falls apart,” said Philip Hackney, a University of Pittsburgh law school professor who formerly worked in the Office of the Chief Counsel at the IRS. “If you find these types of things, I think you’ve got to do something about them. And a prosecution of some sort makes sense to me.”
One of the prosecutors on the case said in court Thursday that the Trump Organization’s public claims about the charges are misleading.
Assistant District Attorney Carey Dunne described the alleged “off-the-books” payment scheme as “a type of crime that’s charged against companies and executives all the time.”
Referring to Trump without mentioning his name, Dunne added, “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.”
While the sums involved in the case seem minor compared to bonuses paid to individual Wall Street bankers in a given year, Hackney said the flagrant nature of the Trump Organization’s alleged scheme called for action.
“That’s pretty egregious stuff,” Hackney said. “With Weisselberg, it’s a fairly substantial amount of money that was avoided.”
Some experts also noted another unusual feature of the DA’s case: The IRS is painted as a victim. In fact, the most serious charge against Weisselberg — carrying a potential 15-year prison term — is that he stole more than half a million dollars from the federal government by not properly paying his taxes.
Yet, so far, there’s been no public sign that the IRS has sued him for that money, much less filed a federal criminal case over it.
Hackney said the alleged unreported income might simply have slipped under the feds’ radar.
“The IRS doesn’t audit that many people, so it’s possible the IRS has just missed all of this,” he said.