However, the Trump Organization’s lavish perks for its CFO Allen Weisselberg — cars, apartments, cash for holiday tips and tuition for his grandchildren, to name just a few — go well beyond what is necessary to compensate a valued employee, tax experts say.
The case against Weisselberg seems to be stronger than expected, according to those who have been following the Manhattan District Attorney’s investigation into the Trump Organization, its employees and its namesake leader.
Daniel Hemel, a University of Chicago law professor, said that “this is an overwhelmingly strong argument.”
The indictment was unsealed Thursday. It states that Weisselberg cheated the tax authorities by taking large chunks of his annual compensation as fringe benefits. These perks, which were not on the books, were valued at nearly $1.8 million over 15 years.
Weisselberg was the only one accused of defrauding both the federal government and the state of New York by claiming more than $900,000. He has pleaded not guilty.
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Former President Trump and his associates have attempted to frame the indictment of Weisselberg, the Trump Organization, and Manhattan District Attorney Cyrus Vance Jr. as a “witch hunting” by New York Attorney General Letitia Jam, both Democrats. They claimed that the perks were common for American businesses.
The case against Weisselberg, however, is not unusual. Some have compared the indictment with a tax fraud case involving another real-estate tycoon 30 years ago: Leona Helmsley. Leona Helmsley was the “Queen Of Mean”, who attempted to get her realty empire to pay $3 million for a home renovation in 1980s.
Trump called Helmsley a “disgraceful to humanity” for fraudulously avoiding taxes over the years.
Daniel R. Alonso (ex-chief assistant district attorney at the Manhattan District Attorney’s Office) stated that “the dollar figures and charges are more serious than we had thought over these last few days with what little information we had.” “In particular the tax loss alleged amounts to $900,000. This is a large amount of fraud that would be considered a typical case of this magnitude and is likely to land you in jail.
Melissa Jampol, a former Manhattan assistant district attorney, specialized in prosecuting white collar crimes. She said that the indictment included more than the fringe benefit abuse allegations some assumed would be the core of the case.
Jampol, an Epstein Becker Green attorney stated that “I think that the main takeaway is that there’s more to this indictment than people are aware of.”
Indictment claims that it wasn’t simply a matter of Weisselberg not reporting his salary correctly. The indictment also claims that the Trump Organization was complicit as a company.
The company maintained internal records to track employee compensation. Weisselberg’s rent and tuition payments for his grandchildren, as well as his cars, were all included in Weisselberg’s compensation package. According to the indictment, Weisselberg’s salary checks were even cut by the company in order to reflect the indirect compensation he was receiving in rent free.
However, the compensation was not recorded in the general ledger of the company and was not reported to tax authorities according to prosecutors.
Jampol stated, “There was the set that was the formal leadger and there was the set that was Weisselberg’s compensation calculations.”
Not infrequently, smaller cases involving similar conducts are reported. Just last month, a Queens-based plumber was sentenced for 20 months. Sergei Denko was found guilty of having cashed $5million in checks to pay off an off-the books payroll system. This allowed him to avoid paying approximately $732,000 in employment taxes. A diner proprietor was also convicted on Long Island in September for avoiding $130,000 in unemployment taxes.
Washington tax lawyer Thomas M. Cryan, Jr. said that although prosecutions for fringe benefits given to employees are not common, an unusually high volume of perks and intent to conceal them under income could make a civil case into a criminal one.
Many cases involving fringe benefits violations are left between the company, Internal Revenue Service and the employee. This could lead to an audit or back taxes and a penalty.
Some of the accusations against Weisselberg are more serious than the abuse of fringe benefits. Barry Weisselberg, Barry’s son and manager of a Trump-owned ice rink in Central Park, paid no rent in 2018 while residing in a Trump-owned apartment. He was also charged only $1,000 per month — well below the typical Manhattan price — while he lived in a Trump apartment between 2005 and 2012.
Prosecutors said that Allen Weisselberg, an extremely private man, maintained his Long Island residency despite living in a Manhattan apartment paid by his company for many years. Weisselberg hid the fact that he was a New York City resident and avoided paying income tax.
Jampol stated that although some tax offenses can be dealt with civilly or administratively, there are other allegations, including grand larceny, that would explain why prosecutors would consider this scheme worthy of criminal prosecution.
However, this does not mean that the allegations will be simple to prove in court.
She said, “That’s really going be the burden that DA’s office will have to prove that there was a plan here, and it wasn’t just a series or misunderstandings.”
