Tax law specialists: “Robust” case in opposition to CFO of the Trump Group | Information, sports activities, jobs

NEW YORK (AP) – Companies constantly give their employees discounts. Many top executives at Fortune 500 companies have access to a company jet for personal use, a company apartment, or an expense report for lost meals. Even lower-level employees regularly get access to perks like tuition reimbursements or cash to join a gym.

But prosecutors’ extravagant perks say the Trump Organization has been wasted on CFO Allen Weisselberg – apartments, cars, cash on vacation tips, tuition fees for his grandchildren, to name a few – well beyond the level of a valued employee compensated, some tax law experts said.

And the case against Weißelberg appears to be much stronger than originally expected by those watching the Manhattan District Attorney’s investigation into the Trump Organization, its staff and its eponymous leader.

“This is an overwhelmingly strong case”, said Daniel Hemel, a law professor at the University of Chicago.

According to the indictment, which was unsealed on Thursday, Weißelberg defrauded the tax office by taking away a substantial part of his annual compensation in fringe benefits. They say these perks were worth nearly $ 1.8 million over 15 years.

Weisselberg alone has been accused of defrauding the state, state and city of more than $ 900,000 in unpaid taxes and unearned refunds. He pleads not guilty.

“Mr. Weißelberg does not want to plead guilty and will fight these allegations in court. This was announced by Weisselberg’s lawyers, Mary Mulligan and Bryan Skarlatos.

In the meantime, former President Donald Trump and his allies have tried to defend the indictment against Weißelberg and the Trump organization as “Witch hunt” Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James, both Democrats. They said the associated perks are standard for successful American businesses.

But the case against Weißelberg is not necessarily unusual. Some compared the charges to a tax fraud case involving another real estate tycoon from 30 years ago: Leona Helmsley, the so-called “Queen of Means” who tried to get their real estate empire to pay for a $ 3 million home renovation in the 1980s.

Trump himself called Helmsley a “Shame on Humanity” for fraudulent tax evasion all those years ago.

“The dollar numbers and the fees are more serious than what we had thought in the last few days with the little information we had.” said Daniel R. Alonso, a former assistant district attorney in the Manhattan District Attorney’s Office. “The alleged tax loss is $ 900,000. This is a fraud amount that is definitely in the prison area for typical cases of this magnitude. “

Melissa Jampol, a former Manhattan assistant attorney specializing in white-collar crime prosecution, said the prosecution’s allegations went well beyond allegations of fringe abuse that some had suspected would be at the heart of the case.

“I think the most important thing to learn is that there is a lot more going on here than the indictments claim than people were previously aware of.” said Jampol, a lawyer at Epstein Becker Green.

The indictment alleges that it is not only because Weißelberg did not properly report his wages. It states that the Trump organization as a company was complicit.

The company kept internal records tracking employee compensation, and those records listed Weisselberg’s rent, tuition fees for his grandchildren, his cars, and other items as part of his compensation package. The company even reduced Weisselberg’s paychecks to account for the indirect compensation he received in the free rent, the indictment said.

However, this compensation was recorded differently in the company’s general ledger and was not reported to the tax authorities, according to prosecutors.

“There’s the set that was the formal ledger and the set that was Weißelberg’s compensation calculations.” said Jampol.

Smaller cases with similar practices are not uncommon. A Queens-based plumber was sentenced to 20 months in prison just last month. Sergei Denko was found to have cashed checks for $ 5 million to fund a payroll system that avoided paying around $ 732,000 in employment taxes. A Long Island restaurant owner was convicted in September for also avoiding $ 130,000 in wage taxes.

Thomas M. Cryan, Jr., a Washington tax attorney, said law enforcement for employee fringe benefits are rare, but an unusually large volume of perks and the intent to hide them as income could turn a civil case into criminal proceedings.

Often times, fringe benefit violations persist between the company and the Internal Revenue Service and can only result in an audit or back tax payment with a fine.

But some of the allegations against Weißelberg go far beyond the abuse of fringe benefits. Weisselberg’s son Barry – who ran a Trump-operated ice rink in Central Park – paid no reported rent while living in a Trump-owned apartment in 2018, and was only charged $ 1,000 a month – well below typical Manhattan prices – while he lived in a Trump apartment from 2005 to 2012, the indictment states.

Allen Weisselberg himself, a very private man who lived in a modest house on Long Island for years, continued to live there, despite spending most of his time in a company-paid apartment in Manhattan, prosecutors said. In this way, Weisselberg hid the fact that he was a resident of New York City and avoided paying the city’s income tax.

Although some stand-alone tax offenses can be handled civilly or administratively, the allegations help explain other misconduct – including aggravated theft – why prosecutors would prosecute this system as criminal, Jampol said.

However, this does not mean that the allegations that require evidence of intent can easily be brought to justice.

“That will really be the burden that prosecutors have to prove that there was a plan and that it wasn’t just a series of mistakes or misunderstandings.” She added.

Get the latest news and more in your inbox