The indictment filed last week against the Trump Organization and its longtime CFO Allen Weisselberg doesn’t have big names, but there is one major exception: a list of seven Trump Organization companies – including one where Ivanka Trump was a leader eight years.
While it’s impossible to know which charges are left, legal experts say the indictment against Weißelberg last week suggests bigger targets are in line, possibly including the former president’s adult children.
“With this indictment in a New York State court, prosecutors can name these companies while they couldn’t in federal courts,” Melissa Jampol, a former US assistant attorney who now practices business law at Epstein Becker Green, told The Daily animal. “In my experience, everything is in there for a reason.”
Prosecutors say the seven companies, along with unnamed Trump companies, exhibited a pattern of paying “a substantial portion” of year-end bonuses to Weisselberg and “other executives” as if they were not employees but independent contractors. Prosecutors also allege that the companies and executives knew the practice was wrong and the amounts appear to be substantial. For example, Weißelberg is said to have broken the law by investing hundreds of thousands of dollars in bonus money in a tax-free retirement plan.
However, experts say the deal also affects the companies – and possibly the executives who ran it.
That could cause great difficulties for Trump’s children, but also for Trump himself, who has already pursued a legal strategy of ignorance of tax laws.
“When you work for a company, you generally get a W2 form for your taxes,” David Sands, partner at accounting firm Buchbinder Tunick, told The Daily Beast. “Some companies try to get around this by having an affiliate say, ‘Oh, this is not my employee, so give them a 1099 instead.'”
Tunick went on to say that workers and companies receive deductions and often try to shield that income. “It’s a practice that is frowned upon by the IRS and bypasses tax laws,” he said.
The federal withholding tax on employee allowances is 22 percent. Other wage taxes would also apply. The Trump companies running the system claimed by the prosecutor would have denied the government that money. And that alone could be enough to bring down a number of members of the Trump family.
“The bonus section may seem like a small thing compared to some of the other charges, but it might actually be one of the keys,” said Ed McCaffrey, tax law expert and Robert C. Packard Trustee Chair in law at the University of Southern California .
That key, he said, is the prosecution’s claim that the bonus system is a matter of “practice” in the Trump Organization, something that “large American corporations generally do not have.”
“That creates a pattern,” McCaffrey continued. “A one-off event may not usually attract government attention. But that is tax fraud for decades, year after year, throughout the company. “
McCaffrey added that if the entire organization were “infected” with “tax evasion” and prosecutors could spot this picture, it would be easier to get in touch with other executives. “This raises the question of how the executives are exposed on the organizational side,” he said.
In the indictment against the Trump Organization released last week, prosecutors singled out seven companies: Wollman Rink Operations LLC, Trump International Golf Club LLC, Mar-a-Lago, Trump Productions LLC, VH Property Corp. (the parent company of Trump National Golf Club in Los Angeles), Trump Las Vegas Development LLC and Trump CPS LLC.
Former federal attorney Barb McQuade told The Daily Beast that the decision to single out these companies could be part of an attempt to secure further collaboration from future charges.
“Sometimes prosecutors withhold some charges to give an opportunity to look into cooperation before they all play their cards,” she said.
While only Weißelberg is mentioned in the indictment, the “other executives” mentioned in the indictment could also be Trump’s children who held top positions in these organizations – particularly his eldest daughter, former senior White House adviser Ivanka Trump.
Ivanka’s financial statements indicate that from 2009 to 2017 she was the vice president of one of the companies named in the indictment – Trump Las Vegas Development LLC. According to the federal government, this company was formed to collect development fees for the Trump Ruffin Tower, a combination of hotel and condominium in Las Vegas.
But these disclosures also show that the company’s underlying value is not clear and its earnings have fluctuated dramatically. The company had no revenue at all in 2014 and 2015, then raised $ 8.1 million in 2016 before dropping again in 2017, the year Ivanka left the company. It pulled in a little over $ 3 million a year for the next two years and then fell asleep.
“The company must have a real business purpose,” said Jampol. “So what are these beings doing? Are they actually doing business or are they just there to pay out compensation for a few years? To qualify as a consultant, you really have to provide consulting services. “
McCaffrey said the Trump children and other executives “almost certainly” will not qualify as advisors. “The IRS has a rulebook. If you are already an employee, you will not be an independent contractor, ”he said.
Last September, the New York Times reported that Trump’s tax returns indicate that Ivanka Trump apparently received nearly $ 750,000 in consulting fees from another Trump firm that she was also an executive with. Following the report, New York Attorney General Letitia James, who worked with Manhattan District Attorney Cyrus Vance in the Trump Organization investigation, sued the Trump Organization for a record of these transactions.
However, according to McCaffrey, most companies don’t see much of a tax incentive to pay contractor fees. Companies can deduct salaries as operating costs. However, he noted that Trump companies may see it differently.
“Trump companies don’t make profits. And if a company isn’t making a profit, they may not care if those prints are lost. Instead, they pay these bonuses to employees in such a way that they don’t have to pay taxes for them, ”said McCaffrey.
The official relationships between Trump’s children and the various units of the family business are blurred. “We don’t take titles at the Trump Organization very seriously,” Ivanka said in a 2016 statement.
But one person who knows the company told The Daily Beast that “every new project has to have one of the kids”.
Founding Documents list no directors other than Donald Trump until he turned his business studies over to his children after taking over the White House in 2017. But his children have been closely associated with the company for a long time. And Ivanka’s financial disclosures show she held executive positions at dozen of Trump companies, including Mar-a-Lago, which is listed in the indictment.
However, some of the companies listed in the indictment also have ties to Eric Trump and Donald Trump Jr.
For example, Trump CPS LLC reportedly signed a treasury contract for the purchase of condominiums in April 2016. The indictment also mentions two golf courses, a division largely owned by Don Jr.
One of these two golf courses, Trump National in Los Angeles, is under investigation by James’ office for possible tax fraud. Prosecutors also called Trump Productions LLC, the ex-president’s media company that produced the Trump-hosted game show The Apprentice. Both Eric and Donald Trump Jr. served as advisors for this series.
Jampol noted that while the indictment is at the state level, the indictment also lists federal crimes, “so we cannot rule out a state investigation.”
However, the blurry lines of business can create a hurdle for prosecutors who have until November to present their arguments to a grand jury.
“That’s the weakest link: who in the organization can be held criminally accountable?” Said McCaffrey. “I think that will be the hardest part. Some executives may try to take on the ‘ostrich defense’, saying their heads are in the sand. “
In a statement earlier this year, Ivanka Trump seemed to distance herself from Weißelberg. She told investigators that she did not know the CFO of her family business, which suggests that she was unaware of his responsibilities.
“He’s the – I should see what he is – I don’t know his exact title, but he’s an executive in the company,” she said.