Trump Organization Expects to Be Charged in N.Y. Tax Case
(Bloomberg) -- New York state prosecutors are likely to charge the Trump Organization in coming days, but not former President Donald Trump himself, a lawyer for the company said.
Trump’s family real-estate company expects to be accused of tax crimes relating to its payment of perks and benefits to favored employees, Ronald Fischetti said on Friday, a day after he and other defense lawyers held a Zoom meeting with prosecutors from Manhattan District Attorney Cyrus Vance Jr.’s office.
“They’re looking at charging the corporation or corporations tied to tax charges,” Fischetti said. “Donald Trump is not being indicted.”
The prosecutors are also targeting Allen Weisselberg, the company’s chief financial officer, Fischetti said. Weisselberg’s lawyer, Mary Mulligan, didn’t immediately return a call and email. The charges aren’t expected to end Vance’s investigation, said a person familiar with the matter who declined to comment publicly on confidential negotiations. It’s unclear if prosecutors will continue to explore charges against Trump.
Charges against the Trump Organization would mark an extraordinary escalation of a years-long investigation into Trump and his family business, which has already been battered by the pandemic and its founder’s divisive presidency. Even if the company isn’t ultimately convicted, criminal charges could seriously harm its ability to continue as going concern, said Bradley Simon, a former federal prosecutor.
“Any kind of indictment against a corporation could be the death knell,” he said. “If charged, it means that customers and vendors are going to stay away and contracts are going to be canceled. From a financial perspective, it’s terrible, because no customer, client or other business will want to go anywhere near a company for fear of being tainted, subpoenaed, questioned by authorities or hauled into a grand jury.”
According to Fischetti, a criminal case over a company’s alleged failure to properly account for perks and benefits would be unprecedented. “In my more than 50 years of practice, never before have I seen the district attorney’s office target a company over employee compensation or fringe benefits,” he said. “The IRS would not, and has not, brought a case like this.”
A spokesman for Vance’s office declined to comment. The potential charges were first reported by the New York Times.
The Trump Organization is a collection of dozens of hotels, offices, golf courses and other properties that Trump either owns or licenses his name to. Altogether, they’re worth more than $2 billion after accounting for debt, according to the Bloomberg Billionaires Index. Hit hard by the pandemic, the company saw declining revenue in Trump’s final year as president, according to his financial disclosures. Hotel income, for example, was about $91 million in 2020, down 42% from 2015, according to a Bloomberg analysis of his financial disclosures.
The person familiar said the Trump Organization plans to argue that the threat to its continued existence posed by prosecution is vastly disproportionate to the alleged misconduct and that the people who will suffer the most are not Trump or his family members but the company’s 3,500 employees, like the dishwashers and maids at Trump hotels and golf courses.
Prosecutors in the past year have combed through Trump’s taxes and business records. They have also scrutinized an array of perks that Weisselberg and the Trump Organization bestowed on favored employees, including Weisselberg’s son, to determine whether appropriate taxes were paid.
Vance’s investigation initially focused on the Trump Organization’s reimbursement, through Weisselberg’s office, of 2016 hush-money payments made by Michael Cohen, Trump’s former personal lawyer and fixer, to women claiming to have had affairs with Trump. The investigation has since grown into a review of its taxes and the company’s dealings with a variety of outside business entities.
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