Trump’s company ‘cheated’ tax authorities, prosecutor says at trial

NEW YORK, Oct 31 (Reuters) – Former President Donald Trump’s real estate company defrauded tax authorities for 15 years, a prosecutor said on Monday in her opening statement in the Trump Organization’s criminal tax fraud trial, while defense lawyers countered that the company’s long-time chief financial officer has acted in his own interest.

The company paid some executives — including former Fire Chief Allen Weisselberg — in perks like rent and cars without reporting those benefits to tax authorities, and falsely reported bonuses as non-employee compensation, the prosecutor said Susan Hoffinger of the Manhattan district attorney’s office.

“This case is about greed and cheating, cheating on taxes,” Hoffinger said. “The scheme was carried out, directed and authorized at the highest levels of the accounting department in the company.”

The case is one of several legal troubles facing the 76-year-old Trump as he considers another bid for the presidency after losing in 2020.

Trump has not been charged in the case.

In August Weisselberg, who has worked for Trump for nearly half a century, pleaded guilty to evading taxes on $1.76 million in personal income and agreed to testify at trial as part of a plea deal to receive a five-month prison sentence. He paid back nearly $2 million in taxes, penalties and interest, Hoffinger said.

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The two Trump Organization units charged – the Trump Corporation and the Trump Payroll Corporation – have pleaded not guilty. Their lawyers argued on Monday that Weisselberg was not acting on behalf of the company.

“Weisselberg did this for Weisselberg,” Michael van der Veen, a lawyer for the Trump Payroll Corporation, said in his opening statement. “Greed made him cheat on his taxes, hide his actions from his employer, and betray the trust built over almost 50 years.”

Hoffinger said Weisselberg was the “primary beneficiary” of the scheme. But he said he acted as an executive of the Trump Organization, and that the company benefited by keeping top executives happy and saving on taxes.

Hoffinger said Trump paid for private school tuition for Weisselberg’s grandchildren, adding that the jury would see checks signed by Trump himself as evidence.

Van der Veen tried to shift the blame to accounting firm Mazars, which handled the company’s and Weisselberg’s tax returns.

Mazars did not immediately respond to requests for comment. In February, the firm dropped the Trump Organization as a client and said financial statements it prepared for the firm between 2011 and 2020 should no longer be relied upon.

FIRST WITNESS

If convicted, the Trump Organization — which operates hotels, golf courses and other real estate around the world — could face $1.6 million in fines. It could also further complicate the real estate company’s ability to do business.

The court case is expected to last over a month. Twelve jurors must reach a unanimous verdict of guilty on all counts of tax fraud, planning to defraud, and falsifying business records.

He said when Trump was elected president in late 2016, Weisselberg and the company had to “clean up these fraudulent tax practices” because of concerns about additional scrutiny. The companies stopped paying for their employees’ unreported personal expenses, and Weisselberg began paying his own grandchildren’s tuition, Hoffinger said.

Susan Necheles, a lawyer for the Trump Corporation, said Weisselberg – not the company – wanted to clean things up.

The prosecution’s first witness, Trump Organization manager Jeffrey McConney, testified that Weisselberg received a portion of his compensation as non-employee bonuses up to a certain point.

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Prosecutor Joshua Steinglass asked him if it ended around the time Trump was elected.

“I think it was a coincidence,” said McConney, who was granted immunity from prosecution because he testified before the grand jury that indicted Weisselberg and the companies.

“Did you say coincidentally?” Steinglass replied. McConney, who prosecutors see as a hostile witness, said yes.

Weisselberg resigned as CFO when he was indicted but remained on the payroll as a senior advisor. After he pleaded guilty, he continued to be paid but was placed on leave.

The case is separate from a $250 million civil lawsuit filed by the New York attorney general against Trump, three of his adult children and his company in September, accusing them of lying to banks and insurers by overstating his real estate assets and Trump’s net worth.

Trump also faces a federal criminal investigation into removing government documents from the White House when he left office last year.

Reporting by Karen Freifeld and Luc Cohen in New York Editing by Noeleen Walder, Alistair Bell and Howard Goller

Our Standards: The Thomson Reuters Trust Principles.

Luke Cohen

Thomson Reuters

Reports on the federal courts of New York. Before that he worked as a reporter in Venezuela and Argentina.

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