New York City DA Targets Trump Organization
The articles that I’ve previously done for AccountingWEB all focus on various aspects of federal income taxes. This one doesn’t; it focuses on New York City income taxes.
Why did I decide to replace federal levies with local levies? Because the New York Times for July 2, 2021, displayed this page-one headline: “Trump Business Charged With ‘Audacious’ Tax Fraud.” Right below it are headlines for two articles by a team of reporters: “Prosecutors Describe 15 Years of Hiding Executives’ Luxury Perks and Bonuses” and ”Striking at Heart of Ex-President’s Image.”
The reporters disclose that Manhattan’s district attorney, Cyrus R. Vance Jr., charges the Trump Organization “with running a 15-year scheme to help its executives evade taxes by compensating them with fringe benefits that were hidden from the authorities.” The DA’s 15-count indictment issued on June 30, 2021, states that the Organization’s long-serving chief financial officer, Allen H. Weisselberg, avoided taxes on $1.7 million of off-the-books perks that he should’ve reported as income.
The reporters mention the CFO’s false statement that he isn’t a resident of New York City, thereby lowering his liability for New York City income taxes. Actually, he and his wife permanently reside in a rent-free apartment in Manhattan.
One of the counts specifies that the Trump Organization gave its CFO about $1.2 million for rent, utilities and related expenses for the apartment over a 15-year period from about March 31, 2005 to about June 30, 2021, the date of the indictment’s issuance.
More in a couple of paragraphs on the couple’s apartment and what, in my view, the reporters failed to mention.
What the prosecution has to do. Before we dive deeper into the indictment, let’s discuss what the prosecution has to do when jurors consider relatively mundane, low-level criminal offenses. The prosecution must persuade them to convict a CFO who failed to report such perks as apartments, leased Mercedes-Benzes and private school tuition charges for his grandchildren.
Remembrance of things past. Early in my career, I worked in several cities for the IRS. One job was as a special agent in the Chicago office of the Criminal Investigation Division. Another was in Washington, D.C., as an attorney who decided whether proposed prosecutions should be deep-sixed or forwarded to the Department of Justice.
Based on my IRS experience, I believe the prosecution will obtain a guilty verdict. Here’s why.
What a tangled web a CFO weaves when first he practices to deceive on New York State Form IT-201.The jurors all file tax returns that report their liability for New York State and New York City taxes, an annual requirement that they satisfy when they submit New York State’s Form IT-201, officially titled “Resident Income Tax Return.”
Surprisingly, the reporters failed to mention that the CFO’s fib on IT-201 about something seemingly innocuous like where he lives could prove to be what persuades the jury that it ought to convict him. Here’s why.
IT-201’s first page includes this indisputably straightforward question: “Did you or your spouse maintain living quarters in NYC during” the year in question?
It asks filers to check a “yes” box or a “no” box. At the top of the first page, filers show their address.
The CFO checked “no” for the years mentioned in the indictment. The Manhattan DA’s office has yet to disclose what address he showed for those years.
When it does, will the address be, say, within a cosseted enclave in Westchester County, which borders New York City to its north? Or will it be a Westchester address for a disheveled dwelling that’s on the wrong side of the tracks and abuts a garbage dump?
Whatever the CFO’s answer, there can be no two opinions on whether it helps the DA For sure, the DA will repeatedly show the first pages of the IT-201s to the jurors, stopping only when: their eyes glaze over; they slump unconscious into their chairs; and the judge orders a recess.
Other flagship items. They include apartment leases signed by the CFO and checks directly sent by the Trump Organization to the landlord. The Organization used the perks to dodge payroll taxes; the CFO used them to dodge New York City income taxes.
While the DA mesmerizes the jurors, he has the option to remind them what addresses the CFO and his wife showed when they applied for things like driver’s licenses, insurance coverage for autos and other kinds of property, health insurance, bank and brokerage accounts, credit cards, and charge accounts. Ditto for when the power couple registered to vote, wrote wills, made medical appointments, or became congregants in places of worship, to cite just some of the possibilities.
Vengeance is mine, sayeth daughter-in-law (former) dearest. Another option available to the DA is to introduce testimony by witnesses who socialized with the CFO and his wife in their apartment. A for-sure witness is their estranged former daughter-in-law, Jennifer Weisselberg.
She has provided the D.A.’s office with a trove of documents concerning the finances of her former in-laws, as well as her ex-spouse, Barry Weisselberg, a longtime Organization employee. The ex-spouses are another couple who lived the good life in a rent-free, Organization-owned apartment.
Witness (unwittingly and unwillingly) for the prosecution. Not all of the potential witnesses are estranged. For instance, there’s unswervingly loyal Donald Trump Jr. He posted a Facebook video acknowledging that his father paid the tuition for his CFO’s grandkids.
Jr.’s explanation for why dad did that: “He’s a good guy.”
Less egregious and not harmful. Brother Eric’s self-aggrandizing explanation of why he and his siblings aren’t fearful that they might be in the DA’s crosshairs: “We’ve always lived amazingly clean lives.”