Trump Organization indictment charges long-time scheme to dodge taxes on compensation to CFO Weisselberg, other execs

Key Points
  • The Trump Organization and Chief Financial Officer Allen Weisselberg pleaded not guilty Thursday to crimes related to what prosecutors called a "sweeping and audacious" scheme to avoid taxes on compensation for the CFO and other executives.
  • The company is owned by former President Donald Trump, who was not charged.
  • A 15-count indictment says the Trump Organization and Weisselberg devised a scheme to compensate Weisselberg and other company executives in an "off the books" manner, in which they "received substantial portions of their income through indirect and disguised means."
  • A prosecutor in court said that the "the former CEO" of the Trump Organization — ex-President Trump — "signed, himself, many of the illegal compensation checks" to executives.
Criminal charges revealed against Trump Organization and CFO Allen Weisselberg

The Trump Organization and its Chief Financial Officer Allen Weisselberg pleaded not guilty Thursday to crimes related to what prosecutors called a "sweeping and audacious" scheme since 2005 to avoid taxes on compensation for the CFO and other executives of the company owned by ex-President Donald Trump.

The 15-count indictment, which was broader in scope than many legal observers expected, is the first set of criminal charges to emerge from probes of Trump and his company by the Manhattan District Attorney's office and the New York state Attorney General's office. Those investigations are continuing.

The indictment says the Trump Organization and Weisselberg devised the scheme to compensate Weisselberg and other company executives in an "off the books" manner, allowing them to receive "substantial portions of their income through indirect and disguised means."

Weisselberg, 73, had the rent, utilities and garage expenses for his apartment on Manhattan's Upper West Side paid for by the Trump Organization, without that compensation being reported to tax authorities, and without paying related taxes, the indictment says.

The Trump Org. allegedly kept two sets of books

He also received from the company Mercedes-Benz cars for him and his wife, private school tuition for two grandchildren, unreported cash to be used for holiday gratuities and other benefits, all of which were hidden from tax authorities, the indictment said.

In all, Weisselberg alone received about $1.76 million worth of "indirect compensation," the indictment said.

He thus evaded paying more than $900,000 in taxes that he should have paid, and received more than $136,000 in falsely claimed refunds, according to the indictment, which was issued by a special grand jury in Manhattan.

A prosecutor said in court that the "the former CEO" of the Trump Organization — ex-President Trump — "signed, himself, many of the illegal compensation checks" to executives.

Trump has not been criminally charged.

The scheme "was orchestrated by the most senior executives, who were financially benefitting themselves, by getting secret pay raises at the expense of state and federal taxpayers," said Carey Dunne, the prosecutor from DA Cyrus Vance Jr.'s office, during the defendants' arraignment in Manhattan Supreme Court.

The indictment says that Weisselberg and the company also schemed to "conceal his status as a New York City resident and enabled Weisselberg to avoid the payment of New York City income taxes."

Weisselberg, who has worked for the Trump family for 48 years, for much of the scheme's time frame had another residence on Long Island, New York. But the indictment says that since 2005, he "spent most of his days in New York City," which would make him a city resident for tax purposes.

Allen Weisselberg, chief financial officer of Trump Organization Inc., center, walks towards a courtroom at criminal court in New York, U.S., on Thursday, July 1, 2021.
Stephanie Keith | Bloomberg | Getty Images

The indictment also says that the Trump Organization maintained internal spreadsheets to track the value of the compensation paid to Weisselberg and others, which was not disclosed to either the IRS, or to New York state and city tax authorities.

The indictment refers to conduct by an unindicted co-conspirator who participated in the scheme. That person is not Trump himself, according to NBC News, which cited a law-enforcement official.

Weisselberg, who surrendered to the DA's office early Thursday morning, was taken into the courtroom in handcuffs by authorities while wearing a white mask.

Weisselberg's attorney told a judge that the defense team objected to the prosecution's claims.

Vance and James were both in court during the hearing. A judge ordered the parties back to court on September 20 for a status conference.

Cyrus Roberts Vance Jr. District Attorney of New York County and New York State Attorney General Letitia James arrive in court for the hearing of Allen Weisselberg, former US President Donald Trumps company chief financial officer at the criminal court in lower Manhattan in New York on July 1, 2021.
Timothy A. Clary | AFP | Getty Images

Last year, Vance won a legal battle that allowed him to obtain years' worth of ex-President Trump's tax records and other financial documents from his long-time accounting firm.

Dunne during the hearing said that — contrary to the claims of Trump himself — the alleged scheme was not a "standard practice in the business community.

"This case is not about politics, this investigation, which is ongoing, is proper," Dunne said.

Dunne also said that "contrary to the defense assertions, there's no clearer example of a company that should be held to criminal account."

The Trump Organization and related entities were charged with Weisselberg with a scheme to defraud in the first degree, fourth-degree conspiracy, criminal tax fraud in the third- and fourth-degree, and falsifying business records.

Weisselberg is also charged with second-degree grand larceny.

He was released without bail after being ordered to surrender his passport and told to clear any foreign travel plans with a judge.

A lawyer for the Trump Organization entered a not guilty plea on behalf of the company, which faces fines if convicted.

New York Attorney General Letitia James, said, "Today is an important marker in the ongoing criminal investigation of the Trump Organization and its CFO, Allen Weisselberg."

"In the indictment, we allege, among other things, financial wrongdoing whereby the Trump Organization engaged in a scheme with Mr. Weisselberg to avoid paying taxes on certain compensation," James said.

"This investigation will continue, and we will follow the facts and the law wherever they may lead."

Trump's former personal lawyer Michael Cohen has repeatedly met with Vance's investigators to assist them with their probe.

Weisselberg's former daughter-in-law Jennifer Weisselberg also has given prosecutors information.

Jennifer Weisselberg speaks with NBC News said about her former father-in-law, Allen Weisselberg, the company's CFO.
NBC News

Her lawyer Duncan Levin, said, "We have been working with prosecutors for many months now as part of this tax and financial investigation and have provided a large volume of evidence that allowed them to bring these charges.

"We are gratified to hear that the DA's office is moving forward with a criminal case," Levin said.

Jennifer's ex-husband Barry Weisselberg works for the Trump Organization. The indictment reflects Jennifer's claims that Barry lived rent-free in a Central Park South apartment owned by the Trump Organization for years.

Barry Weisselberg was not charged in the indictment, which did not identify him by name as the recipient of the rent-free apartment.

But the indictment said, "The value of the lodging provided to [Allen] Weisselberg's family member constituted income to that family member, and the defendants were required to report that income and to pa withholding taxes on it to federal, state and local tax authorities."

"The defendants intentionally failed to do so." 

Ex-President Trump, in a statement, said, "The political Witch Hunt by the Radical Left Democrats, with New York now taking over the assignment, continues. It is dividing our Country like never before!"

"Do people see the Radical Left prosecutors, and what they are trying to do to 75M+++ Voters and Patriots, for what it is?" Trump said in a later statement.

Outside of court after the arraignment, Trump Organization lawyer Alan Futerfas, told reporters, "The allegations in the indictment are just that, they are allegations."

"These charges are going to be vigorously contested," Futerfas said.

Futerfas also said that the charges were "unprecedented," and typically would not have been brought by the IRS or other authorities. He said he believed the indictment was filed because of political reasons.

"If the name of the company was something else, I don't think these charges would've been brought. In fact, I'm fairly certain," he said.

Trump Organization CFO surrenders to authorities, reports NBC News

The Trump Organization, in a statement released after the arraignment, said, "After years of investigating, dozens of subpoenas, millions of documents and millions of dollars of taxpayer money, the Manhattan District Attorney's Office has decided to charge select Trump entities with providing a car, an apartment and other employee benefits to one of its long-time executives."

"Make no mistake – this is not about the law; this is all about politics," a spokesperson for the company said.

"Legal experts across the country all agree: never before has this District Attorney's office, or even the IRS, criminally charged a company over employee benefits."

"Indeed, the District Attorney's office did not even prosecute a single Wall Street bank for causing the 2008 financial crash – the worst financial crisis since the Great Depression – even though their actions hurt millions around the globe and nearly brought the U.S. economy to the brink of collapse," the spokesperson said.