For Donald Trump There is a DEEP Reckoning in New York (More to come)

New Yorker

By Andrea Bernstein 

 

Last Monday, eighty days after their first courtroom appearance in a case known as The People of the State of New York v. The Trump Corporation, et al., the defendants’ lawyers walked down the hallway on the eleventh floor of the Manhattan Criminal Courts Building, ready to face the judge. The long, timeworn corridor was not crowded; far fewer reporters had gathered than during the initial court hearing, in July, when prosecutors unveiled fifteen felony charges, including tax fraud and grand larceny, against Donald Trump’s company and its chief financial officer, Allen Weisselberg. The packed hallway was so hot that day that someone had jammed a scrunched-up plastic water bottle under the door of the women’s bathroom, propping it open so a bit of cool air after a midday downpour could slip through a window within, past the cruddy stalls and beige-tiled floors and out into the corridor.

The diminished audience last week reflected a perception, aided by Trump’s lawyers, that the case is not all that serious, a sideshow. The alleged crimes committed by the Trump Corporation and Weisselberg relate to the conferring of privileges like luxury apartments, private schools, pricey cars, even parking spots. The word “perks” has slipped into news coverage of the case. But prosecutors have issued new subpoenas and are continuing to use the extensive powers of a New York grand jury to possibly add new charges and new defendants to the case. It’s not clear who those defendants are or what the charges may be. During last Monday’s court appearance, one of Weisselberg’s attorneys, Bryan Skarlatos, said, “We have strong reason to believe there could be other indictments coming.” He expressed concern that Weisselberg could become “collateral damage as part of a bigger fight between the Trump Organization and the District Attorney’s office.”

Even if no additional charges are filed, the former President’s company faces a potential reckoning. The charging documents and interviews with former prosecutors and white-collar defense lawyers indicate that the District Attorney is accumulating evidence of pervasive tax fraud. The case goes to the heart of what made—and still makes—Trump Trump.

 

Allen Weisselberg, the man who knows Donald Trump’s financial secrets, agrees to become a coöperating witness.

The New York State attorney general, Letitia James, and the Manhattan District Attorney, Cyrus Vance, Jr., have consolidated their criminal investigations of Trump. At the arraignment hearing, in July, they sat in the front row as the D.A.’s general counsel, Carey Dunne, alleged “a fifteen-year-long tax-fraud scheme, involving off-the-books payments,” that was “orchestrated by the most senior executives, who were financially benefitting themselves and the company by getting secret pay raises at the expense of state and federal taxpayers.” These crimes, prosecutors charge, continued through the entirety of Donald Trump’s Presidency; at the same time that Trump was leading the U.S. government, his company’s top executives were allegedly pilfering from it. The Trump business entities and Weisselberg have pleaded not guilty. Skarlatos and Mary Mulligan, attorneys for Weisselberg, said, in a statement, “We have studied the indictment and it is full of unsupported and flawed factual and legal assertions regarding Allen Weisselberg. We look forward to challenging those assertions in court.”

Federal and state government agencies have repeatedly fined Trump’s businesses for skirting the law. The Trump Taj Mahal casino, in Atlantic City, was twice hit by the U.S. Treasury Department, in 1998 and 2015, with what were then the highest penalties ever for violating money-laundering controls. In 2000, Trump was fined a then record fee by the New York State lobbying commission following an investigation into improper efforts to sway state officials. He or his eponymous entities have settled disputes with the Department of Justice, the Federal Trade Commission, and the office of the New York attorney general, in some instances for millions of dollars. Trump was implicated (but not named or charged) in the federal prosecution that sent his former attorney and executive vice-president of the Trump Organization, Michael Cohen, to prison, for, among other things, violating campaign-finance laws on Trump’s behalf by making hush-money payments, in 2016, to women who said that they’d had affairs with him.

Trump has repeatedly been accused of fraud by business partners, associates, and customers, and litigated thousands of civil suits over his half-century career. At the moment, he is being sued by his niece Mary, for fraud; by the former “Apprentice” contestant Summer Zervos and the magazine columnist E. Jean Carroll, for defamation following alleged acts of sexual misconduct; and by Capitol police officers and, separately, by members of Congress, for incitement to riot and for violating their civil rights, stemming from the storming of the Capitol by his supporters, on January 6th. His company is under a separate, civil investigation by James, for violations of state law. On Friday, a judge unsealed a court order from earlier this month compelling multiple Trump businesses to turn over reams of documents by mid-October, including those maintained by Trump and his children Donald, Jr., Eric, and Ivanka. In each of these cases, Trump, his family, and his entities have denied any wrongdoing.

And yet, in almost fifty years of business and politics, neither Donald Trump nor his family nor his businesses have ever been charged with a criminal act. That changed in case No. 1473-21: The People of the State of New York v. The Trump Corporation.

Allen Weisselberg went to work for the Trump family business in 1973, as an accountant and bookkeeper. From the beginning, he has been unwavering in his devotion to the family, working for Trump’s father, Fred, during the day and for Donald Trump on nights and weekends. Barbara Res, the woman who oversaw the construction of Trump Tower, told me that Weisselberg was initially outside the central circle of power. When Res took a hiatus from the firm, in 1984, Weisselberg had an office in Brooklyn; when she returned, three years later, to work as executive vice-president, she found him in an office on the tower’s twenty-sixth floor, where Trump and other executives sat. Over the years, Weisselberg steadily moved closer and closer to Trump, figuratively and literally. “Whenever you’d go see Donald, Allen was always sitting to the right of his desk,” a person who worked as a high-ranking employee for Trump in the nineties recalled. “The book on Allen was: Don’t take him into your confidence. He works for one man only. He will kill for that man.”

By the early two-thousands, major U.S. banks, which had lost hundreds of millions of dollars to Trump’s failed casinos, would no longer lend to him. It fell to Weisselberg to make the Trump Organization’s numbers work for those still willing to do business with it. Going back as far as 2005, prosecutors say, senior executives, including Weisselberg, also conducted the long-running tax-evasion scheme.  

According to the indictment, the practice allowed the Trump Organization to skirt paying federal and state payroll taxes, and it meant that Weisselberg himself avoided paying taxes on $1.76 million of indirect compensation. The amount may seem small for a New York corporation, but former prosecutors say the crime that Weisselberg is charged with is both severe and unusual. “I authorized lots of similar indictments,” Adam Kaufmann, a former investigations chief under Vance, told me, estimating that there were twenty to thirty a year. But none ever involved grand larceny in the second degree, a theft of between fifty thousand and a million dollars. Prosecutors allege that Weisselberg claimed so many false deductions that he caused the Internal Revenue Service to send him refunds worth $94,902. “I can’t think of a case where someone claimed a sufficient number of false deductions to achieve a tax refund,” Kaufmann said. “To charge grand larceny, you have to steal property. That’s what larceny is.” Kaufmann said that Weisselberg’s alleged years-long effort to dupe the federal government into actually writing a refund check was a higher level of tax fraud than he ever saw in his almost two decades at the D.A.’s office.

Former Trump employees say that funnelling compensation through non-taxed benefits was a widespread practice in the firm. Res told me of one person who worked on Trump Tower who submitted expenses that, “while not large, were nevertheless outrageous.” When Res refused to pay them, the employee pushed back and told her that Trump himself had told him to do so. Res added that there were also individuals who had their own offices and were clearly full-time employees but who were paid as independent contractors, which allowed Trump to skirt payroll and Medicare taxes. When asked if others in the organization knew that the practice was designed to avoid taxes, she replied, “Oh, yeah.”

A spokesperson for the Trump Organization dismissed Res’s claims. “Barbara Res has made a career pretending to be the ‘authority’ on Trump when in reality she left the company over 30 years ago,” the spokesperson said, in a statement. “The last time she had any interaction with our organization was when she was begging for a job."

As Weisselberg’s former daughter-in-law Jennifer Weisselberg remembers it, 2005 was the year that the Weisselberg family fully entered the Trump bubble. Weisselberg moved into an apartment at Trump Place, on the West Side Highway, for which Trump, according to prosecutors, personally signed the lease. (The apartment, which figures prominently in the indictment, was not declared as taxable income, prosecutors say.) Jennifer and her then husband, Barry, who was working as a manager at the Trump-run Wollman Rink, in Central Park, moved into a Trump apartment on Central Park South. (It, too, was provided as an untaxed benefit, she later learned, during divorce proceedings.) “We lived across from the rink. Allen lived down the street. Trump Tower was just a block away,” she told me, in an interview early this summer. On the weekends, she said, she and Barry would socialize with Donald, Jr., and his then wife, Vanessa, at the Trump National Golf Club in Briarcliff Manor, in Westchester. “Trump became central to our lives, became everything,” Jennifer told me. Representatives for Donald Trump, Jr., and Barry Weisselberg declined to comment.

That year also marked a new chapter for the Trump business: “The Apprentice” was a hit, which created licensing opportunities and new business for the firm. And Trump and his siblings had just sold off their father’s real-estate holdings for more than seven hundred million dollars. During this period, “from on or about March 31, 2005,” prosecutors in the Manhattan D.A.’s case claim, Weisselberg and the Trump Organization engaged in a “systematic ongoing” course of tax fraud, and kept detailed records of it.

Weisselberg’s agreed-upon annual salary, for example, had grown to nine hundred and forty thousand dollars by 2011. Prosecutors say that included tens of thousands of dollars’ worth of non-salary compensation—car leases, rent, garages, tuition—and that the Trump Organization tracked those amounts in a spreadsheet but did not report them to the I.R.S. A former high-level prosecutor in Manhattan told me that he was shocked by the alleged practices. “If you take a look at the Speyers of the world, the Silversteins, the Dursts,” he said, referring to major New York real-estate families, “those people, in my experience, would not stoop to that type of fraud. These are smart people who are immensely rich. It would be the height of stupidity to do something that would endanger that.” 

As Trump campaigned for the Presidency, Weisselberg began erasing evidence of his work, prosecutors say. “On or about September 2016, Allen Weisselberg directed a staff member in the accounting department to remove the notations ‘Per Allen Weisselberg’ from the entries in Donald J. Trump’s Detail General Ledger,” the indictment reads. Those entries allegedly were for private-school-tuition payments for Weisselberg’s grandchildren.

People familiar with Trump’s legal battles also took notice of one element of the allegation: Weisselberg is described as making changes to something called “Donald J. Trump’s Detail General Ledger.” If true, the allegation would mean that, in addition to Weisselberg and Trump’s accountants keeping a set of records detailing the company’s finances, there was another ledger, one specifically maintained, the name implies, for Donald J. Trump. “My jaw literally dropped when I saw that,” Tristan Snell, a former New York assistant attorney general, who investigated claims of fraud against Trump University that resulted in a twenty-five-million-dollar settlement, said. “If there was a ledger for him, it blows up the notion that Trump didn’t know about it—it means there was a set of numbers prepared for Donald Trump.” Snell said the public disclosure of the separate ledger’s existence is a signal from the prosecutors to the former President: “We have your ledger.”

Before I read the indictment, I spent years trying to understand the inner workings of the Trump Organization, a small, privately held company with a long-running practice of avoiding disclosure. I’d assumed, like many others, that Trump had always managed to avoid liability in part because he didn’t write things down. But the indictment suggests otherwise. If Weisselberg and Trump’s company lose the case, it may be because Trump’s desire not to write things down was overtaken by his desire to make certain that he was not paying his longest-serving and most loyal aide any more than they had agreed upon.