Donald Trump’s family business and its longtime chief financial officer, Allen Weisselberg, have been charged with criminal fraud by New York prosecutors for allegedly failing to pay tax on certain employee perks.
The charges, unsealed by prosecutors on Thursday afternoon in Manhattan, mark a decisive turn in an almost three-year investigation of Trump’s business by Cyrus Vance, the Manhattan district attorney, in tandem with New York state attorney-general Letitia James.
They allege that Weisselberg and other top Trump Organization executives defrauded the government by receiving their compensation through a variety of fringe benefits, such as free rent, school tuition and car leases, that they did not report to tax authorities. According to prosecutors, Weisselberg netted $1.76m in “indirect compensation” over a 16-year period.
The scheme, they said, also allowed the Trump Organization to avoid paying certain payroll taxes.
Weisselberg, 73, who surrendered to authorities early on Thursday morning, was led into the courtroom in handcuffs, and entered a plea of not guilty during a brief arraignment hearing. His lawyer said he would “fight these charges”.
Earlier in the day, the Trump Organization issued a blistering statement, accusing prosecutors of using Weisselberg — “a loving and devoted husband, father and grandfather” — as “a pawn in a scorched-earth attempt to harm the former president”.
“This is not justice; this is politics,” it added.
Trump was not charged, nor were his three adult children who have served as senior executives at the company: Donald Jr, Ivanka and Eric. Yet prosecutors have noted that their inquiry continues.
The former US president has repeatedly derided the investigation as a witch-hunt perpetrated by his political foes. Both Vance and James are Democrats.
Trump’s lawyers had tried in recent days to persuade prosecutors to stand down. As it became clear Vance and James were moving towards charges, a lawyer for Trump, Ronald Fischetti, promised a vigorous defence.
“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,” Fischetti said last week.
In recent months Weisselberg has become a focus of prosecutors, who hoped to convince the man who once described himself as Trump’s “eyes and ears” to aid their investigation into a private business that features hundreds of byzantine partnerships.
The former president’s business was already struggling, with revenue falling at some of its hotels and golf courses due to the coronavirus pandemic. Some partners such as the Professional Golfers’ Association of America have cut ties in protest at his role in the January 6 insurrection at the US Capitol.
The Trump Organization has about $900m in debts coming due over the next four years, about a third of which are personally guaranteed by Trump.
Vance, who leaves office at the end of this year, will have to hand any case on to a successor. His current inquiry has been overshadowed by criticism for dropping a previous investigation of the Trump Organization, in 2012, which stemmed from condominium-buyer complaints that Donald Jr and Ivanka had misled them. The parties later settled.
Vance launched the current investigation in 2018 in response to reports that Trump’s former fixer, Michael Cohen, had made hush-money payments to two women who claimed to have had extramarital affairs with the-then presidential candidate. Cohen later told Congress he arranged with Weisselberg to be reimbursed by the Trump Organization through monthly payments listed as legal fees.
The investigation expanded to consider possible bank and insurance fraud, according to court filings. Under examination is whether the Trump Organization inflated the value of certain properties to secure bank loans and insurance while minimising them for tax purposes, according to people briefed on the matter.
The investigation had been hampered by Trump’s refusal to hand over tax records. Vance prevailed in a legal fight that went to the US Supreme Court and ultimately took possession of the documents in February.