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The Trump Organization’s Tax-Fraud Trial Is Starting. Here’s What’s at Stake

The criminal tax-fraud trial of the Trump Organization begins on Monday, and the outcome could impact more than the coffers of former President Donald Trump’s family business.

The Manhattan District Attorney’s Office has charged two of the business entities within the Trump Organization—the Trump Corporation and Trump Payroll Corp.—with running a 15-year scheme to defraud tax authorities. Prosecutors allege that the scheme allowed certain executives to receive large portions of their compensation through disguised means, allowing them to underreport their income. The Trump Organization has pleaded not guilty and denied all wrongdoing. If found guilty, the companies could face stiff financial penalties.
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Prosecutors also charged the Trump Organization’s longtime chief financial officer Allen Weisselberg, 75, with devising and operating the alleged scheme. On Aug. 18, Weisselberg pleaded guilty to all 15 felony counts, including conspiring with the Trump Organization. Weisselberg was sentenced to five months in jail and five years probation, contingent on his truthful testimony in the trial beginning Monday in New York City. (He also must pay nearly $2 million in taxes, penalties, and interest.) In an August statement, Manhattan DA Alvin Bragg said that Weisselberg’s plea implicated the Trump Organization in “a wide range of criminal activity.”

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Neither Donald Trump nor any of his children have been charged by the Manhattan DA’s office with any wrongdoing. But the trial promises to reveal new insights into the inner workings of the company that dominated much of Trump’s pre-presidential life. The Trump Organization was built upon Trump’s brand of ‘80s-era bravado, helped launch Trump to fame, and was run by Trump himself for decades until he entered the White House in 2017. Trump then transferred control of the company into a trust run by Weisselberg and his sons Donald Trump Jr. and Eric Trump. (Weisselberg resigned after his indictment last summer.) The charges against the Trump Organization have emerged out of a years-long probe by the Manhattan DA’s office into Trump’s business dealings—a probe that Bragg pledged to continue in April. Court watchers will be listening to testimony in the trial for signs that more charges could emerge.

To win, prosecutors must convince a jury that the Trump Organization was not only aware of Weisselberg and his alleged co-conspirators’ actions, but also that those actions were done in the interest of the company. If the defense successfully paints a picture of a few rogue executives lying on their taxes, the businesses could avoid conviction. The outcome will likely hinge on Weisselberg’s testimony.

Even if the Trump Organization is convicted, it might be a better situation for the Trump family than having the businesses plead guilty as Weisselberg did, says someone familiar with the inner workings of the Trump Organization who requested anonymity to speak candidly. “If convicted, Trump would rather it be by a jury, in a trial that he could blame as biased and flawed,” says the individual, “as opposed to authorizing a representative of the company to walk into court and admit guilt.”

The Manhattan DA’s probe is just one strand in a web of legal woes entangling the former President, who also faces federal investigations for allegedly removing potentially classified documents from the White House and working to overturn the results of the 2020 election. (Trump has denied all wrongdoing.) In September, New York Attorney General Letitia James also filed a $250 million lawsuit against Trump, his three oldest children, the Trump Organization, and senior management in the company including Weisselberg, alleging that they were involved in efforts to falsely inflate Trump’s assets by billions of dollars in order to mislead lenders and secure more favorable loans. James says that her office is cooperating with the Manhattan DA’s office and has also referred their findings to the U.S. Attorney’s Office for the Southern District of New York and the Internal Revenue Service for criminal investigations.

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Read More: The Major Ongoing Investigations Into Donald Trump

“I imagine the New Attorney General’s office will be paying close attention to find any overlap between their civil case against Donald Trump,” says Barbara McQuade, a professor at University of Michigan Law School and a former U.S. Attorney for the Eastern District of Michigan. “Evidence used in this trial would be of interest to the [Attorney General’s] office.”

The Trump Organization, the Manhattan DA’s office, and Donald Trump did not respond to TIME’s requests for comment.

Jury selection begins on Oct. 24. Here’s what to know about the Trump Organization’s tax-fraud trial.

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What are the charges against the Trump Organization?

In July 2021, a grand jury indicted the Trump Organization and Allen Weisselberg on 15 felony counts, including conspiracy, grand larceny, and tax fraud. Between March 2005 and June 2021, the indictment alleges, the Trump Organization, Weisselberg, and “others” devised and operated a scheme to defraud federal, New York State, and New York City authorities.

Prosecutors say the scheme’s goal was to compensate Trump Organization executives in ways that were “off the books,” meaning large segments of their income were unreported or misreported to tax authorities. This allegedly allowed certain executives to pay significantly less federal, state, and local taxes than they should have.

Prosecutors claimed that Weisselberg, who has worked for the Trump family since 1973, was one of the largest beneficiaries of the scheme, which allowed him to receive roughly $1.76 million in indirect employee compensation from the Trump Organization. That included paying his rent for an apartment on Manhattan’s Riverside Boulevard, paying for his utilities and garage privileges, paying for multiple Mercedes Benz automobiles, paying the private school tuition for his grandchildren, and providing unreported cash and furnishings for his New York and Florida homes. Weisselberg ultimately pleaded guilty to all 15 felony counts in August.

“Entering a plea of guilty was one of the most difficult decisions of his life, even with the promised sentence which could require as much as 100 days of incarceration,” Weisselberg’s attorney Nicholas Gravante Jr., co-head of global litigation at Cadwalader, Wickersham & Taft, said in a statement in September. “But the Manhattan jury pool that would have judged him and the current political [climate] in New York City militated against his rolling the dice at trial and risk serving as much as 15 years in jail… Mr. Weisselberg is comfortable with his decision to have plead guilty and pleased to have this matter behind him.”

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Weisselberg is not cooperating with prosecutors in the broader ongoing investigation into Trump’s business dealings. But Bragg has said that Weisselberg’s plea requires him to provide “invaluable” testimony against the business entities in exchange for his lighter sentence. If he doesn’t testify truthfully, he risks up to 15 years in prison.

In a written statement shared with TIME, Gravante said that Weisselberg has elected to meet with both the prosecution and the defense ahead of the trial “in order to assure that his testimony goes smoothly.”

“By doing so, Mr. Weisselberg is giving both sides the opportunity to ascertain in advance what truthful testimony they may elicit from him that is helpful to their respective positions,” the statement continued.

As the company’s longtime CFO, Weisselberg is in a position to testify about whether officials within the Trump Organization had criminal intent behind their alleged actions, as opposed to making mistakes, says McQuade. Such testimony could implicate other corporate officers. When Weisselberg pleaded guilty on Aug. 18, he named the Trump Organization’s longtime controller Jeff McConney as an executive with whom he conspired. But McConney already has immunity in the investigation because he was subpoenaed and agreed to testify before the investigation’s grand jury. He is expected to testify in the trial as well. (His lawyer did not respond to TIME’s request for comment.)

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How is Donald Trump involved?

Donald Trump has not been charged with any crime or accused of any wrongdoing by the Manhattan DA’s office. He was president and owner of the Trump Organization during decades of the alleged scheme.

Donald Trump took over the Trump Organization from his father Fred Trump in the early 1970s and oversaw its decades of growth. The Trump Organization is currently made up of roughly 500 business entities that own over nine hotels, 12 golf courses, and numerous commercial and residential buildings around the world.

Read More: How Trump Survived Decades of Legal Trouble: Deny, Deflect, Delay, and Don’t Put Anything in Writing

The trial beginning Monday is narrowly focused on the alleged tax fraud by executives within the Trump Organization. It’s highly unlikely that anyone with the last name Trump will be subpoenaed to testify. They may rarely be mentioned at all. But even if they are not explicitly named, revelations of potentially illegal internal business practices of the corporation could hurt the family financially. “A conviction could bring a hefty fine and harm to the reputation of the Trump Organization,” says McQuade. “That could make it more difficult for Trump or his business to secure business deals or loans.”

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Prosecutors pursuing other investigations into Trump’s business dealings, such as James’ lawsuit alleging the Trump Organization engaged in business fraud, will likely also be watching closely. James and the Manhattan DA’s office have been cooperating on their parallel investigations. Given that James also referred her findings to the U.S. Attorney’s Office for the Southern District of New York and the Internal Revenue Service for criminal investigations, the Trump Organization could face more charges in the future.

from TIME
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