On Tuesday, the Washington Post reported that Manhattan District Attorney Cyrus R. Vance Jr. has impaneled a grand jury to determine whether Donald Trump, or anyone in his organization, should be charged with crimes related to potential corporate malfeasance. Martin Sheil is a retired supervisory special agent with the IRS Criminal Investigation with more than 30 years’ investigative experience. Jennifer Rodgers is a former federal prosecutor, having served for 13 years in the U.S. Attorney’s Office for the Southern District of New York.
What follows is a conversation between them analyzing the blockbuster grand jury news and reports that investigators are eager to gain the cooperation of longtime Trump Organization chief financial officer Allen Weisselberg.
Jennifer Rodgers: It’s been clear for a long time that Allen Weisselberg will not voluntarily cooperate with authorities, at least not without a serious threat of being charged hanging over his head. He refused to do so when my old office, SDNY, was prosecuting former Trump attorney Michael Cohen—Weisselberg had to be forced to testify there under an immunity order—and it appears that posture has continued. So, in order to convince Weisselberg that cooperation is in his best interests, prosecutors need leverage over him in the form of charged or at least chargeable criminal conduct. It appears that, while SDNY did not have such evidence during their Michael Cohen investigation, both New York Attorney General Letitia James and the Manhattan DA are investigating whether Weisselberg has committed crimes, both related to and separate from his employment with the Trump Organization. Because most of the conduct under investigation appears to be of the tax fraud variety, I would love to hear your thoughts about the viability of what might be out there. What are the different areas of potential criminal exposure for Allen Weisselberg?
Martin Sheil: Let’s start with private school tuition tax issues, since it’s been reported that the tuition of Weisselberg’s grandchildren may have been paid by someone at the Trump Organization, presumably as part of the compensation of either Allen Weisselberg, or his son, Barry Weisselberg, who also worked for Trump. Did Allen and Trump come to some sort of agreement on how to treat the tuition payments on the books of the Trump Organization as well as the tax returns? What about any other fringe benefits possibly received by Barry Weisselberg and his wife? Did they report any such benefits on their tax returns? Did Allen Weisselberg and/or Trump himself conspire to conceal any such payments from tax authorities? Notably, Weisselberg, as the chief financial officer, would generally be responsible for the preparation and distribution of tax forms to Trump Organization employees as well as to both federal and state tax authorities. One big question will be: Did Weisselberg falsify company books in order to clear the way for tax returns to be prepared based on those records?
New York state has a misdemeanor charge with regard to falsifying company books and records that can be elevated to a felony if it is associated with other fraud. This statute could also come into play when reviewing the relevant tax forms for potential falsification.
Also, Barry Weisselberg has the responsibility to report all income and fringe benefits received from all sources including the Trump Organization. These could include tuition payments, and the use of an apartment free of rent, something else the Weisselbergs may have received from the Trump Organization. Intentionally not reporting this type of income could result in a charge for submitting false tax returns under New York law.
On the other hand, if Donald Trump or Allen Weisselberg instead made the tuition payments from private personal bank accounts, it may have been a “gift,” which brings in separate gift taxes provisions.
Rodgers: So, we’re talking about possible tax exposure for both Allen and Barry Weisselberg from the school tuition and maybe other benefits that may have been paid in avoidance of payroll taxes. That would be pretty good leverage for prosecutors.
You mentioned Barry Weisselberg. His ex-wife Jennifer Weisselberg is cooperating with authorities and has reportedly provided them with significant documentation. She appeared on Fintech Zoom to say, among other things, that the DA is now looking into irregularities in the operation of the Wollman Rink and the carousel in Central Park, both Trump businesses run by Barry, whom Jennifer has suggested laundered money as part of those operations. It’s too early to say what kind of exposure Barry Weisselberg might have from activities related to those properties, but that might be another way to exert pressure on Allen Weisselberg, of course, or even to separately gain the cooperation of Barry Weisselberg. What other sorts of possible financial crimes should we look for in terms of Wollman Rink and the carousel?
Sheil: One big question here is what possible overt act(s) of evasion might have been committed in any alleged skim operation? Are there undisclosed bank accounts? What records might have been falsified? Who else might have been involved?
As for trying to drive a wedge in the father and son relationship between Barry and Allen, this would not be uncommon in these types of cases. When Enron was under federal investigation for various financial frauds the feds did not pass up the opportunity to prosecute the wife of Enron executive Andy Fastow on criminal tax violations in order to compel Fastow’s cooperation.
Weisselbergs aside, though, there is also another family to consider—the Trump family. If Ivanka double-dipped with regard to receiving consultant fees in addition to her salary for doing the same work, for instance, then Allen would be in the middle of any paperwork concerning that. If Eric Trump falsely testified with regard to the property valuation on the Westchester easement situation, Allen would be a key witness. If Donald Trump Jr. signed off on Trump Organization checks to Michael Cohen with regard to reimbursing Cohen for his hush money payments to Stormy Daniels, then Weisselberg might have some exposure. Weisselberg himself signed at least one reimbursement check to Michael Cohen based on a false invoice, as did the Trump Organization CEO.
When you start breaking it down, Allen Weisselberg may have involved himself in the so called hush money reimbursement conspiracy; bank fraud based on the submission of false loan applications involving asset value inflation; property tax fraud (mail fraud) based on artificially decreasing the value of building assets owned by the Trump business enterprise; insurance fraud allegations; and we can go on.
Should the New York prosecutors decide to take a hard line here, there may be a lot they can do, including even potentially racketeering charges.
Rodgers: I think that SDNY’s decision to give Weisselberg immunity for his testimony instead of charging him based on that suggests that they didn’t think that this, standing alone, was strong enough to charge. While the SDNY immunity deal for Weisselberg’s testimony has no impact on whether the Manhattan DA can charge Weisselberg as a legal matter, because the federal and state are separate sovereigns, the fact of that deal and the lack of a cooperation agreement with SDNY tells me that the DA will have to come at Weisselberg with much more than the hush money payments.
That doesn’t strike me as much of a dilemma—I think the DA and the AG are all in, and are ready to play hardball to make whatever case might be possible. As you’ve laid out, there is a lot of information to wade through, and more evidence coming in all the time, but I think prosecutors are committed to proceeding, and would like to do so with the help of Allen Weisselberg. He’s the one who may face a big dilemma once prosecutors present him with the fruits of their efforts: stay loyal and go to prison, or turn on the Trumps?
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