It is a pretty cut-and-dried case of tax fraud, and one that should not be very difficult to prove.
I’m speaking, of course, of the Manhattan District Attorney’s indictment of the Trump Organization and its Chief Financial Officer, Allen Weisselberg. In a nutshell, the Trump Organization and Weisselberg conspired to hide income paid to Weisselberg in the form of free rent, vehicles, and tuition for his family members. Internal Trump Organization records documented these expensive perks as compensation, but Weisselberg never reported any of the benefits as income on his taxes.
This is not a case that will depend on the testimony of cooperators whose credibility could be attacked. It will not be difficult to establish that Weisselberg lived rent-free for years in an apartment paid for by his employer, or that the Trump Organization also paid for his grandchildren’s tuition and the leases on his and his wife’s Mercedes. All of this is clearly income and the tax returns show it was never reported as such.
While the government still needs to prove that this was willful conduct, it is going to be a tough sell for the defense to try and argue that the Chief Financial Officer of the Trump Organization did not understand that these benefits needed to be reported as income. Not to mention that this trial would take place in Manhattan—hardly a friendly venue for anyone associated with Trump.
So the real question is not whether Weisselberg and, for that matter, the Trump Organization, is likely to get convicted of tax fraud. Of course that is the likely outcome. The real question is whether Weisselberg is liable to flip and become a cooperating witness against the head of the Trump Organization—a/k/a “the Former Guy,” a/k/a Donald J. Trump. So far Weisselberg has held firm and refused to cooperate, leading to his indictment this morning. But as they say in the world of finance, “past performance is not a guarantee of future results.” In other words, The Former Guy better not exhale just yet.
Cooperating witnesses, like people generally, differ widely. Some cooperators are terrified of being prosecuted and cooperate with the government at the first hint of trouble. But just as common are cooperators who strike a brave and defiant tone initially only to have a change of heart after being indicted and the reality of an expensive trial begins to loom.
Weisselberg will be able to remain free in the short term, out on bail as the case winds along. But assuming Weisselberg has competent counsel, he will be told that his chances at trial are very poor and that he faces the likelihood of conviction and incarceration for at least several years. This is not an inviting prospect for anyone, and particularly for a 73 year-old defendant like Weisselberg who has been enjoying life as a rent-free resident at Trump Tower for the past 15 years. Prudence and commonsense suggests that cooperating against Trump is clearly the most intelligent option. And because these are state and not federal charges, even if Trump were to once again be elected president, he could not pardon Weisselberg for any of this conduct.
But, of course, people frequently do not do the sensible or logical thing. And there are many other factors that are no doubt impacting Weisselberg’s calculations. Chief among those concerns would have to be fear of retaliation from Trump and the MAGA crowd. That is no small matter; anyone who points the finger at Trump is going to be subjected to almost unimaginable levels of abuse, threats and, very possibly, physical violence. The pressure on Weisselberg not to flip will also be immense, and much of it will no doubt be orchestrated by Trump himself.
The other wildcard is whether there are more shoes to drop. The DA’s investigation reportedly has focused on the Trump Organization’s undervaluation of properties in order to evade taxes. These abuses reportedly involved millions of dollars in underreporting. The best witness to this conduct is no doubt Weisselberg himself and it is likely the government is starting small with this straight-forward case against Weisselberg in the hopes that he will cooperate regarding these other strands of the investigation. If he refuses, the government may decide to indict anyway or stick with what they have: straight-forward tax fraud. Not a particularly sexy charge but enough to take down Al Capone and more than enough to deal a devastating blow to the Trump Organization.
After Jan. 6, banks and other lenders have reportedly walked away from doing business with the Trump Organization. That will be nothing compared to how these same lenders treat an indicted–much less convicted–Trump Organization. Credit will dry up and this will have a direct and possibly devastating effect on the Trump Organization’s bottom-line.
Will any of this matter to Trump’s political prospects? Probably not. The MAGA world will shrug this off like they have so many other scandals. But this prosecution will hit Trump in his most sensitive spot—his pocket-book. And it will leave a mark.