Tax law experts see 'strong' case against Trump Org. CFO

NEW YORK (AP) — Companies give perks to their employees all the time. Many top executives at Fortune 500 companies have access to a corporate jet for personal use, a company apartment, or an expense account for fancy meals. Even lower-level employees regularly get access to perks like tuition reimbursement or cash to join a gym.

But the extravagant perks prosecutors say the Trump Organization lavished onto its CFO Allen Weisselberg — apartments, cars, cash for holiday tips, tuition for his grandchildren to name a few — are well beyond the level of compensating a valued employee, some tax law experts said.

And the case against Weisselberg appears to be much stronger than was originally expected by those watching the progress of the Manhattan District Attorney's investigation of the Trump Organization, its employees and its namesake leader.

"This is an overwhelmingly strong case," said Daniel Hemel, a law professor at the University of Chicago.

According to the indictment unsealed Thursday, Weisselberg cheated tax authorities by taking a hefty chunk of his annual compensation in fringe benefits. They say that over 15 years these off-the-books perks were worth nearly $1.8 million.

Weisselberg alone was accused of defrauding the federal government, state and city out of more than $900,000 in unpaid taxes and undeserved refunds. He is pleading not guilty.

"Mr. Weisselberg intends to plead not guilty and he will fight these charges in court," Weisselberg's lawyers, Mary Mulligan and Bryan Skarlatos, said in a statement.

Meanwhile, former President Donald Trump and his allies have tried to frame the indictment against Weisselberg and the Trump Organization as a "witch hunt" by Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James, both Democrats. They have said the perks involved were standard for successful American companies.

But the case against Weisselberg is not necessarily unusual. Some compared the indictment to a tax fraud case involving another real estate tycoon from 30 years ago: Leona Helmsley, the so-called "Queen of Mean" who tried to get her real estate empire to pay for a $3 million home renovation in the 1980s.

Trump himself called Helmsley a "disgrace to humanity" for fraudulently avoiding taxes all those years ago.

"The dollar figures and the charges are more serious than what we had thought over the last few days with the little information we had," said Daniel R. Alonso, a former chief assistant district attorney in the Manhattan District Attorney's Office. "In particular, the tax loss alleged is $900,000. That is a fraud amount that is definitely in the jail range for typical cases of that magnitude."

Melissa Jampol, who as a former assistant district attorney in Manhattan specialized in prosecuting white-collar crimes, said the indictment's allegations stretched far beyond the allegations of fringe benefit abuse that some had presumed would be the crux of the case.

"I think the major takeaway is that there's a lot more going on here that's alleged in the indictment than people were aware of previously," said Jampol, an attorney at the law firm of Epstein Becker Green.

The indictment alleges that this wasn't just a matter of Weisselberg failing to report his pay properly. It says the Trump Organization, as a company, was complicit.

The company kept internal records that tracked employee compensation, and in those records, Weisselberg's rent, the tuition payments for his grandchildren, his cars and other things were all listed as part of his compensation package. The company even reduced Weisselberg's payroll checks to account for the indirect compensation he was getting in free rent, the indictment said.

But that compensation was recorded differently in the company's general ledger and none of it was reported to tax authorities, according to prosecutors.

"There's the set that was the formal ledger and there's the set that was Weisselberg's compensation calculations," Jampol said.

Smaller cases involving similar practices pop up not infrequently. A Queens-based plumbing contractor was sentenced to 20 months in prison just last month. Sergei Denko was found to have cashed $5 million in checks to fund an off-the-books payroll system, avoiding paying roughly $732,000 in employment taxes. Out on Long Island, a diner owner was convicted in September of avoiding $130,000 in employment taxes as well.

Thomas M. Cryan, Jr., a Washington tax lawyer, said prosecutions over fringe benefits issued to employees are rare, but an unusually large volume of perks and an intent to conceal them as income could tip a civil matter into a criminal case.

Often cases involving fringe benefit violations remain between the company and the Internal Revenue Service, and may just result in an audit or back taxes with a penalty being paid.

But some of the allegations against Weisselberg go well beyond the abuse of fringe benefits. Weisselberg's son Barry — who managed a Trump-operated ice rink in Central Park — paid no reported rent while living in a Trump-owned apartment in 2018, and he was charged just $1,000 per month — far below typical Manhattan prices — while living in a Trump apartment from 2005 to 2012, the indictment said.

Allen Weisselberg himself, an intensely private man who lived for years in a modest home on Long Island, continued to claim residency there despite spending a majority of his time in a company-paid Manhattan apartment, prosecutors said. By doing so, Weisselberg concealed that he was a New York City resident, and he avoided paying the city's income tax.

Though some standalone tax offenses can be handled civilly or administratively, the allegations of other misconduct — including grand larceny — help explain why prosecutors would treat this scheme as deserving of criminal prosecution, Jampol said.

But that doesn't mean the allegations, which will require proof of willfulness, will be easy to establish in court.

"That's really going to be the burden that the DA's office is going to have to prove is that there was a scheme here, and that it wasn't just a series of mistakes or misunderstandings," she added.

Associated Press writer Eric Tucker reported from Washington.