Yesterday, Manhattan District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James paraded triumphantly in front of hundreds of cameras to charge the Trump Organization and its finance chief, Allen Weisselberg, 73, with a 15-count indictment for failing to pay taxes on corporate perks. Weisselberg was a trophy defendant that needed to be prominently displayed. James ran for Attorney General on the pledge to get Trump and his associates. The excitement around the courthouse itself had the feel of a thrill kill as the heavily Democratic city celebrated the arrest of someone close to Trump.
I admittedly view these cases through the lens of a longtime criminal defense attorney but few recognized the obvious problem of a big hunt and small game. It is not that Weisselberg himself is small game, he was a close associate at the top of this company. The charges are small game when these prosecutors pledged to pursue Trump and alleged major crimes. However, the charges are based on violations that are ubiquitous among corporate executives and rarely the subject of such a major prosecution. If prosecuting untaxed perks was really a focus of these offices, they would have to frog march half of Manhattan to the hoosegow.
Nevertheless, the New York Times declared “the charges represent a major milestone for Mr. Vance, a Democrat who twice beat Mr. Trump at the U.S. Supreme Court in a battle to obtain the former president’s tax records.” Indeed, this effort has been going on for years and I also supported Vance’s right to gain such tax records. I stated repeatedly that I believed that the Trump arguments against turning over such records to Congress and prosecutors were unsupportable from a legal basis.
However, one can recognize that major victory in obtaining Trump’s taxes without inflating the significance of this indictment of his former CFO. The piling on of charges is clearly designed to get Weisselberg to flip against Trump. Standing alone, the case is hardly impressive. These are tax reporting violations that go back to 2005 and had nothing to do with Trump’s presidency. This was not Russian collusion or Ukrainian coercion to hush money payments to strippers. It was a failure to tell the IRS that Weisselberg was using cars and apartments paid for by the Trump organizations as well as other benefits.
That did not stop the “bag and brag” quality of the event held at the courthouse. People and many news outlets celebrated that a Trump associate was being handcuffed for anything. However, as a trophy kill, this is hardly enough to mount let alone brag out.
Moreover, the failure to pay taxes on benefits is usually a matter addressed civilly not criminally. If the prosecutors can prove the alleged effort to conceal the benefits, that certainly makes the matter more serious but this is not a big game charge eve if this is a major figure in the Trump company. It is of course possible that there are major criminal charges coming and that this is just the first small salvo. However, it would be difficult to nail Trump on such tax allegations over perks without showing knowledge and involvement in the tax omissions.
The prosecutors have alleged that as much as $1.76 million in benefits should have been taxes since 2005. Putting aside the common inflation of such valuations by prosecutors, that is a lot of money. It is result of adding everything from cars to apartments to wifi to holiday gift accounts. I expect some of these should have been taxed, but reading the indictment leaves one wondering how many executives fail to include car and other benefits as income, particularly going back to 2005.
I have made an analogy to Major League Baseball cracking down on substances on the hats and arms of pitchers. Pitchers knew that it was illegal but saw this as a common practice. Umpires did not monitor or punish pitchers for adding substances for better adhesions. As I said yesterday, this is obviously far more serious as an act. This is an alleged crime and a lot of money, particularly the payment of tuition which are hard and reliable figures. However, the question is whether this is a common practice has been the focus of major investigations let alone major criminal cases in the past. It also raises the question of selective prosecution.
Weisselberg is charged with a scheme to defraud, conspiracy, four counts of criminal tax fraud and other crimes. However, the major charge is grand larceny in the second degree which can result in a sentence for as must as 15 years but it is extremely unlikely that a sentence would be long, let alone reach such levels. This is a first offender, elderly businessman who did not claim perks for taxes. It does not make him Mother Teresa but it also does not make him John Gotti.
Here is the indictment: Weisselberg indictment