Trump Approved Key Aspect of Company’s Scheme, Prosecutors Assert
Donald J. Trump approved a key aspect of a tax fraud scheme orchestrated by several top executives at his family business, prosecutors said on Friday in their closing arguments at the company’s trial, an explosive claim as the jury prepares to deliberate next week.
Prosecutors have not charged Mr. Trump with participating in the scheme, through which, they say, the executives were compensated in off-the-books perks so that they could evade taxes. But on Friday, Joshua Steinglass, a prosecutor, told the jury that Mr. Trump had signed off on part of the scheme, and that one document proved it.
“Mr. Trump is explicitly sanctioning tax fraud,” Mr. Steinglass said, referring to a paper signed by the former president that showed an executive asking that his salary be reduced. “That’s what this document shows,” Mr. Steinglass added, arguing that the lower salary corresponded with the perks the executive, Matthew Calamari, had received.
Although prosecutors have shown that Mr. Trump knew about some of the perks his executives were getting, his awareness of the extent of the scheme is murky. Defense lawyers objected strongly to Mr. Steinglass’s statement, and the judge, Justice Juan Merchan of State Supreme Court in Manhattan, sustained their objection.
Still, jurors heard what Mr. Steinglass said.
The Manhattan district attorney’s office, which is pursuing a broader criminal inquiry into the former president, has accused his company, the Trump Organization, of doling out the perks, which included luxury cars and apartment rentals, to several executives, primarily Allen H. Weisselberg, the company’s longtime finance chief. Mr. Weisselberg pleaded guilty this summer and testified at the trial.
After Mr. Steinglass finished his closing, the focus turned to Mr. Trump. A defense lawyer, Michael van der Veen, requested a mistrial because of Mr. Steinglass’s comment.
“It’s a bias that he on the jury that can’t be undone, and it’s not insignificant that he did it,” Mr. van der Veen said.
Understand the Cases Against Allen Weisselberg and the Trump Organization
Who is Allen H. Weisselberg? Mr. Weisselberg was the Trump Organization’s longtime chief financial officer and for decades, one of former President Donald J. Trump’s most trusted executives. He entered the Trump orbit as a junior bookkeeper for Mr. Trump’s father and climbed the ranks in the decades that followed.
What is he accused of? Mr. Weisselberg and the Trump Organization were both charged with participating in a 15-year tax-evasion scheme starting in 2005 to help executives avoid taxes by compensating them with perks and bonuses that were kept off the books. The charges were the result of an ongoing investigation of Mr. Trump and his company by the Manhattan district attorney.
Was Mr. Trump also charged? No. Although the former president is entwined with the Trump Organization, the indictment, which was unsealed last summer, did not accuse him of wrongdoing. No employee other than Mr. Weisselberg was charged.
What are the implications for Mr. Weisselberg? Mr. Weisselberg has agreed to a plea deal with Manhattan prosecutors, and he is expected to receive a five-month jail term and could spend as little as 100 days behind bars. The deal, which required him to plead guilty to 15 felonies, could put the Trump Organization at a disadvantage at its own trial, which kicked off on Oct. 31. The executive is expected to be a central witness.
What does this mean for the Trump Organization? Mr. Weisselberg is not expected to implicate Mr. Trump or his family when he takes the stand in October. But his admission of guilt will undercut any effort by the company’s lawyers to contend that no crime was committed. If convicted, Mr. Trump’s company could face steep fines or other penalties as well as a fallout from its business partners.
Justice Merchan rebuffed the request. “I don’t believe it is necessary to declare a mistrial,” he said.
The former president is not on trial, and the prosecution need not prove his involvement in, or awareness of, the alleged fraud. What it must prove is that Mr. Weisselberg acted “in behalf of” the company, meaning that he did not act solely in his own interest, and that his actions provided some benefit to the company.
Those three words — “in behalf of — have been the subject of a running debate throughout the trial, and the lawyers quarreled about the phrase again on Friday. Justice Merchan said he was considering defining the phrase for the jury when he provides them directions on Monday, when they are to begin deliberating.
The definition he provided on Friday, though, may not offer much clarity.
“It is not necessary that the criminal acts actually benefit the corporation, but an agent’s acts are not in behalf of a corporation if undertaken solely to advance the agent’s own interests,” he said. “Put another way: If the agent’s acts were taken merely for personal gain, they were not made in behalf of the corporation.”
On Tuesday, with the jury absent, he was more explicit, saying that prosecutors needed to show that Mr. Weisselberg had “some intent to benefit the corporation.”
Mr. Steinglass said during his closing argument that “by far the most significant benefit” to the Trump Organization was that it allowed the companies to pay less to Mr. Weisselberg, who took home $1.76 million in off-the-books perks from 2005 to 2017.
Had the compensation been properly reported, it would have cost the company $3.5 million, Mr. Steinglass said, referring to a chart with figures he had rounded off.
“That, ladies and gentlemen, is not peanuts,” Mr. Steinglass told the jury.
He argued that once Mr. Weisselberg began reducing his total compensation to account for the off-the-books perks, it “only hurt Allen Weisselberg and only helped the companies.”
The jury appeared to be following closely as Mr. Steinglass described how the scheme had helped the Trump Organization, including by helping the company avoid the need to give out raises; reducing its contributions to Medicare; cultivating the executives’ happiness and loyalty; and increasing their productivity by allowing them to work longer hours.
It was not just Mr. Weisselberg who engaged in the scheme, Mr. Steinglass argued; it was part of the company’s culture. He cited Mr. Calamari, the Trump Organization’s operations chief, and Jason Greenblatt, the general counsel, as taking part as receiving benefits through the scheme as well.
Mr. Steinglass said Mr. Weisselberg’s motivations were akin to a professional musician who wanted to play well for his or her own success, but also to make the orchestra sound better.
The defense objected to the prosecution’s mention of Mr. Trump earlier in its summation, but the judge said he would allow it as long as prosecutors did not refer to him haphazardly.
“I had been somewhat surprised by the extent to which the defense had actually brought up Mr. Trump’s name and I felt it was perfectly fine for Mr. Steinglass to then respond to that,” Justice Merchan said.
Mr. Steinglass said during his final statement on Friday that he would not veer far into whether Mr. Trump was aware or involved, because “ultimately it doesn’t matter.”
He nonetheless neatly laid out the argument that Mr. Trump was not “blissfully ignorant.”
“This is all part of the Trump executive compensation package: free cars for you, free cars for your wife, free apartments for you, free apartments for your kids,” Mr. Steinglass said.
As the morning wore on, some of the jurors appeared annoyed by the defense team’s objections, with a few shaking their heads and glancing at their watches.
The prosecution’s closing came after the defense offered its own final arguments on Thursday, with two of the company’s lawyers, Susan Necheles and Michael van der Veen, arguing that Mr. Weisselberg had engaged in the tax-fraud scheme solely to help himself, and that the company had not benefited.
The defense also sought to blame Donald Bender, an employee of Mazars, an outside accounting firm that prepared tax returns and offered other tax guidance to the Trump Organization.
Kate Christobek contributed reporting.