Allen Weisselberg, You Got Some Splainin’ To Do

Leading up to this afternoon’s arraignment of Trump Organization CFO Allen Weisselberg in a Manhattan courtroom, Trump’s lawyers worked overtime to downplay the coming charges.

“This is so small that I can’t believe I’m going to have to try a case like this,” attorney Ronald Fischetti scoffed to Politico.

And compared to the massive tax fraud the company was being investigated for, he might have a point. But the years-long conspiracy to commit tax fraud alleged in the 15-count indictment is not exactly “small.” In fact, it describes a complex conspiracy engaged in by Weisselberg and the company to stiff federal, state, and municipal tax authorities for more than a million dollars in taxes. Plus there’s brazen chutzpah of everyone involved in carrying it out!

In a nutshell, Weisselberg’s annual compensation was $940,000 between 2011 and 2018, but he and the company developed a diverse series of stratagems to decrease his taxable income by a huge chunk every single year, mostly via perks that were not reported to Uncle Sam as taxable income. They were, however, reported internally in the second set of books maintained to track Weisselberg’s actual compensation — because clearly these people never watched The Wire.

Perks like an apartment on Riverside Boulevard for which the Trump Organization paid the rent, garage fees, and all utilities — none of which Weisselberg declared as taxable income, all of which were deducted from his gross pay.

Simultaneously, the Trump Organization reduced the amount of direct compensation that Weisselberg received in the form of checks or direct deposits to account for the indirect compensation that he received in the form of payments of rent, utility bills, and garage expenses. The indirect compensation was not included on Weisselberg’s W-2 forms or otherwise reported to federal, state, or local tax authorities, and no income taxes were withheld by the corporate defendants in connection with the indirect compensation.

Weisselberg and his wife resided in the apartment, which is in New York City, but failed to pay municipal income tax as city residents. Ooopsie!

Similarly, Weisselberg and his wife were each given a leased Mercedes Benz courtesy of the Trump Organization, which they failed to report as compensation even as the cost was deducted from the CFO’s $940,000 top-line salary.

The schemes were varied in size and scope, ranging from corporate checks cashed so that Weisselberg could have a little walking around money, to hundreds of thousands of dollars in tuition payments for his grandchildren coming from the Trump Organization and later the Donald J. Trump Revocable Trust. But every penny of it was accounted for and subtracted from Weisselberg’s compensation, thus allowing him to pay for it with “pre-tax” dollars.

It seems the only thing limiting Weisselberg’s alleged grift was his own creativity. In one particularly audacious move, end-of-year bonuses were paid by related Trump entities and treated as self-employment income.

However, for Weisselberg and other executives, a substantial portion of their end-of-year bonuses was paid in the form of checks drawn on other Trump Organization entities, including Wollman Rink Operations LLC, Trump International GolfClub LLC, the Mar-a-Lago Club, Trump Productions LLC, VH Property Corp., Trump Las Vegas Development LLC, Tramp CPS LLC, and other entities.

The end-of-year bonus checks drawn on entities other than Trump Payroll Corp. were routinely reported to tax authorities as non-employee compensation, and set forth on United States Internal Revenue Service 1099 Forms, which are used to report non-employee compensation.

But why would Weisselberg want to do it that way, you are wondering? Well, presumably he’d maxed out on Social Security on his “real” compensation, and the gambit allowed him to build up a substantial retirement account as a “self-employed” taxpayer. You know, on top of his regular 401k.

Additionally, by reason of having reported substantial non-employee compensation, Weisselberg was able to make annual contributions to a Keogh plan, which is a tax-deferred pension plan that s available to self-employed individuals for retirement purposes. Weisselberg was nota self-employed individual. But, because he purportedly received substantial non-employee compensation from the entities such as the Mar-a-Lago Club and Wollman Rink Operations LLC, as set forth above, he falsely reported the receipt of self-employment income and thereby falsely claimed that he was entitled to an annual exclusion from his income of amounts contributed to his Keogh plan. The amounts so contributed for the tax years 2012 through 2016 exceeded approximately $215,000, and over the course of the scheme to defraud, Weisselberg was able to build up a Keogh plan worth many hundreds of thousands of dollars.

Respect the hustle!

In addition to multiple references to other corporate executives who engaged in creative compensation computation, there are also several mentions of “Unindicted Co-conspirator #1,” who carried out the scheme with Weisselberg. There is rampant speculation that this refers to Trump himself, although, FWIW, my money’s on the dingbat son who also allegedly got an apartment and a load of goodies out of his old man’s pre-tax slush fund.

So, no, it’s not small potatoes as Trump’s lawyers would have us all believe. The question is whether it’s big enough to cause Weisselberg to flip on his boss and the Trump family, who ran the company during the Trump presidency. Relatedly, Trump has every incentive to claim that Weisselberg conducted the scheme entirely on his own, un-abetted by any member of the family.

Honor among thieves? Looks like we’re about to find out.

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Elizabeth Dye (@5DollarFeminist) lives in Baltimore where she writes about law and politics.