Trump’s company charged on narrow grounds despite 3 years of investigation

....And yet the case brought by the Manhattan district attorney is stunningly narrow. To bring criminal charges over the tax treatment of fringe benefits underscores how more serious allegations were investigated and discarded.

At the top of the list: Donald Trump was not personally charged (and remember, the prosecutors have his tax returns). The company was not charged with inflating its assets to get bank loans, or minimizing its assets to dodge taxes—the kind of fraud that can devastate a business. The company was not charged for funneling hush money through Michael Cohen to Stormy Daniels in an effort to buy her silence about an alleged affair with the boss. All these matters made headlines, DA Cyrus Vance Jr. has been investigating for three years, and obviously didn’t have the evidence for grand jury charges.

I’m not trying to minimize the tax charges against Trump company executives. Weisselberg is alleged to have avoided taxes on $1.7 million in "indirect employee compensation" over 15 years--which would amount to about $900,000 in fraud. The organization itself was accused of failing to withhold taxes on those amounts. Weisselberg was also accused of hiding his New York City residency and of not declaring payments for beds, TVs and carpeting at a Florida home.

Still, such matters are usually dealt with in a civil suit. If you’re guilty, you pay a big fine and repay the back taxes you avoided. Company lawyers said they couldn't find a previous criminal case of this nature....

From experience, here’s how this works. The government is like the Mafia, but with better retirement and dental insurance. The IRS sent a task force to the Honeywell facility on Ulmerton Rd in Clearwater, Fl. They spent about 18 months with a large team, I want to say it was about 20 auditors. This cost the government a lot of money. As a sidebar, Honeywell was the most ethical employer I ever had. My employers on the low end, ranged from Elcotel, which was raided by the FBI, to an ITT spinoff that was forced to be sold to Harris because of a massive cheat. Honeywell was on the other end of the scale. The IRS team found only one small thing.

On his first day in office, a VP had signed an okay to use a new charge number on an in-house project as the other one had run out. It turned out to be a government charge number and Honeywell caught the error and repaid the miss-charge. The IRS threatened to send that VP to prison for fraud. They demanded (I want to say two million dollars) which was far in excess of the amount miss-charged, that had been repaid as soon as the error was caught.

I was personal friends with the VP’s son. So, I know the inside story. The IRS was embarrassed, having publicly stated that Honeywell was a cheat and a fraud and they were going to send people to jail. Essentially, the money they demanded would have paid for the investigation, plus some. Honeywell understood this was a negotiation. So, they said, “Nope. We’ll see you in court.” Now, anyone who deals with government thugs knows how this works. Yes, Honeywell would likely have prevailed and the IRS would have gotten an even bigger black eye. (I think the technical word here is, “extortion.”) The last thing a company wants is a government agency as powerful as the IRS “mad” or “vengeful” towards them. Both parties knew there would be a compromise to make the IRS not look too bad and to let the IRS save face by saying they had fined Honeywell. I don’t recall the details, but I think Honeywell admitted to wrongdoing, which the government “forgave” in exchange for paying a fine, the amount of which was secret.

The Mafia would be RICO’d for doing the same thing.

You’re correct. But, the author is using the wrong verb here. Tax avoidance is using the black letter of the law to minimize your tax liability.

Tax evasion is committing civil illegalities or crimes to not claim - and subsequently not pay - tax liabilities. If the allegations are accurate, then yes, this is tax evasion, not tax avoidance.

Having said that, not all tax evasion is criminally prosecuted, as the author also says. It’s frequently dealt with in civil court.

“Weisselberg is alleged to have avoided taxes on $1.7 million in “indirect employee compensation” over 15 years—which would amount to about $900,000 in fraud. The organization itself was accused of failing to withhold taxes on those amounts. Weisselberg was also accused of hiding his New York City residency and of not declaring payments for beds, TVs and carpeting at a Florida home. “

WTH? What is the statute on this? Since when is the state allowed go go back 15 years and check your back taxes? What did they find to toll the statute?

I guess its a New York state of mind thing!

I run into these tax issues fairly often in my law practice.

The author is correct. This is usually a civil matter initiated by an IRS audit. If they find that tax should have been paid they will assess back taxes, interest and penalty. The taxpayer has due process appeal rights if they think the IRS is wrong. Criminal prosecution is reserved for egregious cases like hiding income or some kind of deliberate fraud.

Indeed, I almost never encounter these being initiated by state authorities because the state tax owed is usually a small fraction of the federal tax owed. Plus, why not let the Feds do the work?

I have seen one state tax criminal prosecution here but that was against a con artist selling victims fake tax credits.

Looking at the whole picture, this is nothing more than a selective, political prosecution by a corrupt, partisan prosecutor. Couldn't be more obvious.

But don't expect the MSM to commit any acts of journalism in telling this story.

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