Trump Organization’s Criminal Trial For Tax Fraud Starts—Here Are The Consequences It Could Face

Topline

Jury selection begins Monday in the Trump Organization’s criminal trial for alleged tax fraud—which will only result in the company having to pay monetary damages if it’s found guilty, though a conviction could have more damaging knock-on effects for former President Donald Trump’s business.

The Trump Organization is going to trial on charges of criminal tax fraud after allegedly paying … [+] executives in a way that avoided higher taxes.

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Key Facts

The Trump Organization is on trial after being indicted on charges of criminal tax fraud, scheme to defraud, conspiracy and falsifying business records, with Manhattan prosecutors alleging the company “devised and operated a scheme to defraud” tax authorities by paying executives through gifts and other “off the books” compensation.

Weisselberg has already pleaded guilty to the scheme, through which he allegedly received approximately $1.76 million in indirect compensation between 2005 and 2021, but no other Trump Organization executives—including Trump or his family members—have been directly implicated in the criminal case.

If found guilty, the Trump Organization will only have to pay a maximum of approximately $1.6 million in fines, which CNN notes is the highest amount allowed under state law for this kind of crime.

A conviction would not result in any further direct consequences to the Trump Organization, including the dissolution of the company.

It could make it less likely that creditors or other business partners will be willing to work with the Trump Organization, however, legal experts cited by Bloomberg and NBC News noted, and Brooklyn Law School professor Miriam Baer told Reuters the trial alone “casts a pall of uncertainty over the company” that could affect its future business deals.

Legal experts cited by Insider also note a conviction could persuade the federal government to stop doing business with the Trump Organization—such as Secret Service agents being charged to stay at Trump properties—citing federal regulations that allow government contractors to be “debarred” if they’ve committed crimes like tax evasion or falsification of records.

Crucial Quote

“Is it definitive that a company convicted of a crime will be shunned by lenders and creditors? Not necessarily,” attorney Daniel Horwitz, a former prosecutor at the Manhattan district attorney’s office that brought the charges, told Bloomberg. “Is it a good thing if the Trump Organization is convicted of cheating the government of millions of dollars in taxes over the years? No, it’s not good.”

What To Watch For

Jury selection in the case is expected to last for approximately two weeks, Law360 reports, as attorneys in the case try to weed out potential jurors who have a strong political bias against Trump. The trial itself will then take approximately five to six weeks, New York State Judge Juan Merchan said ahead of jury selection Monday, which will include testimony from Weisselberg on the alleged tax fraud scheme.

Chief Critic

The Trump Organization has pleaded not guilty to the charges against it, and attorneys representing the company at trial told the New York Law Journal they’ll argue that even though Weisselberg pleaded guilty, there’s “no evidence” to show the company itself did anything wrong. “Our defense has always been that these corporate entities are not liable for things that employees do behind the corporation’s back,” attorney Michael van der Veen told the Journal. “The corporation received no benefit from the tax crimes.”

Key Background

The Trump Organization and Weisselberg were indicted in July 2021 following a years-long investigation by the Manhattan District Attorney’s office into the company’s financials. (That investigation has so far not resulted in any other charges.) The indictment alleges the Trump Organization paid for Weisselberg’s Manhattan apartment, private school tuition for his family members and leases for Mercedes Benz vehicles for him and his wife, among other methods of indirect compensation, and the Trump Organization allegedly fraudulently misreported income to both Weisselberg and other unnamed executives to avoid paying higher taxes. Weisselberg pleaded guilty to the charges against him in August and will now serve only up to five months in prison, avoiding a potential 15-year sentence if he had been found guilty at trial. CNN reports the Trump Organization’s trial comes after the company and the Manhattan DA’s office discussed a possible plea deal a few weeks ago, which didn’t come to fruition. According to sources cited by CNN, the Trump Organization was only willing to plead guilty to committing a misdemeanor while the DA’s office wanted them to plead guilty to felony charges, and Trump himself was unwilling to let the company make any guilty pleas at all.

What We Don’t Know

What other punishments Trump and his company may face outside of this trial. New York Attorney General Letitia James has separately sued the Trump Organization, Trump, his children and other business associates for allegedly fraudulently inflating the company’s assets. That case could have much more significant impacts for the Trump Organization if they lose in court, including having its business certificates canceled in New York, Trump and his children being barred from leading New York businesses and a heftier $250 million fine. While that litigation is a civil lawsuit, James said her office has also found evidence Trump and his business violated criminal laws, including federal ones, and has thus referred its findings to the Justice Department and Internal Revenue Service. That means it’s possible Trump could be prosecuted in federal court as well. The former president is also facing multiple investigations from the Justice Department over him bringing White House documents back to Mar-A-Lago and his efforts to overturn the 2020 election, and prosecutors in Fulton County, Georgia, are also separately probing Trump’s post-election scheme.