Corporate Tax Fraud on Trial in Manhattan Case: False Tax Returns

false tax returnsAn ongoing trial in New York City focused on criminal tax fraud continues with trial delays due to COVID-19.


The Trump Corporation and Trump Payroll Corp. face 17 counts of tax fraud, falsifying business records, payroll tax issues, and conspiracy, among other charges. While the parties are big names in the New York State Supreme Court, the allegations at the heart of the case are commonplace.


In this case, it is business on trial. The key witness, Allen Weisselberg, is the former chief financial officer of the Trump Corporation who pled guilty and agreed to provide testimony in the matter.  Despite his plea, Mr. Weisselberg did not agree to provide information concerning executives such as Mr. Trump and his family, and he remains on leave from his job—albeit without his former title.


Overall, the criminal tax charges leveled against the businesses relate to allegedly concealed perks and benefits provided to executives on which taxes were not paid. In that regard, the prosecution hopes to prove to the jury that the companies involved hid compensation in the usual course of business. Mr. Weisselberg benefited from the practice in several ways. In addition to leases of Mercedes-Benz vehicles for Mr. Weisselberg and his wife, the Trump Corporation also paid his utilities, rent, and parking garage fees. Mr. Trump is alleged to have personally paid the private school tuition of Mr. Weisselberg’s grandchildren.


Because perks and benefits were paid and not claimed on taxes, the charges include the preparation of fraudulent tax returns. Prime witnesses in the matter are Mr. Weisselberg and his deputy Jeffrey McConney. On his second day of testimony, Mr. McConney tested positive for COVID during the lunch break. He reportedly began feeling ill three days prior. As a result, the trial was paused for a week.


This trial is steeped in financial minutia which may or may not make an impression on jurors. Although a guilty verdict for either company would impact business reputation, it would also likely result in a financial penalty that either company could bear without difficulty.


Each of the defendant companies has its own team of criminal defense tax attorneys—an important assist for navigating the charges, which may pose a challenge to the overall prosecution of the matter. Defense counsel is pointing at Mr. Weisselberg as the villain of the story and if the prosecution is not able to prove more than that—Mr. Weisselberg himself is already in line for a reduced sentence in exchange for testifying at the trial.


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