Plan B Forum

Mr. Weisselberg has maintained that keeping a close eye on the organization’s finances and accounting had not given him insight into potential malfeasance at the company. In a 2015 deposition, he made it clear that it was not his job to ensure that the company complied with the law; it was the job of the Trump Organization lawyers. (My underlining.)

jrw
Portland, Oregon
June 30

A little perspective for all the people claiming this is a faux crime not worth prosecuting. The police murdered George Floyd because he allegedly had passed a counterfeit $20 bill.

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As someone who has written for decades about corporate crime, I was reading the Trump O/Weisselberg indictment going, "Yah, ok..hmm..yah..ok..Wait..HOLY SHIT!" The Trump Org is in deep, deep trouble. And not because of the criminal charges. Because of its bank loan covenants.../1

..in fact, if even the smallest bit of this case is true, I think the Trump Org could be dead. It's complicated, but it primarily pertains to the 12th count of the indictment.

Taking this a step at a time: Like most real estate companies, the Trump Org is horribly illiquid.../2

...this means it cannot readily convert its assets into cash as needed. Worse, because of the incredible incompetence and business idiocy of Trump, cash on hand (and access rapid loans through what is known as the commercial paper market) is small. So, the company survives.../3

...on loans against assets. Trump originally depended on bank loans, then jumped into high-yield (junk) bond market, which is why so many of his businesses went bankrupt: Junk bonds gave him lots of cash to spend, but he was too stupid to apply an analysis beyond 'I'm great'.../4

.to figure out how he was going to generate enough cash to pay interest on bonds. He couldn't. With his dad, he tried laundering money through Trump Castle to get past a requirement with his bank loans brought on by his junk debt, but got caught. Everything crashed down.../5

...so, the bottom line: Trump knows how to borrow money, he doesn't know how to manage it. Then came The Apprentice, which gave him lots of cash. Of course, he spent it all, then used assets he purchased as security to borrow from banks on apparent assumption that 'I'm great...'/6

...would fix any cash flow problems. He now has huge amounts of debt against assets that are plummeting in value because of January 6 and his toxic brand name. He *needed* the presidency to survive financially. I have always believed, that is why he is so desperate to keep it.../7

....because if he was president, he could hit up the Russians, Saudis, etc to bail him out. Now, with him toxic and a threat to the country, those nations know that any secret payments they make to him run a huge risk of being discovered.
Which brings us to today's charges.../8

...all bank loans with a business come with 'lending covenants.' These are basically a series of requirements, some of which include 'you'll behave' in minor character. But *the most important part* of any loan covenant is the 'books and records' portion. It is included in.../9

...every covenant for a bank loan to a business. The terms are simple: You maintain truthful books and records, you attest to us that they are truthful, and we are allowed to review them at any time. There is no 'You can lie *just a little bit* on your books and records'.../10

...it's all or nothing, like pregnancy: You either are or you aren't. The books and records either are truthful or they aren't. Which brings us to count 12, which I think you can now understand the significance of. /11

...Forget Weisselberg. That is every every corporate defendant, every entity that could have a loan covenant in its name. Every Trump Org bank lender in the world, right now, is looking at this indictment, looking at their covenants, and calling the Trump Org demanding.../12

...they turn over every relevant book and record pertaining to these issues. If they refuse...BOOM. Loans pulled. If they do and the banks don't like what they see...BOOM. Loans pulled. If the loans come due (which 100s of millions do next year) no way they get refinanced..../13

...there may be something I am missing here, but I do not see how the Trump Org survives this without some sort of corrupt deal overseas. But even that seems far-fetched. Instead, it may be the biggest real estate corp bankruptcy in history..../14

......and given that those of us who covered his business for decades - back when he was a democrat/reform party/whoever would have him - and always knew he was a crook, all I can say is, what the hell took so long?

- Kurt Eichenwald @kurteichenwald

The charges allege that Weisselberg and the Trump Organization did not properly pay taxes related to $1.7 million worth of “fringe benefits” Weisselberg received as part of his salary — most notably apartment and car leases for Weisselberg and private school tuition for his grandchildren. The specific charges also include conspiracy and grand larceny, but those too are related to these fringe benefits. Both Weisselberg and the company pleaded not guilty.

But reports in recent months have made clear that Vance’s investigation is focused on more than just corporate perks. He has also been probing matters close to the heart of the Trump Organization’s business practices, examining whether the company overvalued certain properties to score favorable loan terms while undervaluing them to pay less in property taxes. He even obtained Trump’s tax returns after a battle that went to the Supreme Court.

It’s this broader investigation that may be the true danger to Trump — if Vance can make a case, that is. And prosecutors have been trying for months to “flip” Weisselberg and turn him into a cooperating witness. They have not succeeded in doing so, and that’s the background to Thursday’s charges.
[...]
According to the New York Times, it is “highly unusual” for prosecutors “to indict a company for failing to pay payroll taxes on fringe benefits alone.” Then again, the evidence here appears strong — it includes that the Trump Organization kept internal spreadsheets tracking some of Weisselberg’s expenses.
[...]
Allen Weisselberg is Trump’s longtime money man. He has worked for the Trump family since the early 1970s, first as an accountant for Donald Trump’s father Fred, and eventually rose to his current post as CFO of the Trump Organization. When Trump assumed the presidency, he handed over management of that company to three people — Donald Trump Jr., Eric Trump, and Weisselberg.

“He knows where all the financial bodies are buried,” Trump biographer Tim O’Brien tweeted recently. Indeed, Trump lawyer Michael Cohen testified before Congress in 2019 that Weisselberg had worked with him to arrange hush-money payments to women alleging affairs with Trump.

As CFO of the Trump Organization, Weisselberg received an official salary. But he also received various lucrative perks on top of that — “fringe benefits.” These included:

• An apartment lease: Trump’s company paid the lease and utility bills for an apartment on Manhattan’s Upper West Side that prosecutors say has been Weisselberg’s primary residence since 2005.
• Car leases: Trump’s company paid the leases on two Mercedes-Benz cars used by Weisselberg and his wife.
• Private school tuition: From 2012 to 2017, either Trump or a Trump trust paid hundreds of thousands of dollars in tuition to a New York
• City private school for two of Weisselberg’s grandchildren.

Though fringe benefits such as these aren’t technically part of an employee’s salary, they have monetary value and as a result should be considered taxable income paid by the employer. (Certain types of fringe benefits, like employer-provided health insurance, are excluded from taxation, but most aren’t.)

Prosecutors allege that both the Trump Organization and Weisselberg participated in a scheme to avoid paying taxes on these perks. They argue that the Trump Organization should have paid payroll taxes, and that Weisselberg — whom they allege also hid his New York City residency — evaded more than $500,000 in federal taxes, more than $100,000 in state taxes, and more than $200,000 in New York City taxes.

Liberals are opposed to employee fringe benefits.

liberty wrote: ↑

Fri Jul 02, 2021 5:29 pm

Liberals are opposed to employee fringe benefits.

Big RR wrote: ↑

Sat Jul 03, 2021 12:21 am

Liberals are opposed to employee fringe benefits.

Please, shoe us who these "liberals" are; I had a company car for years and paid tax on my personal use, and have no problem with it. I doubt many others do. But I'm happy to prosecute those who illegally seek to avoid payment of taxes, as it should be.

ex-khobar Andy wrote: ↑

Thu Jul 01, 2021 3:29 pm

One of the comments on the above-linked piece deserves to be circulated much more widely:

jrw
Portland, Oregon
June 30

A little perspective for all the people claiming this is a faux crime not worth prosecuting. The police murdered George Floyd because he allegedly had passed a counterfeit $20 bill.

Reply. 721 Recommended. Share

Crackpot wrote: ↑

Sat Jul 03, 2021 11:46 am

I tend to feel a little forgiving (if that’s the right word) of the rookie cops as they were assigned to “learn the ropes” from the more senior officers. It does beg the question due to Chauvins history why would he be assigned such a task.