Trump Org. and CFO Indicted

[Meadmaker]

I don’t find the argument that it’s not fair to prosecute this guy for defrauding the government of over a million dollars because most of the time they don’t care when people do this both improbable and unconvincing. Avoiding paying over a million dollars whether it’s by fringe benefits or some other means is incredibly greedy. The defense that this is standard industry behavior is something everyone should be skeptical of.

I think the more common way of dealing with this situation is, when it is found that income is being hidden as "fringe benefits" or "business expenses", to demand that the back taxes be paid, with interest and penalties.

It all depends on just how egregious the behavior is, though. I have no way of assessing whether the sort of behavior the CFO was engaged in met the level that it would normally be prosecuted, instead of just imposing "penalties", which are basically non-judicial fines.

It's amazing what people will talk themselves into believing when it comes to taxes. I can teach you the whole of the tax code while you are standing on one leg. If someone gives you money, and the result is that you can buy more stuff, you have to pay taxes. The rest is commentary.* And yet, people will convince themselves that if the company rents an apartment and they live in it, that's not income.**

If you do that sort of thing, the IRS will assess penalties. If you do it enough, they will prosecute. How much did the Trump folks do it? That''s why we have courts.


* Jewish readers will recognize this as a parody of a story about Rabbi Hillel and the Jewish equivalent of the Golden Rule.

**I actually experienced this one myself. I got the money, and my company insisted that it was not taxable, but I was absolutely certain it was. I eventually asked a lawyer and he said it was, and it was so obviously taxable that the IRS would eventually demand the money, including penalties, from the company, not from me.

 

[Lurch]

Surely you jest.

Yeah, I do alternate between hope and despair. In a moment of brighter mood I dared entertain the notion that the MAGAchuds might turn against their Great White Savior if he was perceived to be a loser.

On reflection, the martyr complex in that basket of deplorables might just further cement their fealty to their persecuted messiah. Making their hate against the despised Libs take on a whiter heat. Just what Dump would like. And Pootie, nodding with sly appreciation in the shadows.

 

[Joe Random]

I have to review expense reports for my office and recently I've had to remind department heads that they can't give out pre-paid gift cards to their staff as bonuses because it circumvents taxation. That's on people getting a Kohl's card for $200.00 here or there. Guess I should have set my limits a tad higher ...

 

[Bob001]

I think the more common way of dealing with this situation is, when it is found that income is being hidden as "fringe benefits" or "business expenses", to demand that the back taxes be paid, with interest and penalties.

It all depends on just how egregious the behavior is, though. I have no way of assessing whether the sort of behavior the CFO was engaged in met the level that it would normally be prosecuted, instead of just imposing "penalties", which are basically non-judicial fines.
.....

Well, according to press reports the scheme lasted at least 15 years and included maintaining two sets of books, one of which recorded the real value of the perks and counted them toward salaries. So this is way beyond a misunderstanding of the tax laws.
https://slate.com/news-and-politics/2021/07/how-much-jail-allen-weisselberg-trump.html
https://www.documentcloud.org/documents/20982377-indictment

 

[dirtywick]

That's what I mean when I say we should be skeptical about what the Trump Org is putting out there. Maybe the IRS typically does ignore typical, industry standard schemes by high level business executives set up deliberate 15 year plans to defraud the government out of hundreds of thousands of dollars in taxes and they're just being unfairly politically prosecuted. That doesn't pass the smell test for me, but that kind of stuff is way out of my wheel house.

 

[quadraginta]

I have to review expense reports for my office and recently I've had to remind department heads that they can't give out pre-paid gift cards to their staff as bonuses because it circumvents taxation. That's on people getting a Kohl's card for $200.00 here or there. Guess I should have set my limits a tad higher ...

This reminds me of a policy a building firm I worked for implemented. They frequently operated as the general contractor on large projects they did. As a carrot rather than stick' addition to their safety program they gave field superintendents gift cards to pass out to workers (all subcontractor employees) who went "above and beyond" in observing workplace safety.

Individually they were not much. $10, $15, $20. But cumulatively they would have totaled quite a bit. And that would have been only for the project I was on. I don't know how many others they tried it with, but this company was among the largest building contractors worldwide, so it could have amounted to a significant investment.

I wonder how they handled that on their books.

***********************

As an aside. One of the people I gave a couple of them to, a foreman for our elevator contractor, asked me to quit giving them to him. His problem with them? They were gift cards to Lowes, a big box home improvement and building chain.

He said, "You know I can't go into Lowes and only spend $10. These things cost me too much money".

 

[DevilsAdvocate]

When compared to the amount of effort, time, or money expelled to perpetually investigate any one individual or corporation; the amount of effort, time, and money being spent to investigate Trump, his family, and anybody associated with him can be easily labeled as excessive.

1. Are these charges a personal vendetta against a former president, for whom many found despicable, being done with the hope that it will limit Trump's prospects of running for president in the future?

2. Or has the lack of taxes paid on these fringe benefits by the Trump organization done real harm to citizens and can be viewed as a justified use of government funded prosecution?

3. Perhaps they hare better nderstood by a different narrative?

Trump brought it on himself. He practically required that there be an investigation.

I agree with Trump that the press is sometimes unfair to him. The press sometimes takes things out of context, chooses an unfavorable interpretation, picks on little things, calls him out for doing the same things other presidents have done, etc. Other Presidents did not face that to the same degree. But he brought that on himself. Other Presidents didn't call the press the "enemy of the people" or constant scream "fake news" or refer to news agencies as "terrible" and "failing" or call reporters by mean playground nicknames or constantly lie or contradict his press secretaries when they don't get a positive response and so on. He brought it on himself.

It is the same with this investigation. Maybe sometimes the IRS gives the benefit of the doubt that it was an honest mistake. Probably more often they don't investigate at all. But Trump practically forced an investigation.

He spent that last several years spouting off everyday on the news and social media to get attention, attention, attention. It's no surprise that attracts attention.

He has a history of shady business practices and lawsuits and running a fake university scam and trying to set up shady deals with Russia and maybe the Ukraine and surrounding himself with criminal who do things like pay hush money to strippers with campaign finances and run off with money donated to build a border wall and he didn't release his taxes like every other Presidential candidate for decades and didn't turn over his business to a trust while in office like every other President and potential violations of the Emoluments Clause and so on. It's no surprise that attracts suspicion.

When he spends years engaged in suspicious business activity and constantly attracts attention, that is obviously going to attract attention to his suspicious business activity and there will be an investigation. He brought it on himself.

 

[Skeptic Ginger]

To the gift card issue, more often than not those kinds of things are handled like the office potluck or fund raiser or Xmas party. They don't come out of the company funds.

And second, unless you are keeping 2 sets of books, one to hide the tax fraud, I doubt the IRS is going to care about such small amounts.

 

[Segnosaur]

I agree with Trump that the press is sometimes unfair to him.

Uhhh... not its not.

First of all, "the press" is not some monolithic entity... its composed of multiple sources all across the political spectrum, some right, some left. The ones on the political right (such as Fox News) were more that fair... in fact, they were excessively generous to him.

Secondly, even if many of the moderate or left wing sources were negative about him, that does not necessarily mean their stories were in any way false or biased. (In fact, many source went out of their way to at least present the Trump perspective.)

The press sometimes takes things out of context, chooses an unfavorable interpretation, picks on little things, calls him out for doing the same things other presidents have done, etc. Other Presidents did not face that to the same degree.

Or..... maybe Trump got criticized more because he was much more corrupt and made more mistakes.

The news media is certainly not perfect. But that doesn't mean that Trump was treated any worse than anyone else.

It is the same with this investigation. Maybe sometimes the IRS gives the benefit of the doubt that it was an honest mistake. Probably more often they don't investigate at all. But Trump practically forced an investigation.

He spent that last several years spouting off everyday on the news and social media to get attention, attention, attention. It's no surprise that attracts attention.

He has a history of shady business practices and lawsuits and running a fake university scam and trying to set up shady deals with Russia and maybe the Ukraine and surrounding himself with criminal who do things like pay hush money to strippers with campaign finances and run off with money donated to build a border wall and he didn't release his taxes like every other Presidential candidate for decades and didn't turn over his business to a trust while in office like every other President and potential violations of the Emoluments Clause and so on. It's no surprise that attracts suspicion.

When he spends years engaged in suspicious business activity and constantly attracts attention, that is obviously going to attract attention to his suspicious business activity and there will be an investigation. He brought it on himself.

It is quite possible that the current legal issues facing the Trump organization are largely as a result of attention brought about by Trump's activities and political profile. But that doesn't necessarily mean any sort of 'bias' is at play.

 

[The Great Zaganza]

the only unfair treatment here is that Trump got away with it for so long, even though everyone knew since his first bankruptcy that he was breaking the law.

 

[Skeptic Ginger]

the only unfair treatment here is that Trump got away with it for so long, even though everyone knew since his first bankruptcy that he was breaking the law.

I agree. He did buy off one prosecutor, IIRC, for as little as a $25K campaign donation. I bet he smoozed and suckered NY officials.

 

[Meadmaker]

That's what I mean when I say we should be skeptical about what the Trump Org is putting out there. Maybe the IRS typically does ignore typical, industry standard schemes by high level business executives set up deliberate 15 year plans to defraud the government out of hundreds of thousands of dollars in taxes and they're just being unfairly politically prosecuted. That doesn't pass the smell test for me, but that kind of stuff is way out of my wheel house.

I can't claim any significant experience on this, either.

Five paragraphs explaining my own encounter with tax fraud via "travel expense":

In the one case I am extremely familiar with, because it was me, I know that from 1998 to 1990, I received somewhere around 50,000 dollars of "travel expenses", that were not actually travel expenses. I could read the IRS regulations and say that they were definitely taxable, and yet I had a tax preparer tell me that they were definitly not taxable. I was sure that not only was it taxable, but it was the exact sort of payment that the tax code authors had in mind when they wrote the regulation. I was perfectly happy to not pay taxes on it, but I stashed away enough of the money to be sure I could pay the back taxes if the IRS came knocking wanting their money.

I was one of a group of about 25 people, all in the same situation, and in fact almost all of them were receiving more money from me, because I was not turning in as many "expenses" as others did. (I was living in an apartment that only cost half of what my apartement allowance was, for example.)

There was another group of employees on a different program in exactly the same situation. So, in total, there was probably three million dollars of taxable income that the company was calling non-taxable, but they were passing those expense along as charges to our customer, with a markup, so my company was making a profit by not calling it taxable income, so they weren't going to stop.

When I finally talked to a lawyer, he said it was very obviously taxable, and I said, "So I should file an amended return?" He replied. "Hell no. When the IRS finds out about it they will go after your company and make them pay, because the company ought to know better. The IRS will make them pay all the back taxes plus interest and penalties."

A year later, after the payments had stopped, we got letters from our company saying there had been a mistake and that we may have to pay back taxes, and 1099 forms would be forthcoming. Needless to say, this was not a happy day in the office, because everyone but me insisted that it wasn't taxable. A week after that, we got another letter from HR saying that never mind, the company would take care of it, just as the lawyer predicted.

Anyway, the short version is that my company skipped payments on about 3 million dollars of income, because by doing so they could make a profit on those costs, and no charges were filed. No prosecutions. Back taxes with interest and penalties, but no crimes.

The IRS has a lot of discretion on whether or not to pursue penalties or to pursue criminal charges. They normally only pursue criminal charges in really egregious cases. Was this such a case? Maybe. Trump can try to explain it in court. Good luck with that. Well.....just kidding.....I actually hope this is just the tip of the iceberg and that they can pin something criminal on him, personally, but that's a matter for the courts, including prosecutors, judges, and juries.

ETA: Oh....and....I made out like a bandit. I got to keep all the 50,000 dollars, and didn't have to pay taxes. I wish I would have understood long term investing at the time.

 

[Orphia Nay]

I wonder how long it will be before Weisselberg flips and dumps this on Trump.

 

[Skeptic Ginger]

I can't claim any significant experience on this, either.

Five paragraphs explaining my own encounter with tax fraud via "travel expense":

In the one case I am extremely familiar with, because it was me, I know that from 1998 to 1990, I received somewhere around 50,000 dollars of "travel expenses", that were not actually travel expenses. I could read the IRS regulations and say that they were definitely taxable, and yet I had a tax preparer tell me that they were definitly not taxable. I was sure that not only was it taxable, but it was the exact sort of payment that the tax code authors had in mind when they wrote the regulation. I was perfectly happy to not pay taxes on it, but I stashed away enough of the money to be sure I could pay the back taxes if the IRS came knocking wanting their money.

I was one of a group of about 25 people, all in the same situation, and in fact almost all of them were receiving more money from me, because I was not turning in as many "expenses" as others did. (I was living in an apartment that only cost half of what my apartement allowance was, for example.)

There was another group of employees on a different program in exactly the same situation. So, in total, there was probably three million dollars of taxable income that the company was calling non-taxable, but they were passing those expense along as charges to our customer, with a markup, so my company was making a profit by not calling it taxable income, so they weren't going to stop.

When I finally talked to a lawyer, he said it was very obviously taxable, and I said, "So I should file an amended return?" He replied. "Hell no. When the IRS finds out about it they will go after your company and make them pay, because the company ought to know better. The IRS will make them pay all the back taxes plus interest and penalties."

A year later, after the payments had stopped, we got letters from our company saying there had been a mistake and that we may have to pay back taxes, and 1099 forms would be forthcoming. Needless to say, this was not a happy day in the office, because everyone but me insisted that it wasn't taxable. A week after that, we got another letter from HR saying that never mind, the company would take care of it, just as the lawyer predicted.

Anyway, the short version is that my company skipped payments on about 3 million dollars of income, because by doing so they could make a profit on those costs, and no charges were filed. No prosecutions. Back taxes with interest and penalties, but no crimes.

The IRS has a lot of discretion on whether or not to pursue penalties or to pursue criminal charges. They normally only pursue criminal charges in really egregious cases. Was this such a case? Maybe. Trump can try to explain it in court. Good luck with that. Well.....just kidding.....I actually hope this is just the tip of the iceberg and that they can pin something criminal on him, personally, but that's a matter for the courts, including prosecutors, judges, and juries.

ETA: Oh....and....I made out like a bandit. I got to keep all the 50,000 dollars, and didn't have to pay taxes. I wish I would have understood long term investing at the time.

That seems unclear to me. If you are given travel expenses doing business for the company, that's not income to you. That's a business expense the company pays. It's not like you got a vacation out of it. Why should a company expense be your income?

As for the company overpaying said expenses, you might ask how that differs from them buying a product and overpaying for it.

 

[Skeptic Ginger]

I wonder how long it will be before Weisselberg flips and dumps this on Trump.

It has been noted on one of these news programs here that Weisslberg worked for Dump for 50 years and that he owes Dump for all of Weiss' 'wealth'. It's very possible IMO that he won't flip, he'll get a light sentence unless some judge wants to make an example of him.

Now the kids OTOH, were it me I might offer some flipping on them.

 

[Segnosaur]

I wonder how long it will be before Weisselberg flips and dumps this on Trump.

Half the news reports/analysis i see says "soon" the other half says "never".

Sent from my LM-X320 using Tapatalk

 

[Bob001]

That seems unclear to me. If you are given travel expenses doing business for the company, that's not income to you. That's a business expense the company pays. It's not like you got a vacation out of it. Why should a company expense be your income?

As for the company overpaying said expenses, you might ask how that differs from them buying a product and overpaying for it.

If they give you more than you spend and you keep the excess, that's income. Without knowing for sure, it sounds like employees were given cash beforehand to use for travel, rather than getting reimbursed after they filed expense reports. If they give somebody $200 a day for a nice hotel, and they stay at a Motel 6 (not that there's anything wrong with Motel 6) the difference is income.

 

[dirtywick]

I can't claim any significant experience on this, either.

Five paragraphs explaining my own encounter with tax fraud via "travel expense":

In the one case I am extremely familiar with, because it was me, I know that from 1998 to 1990, I received somewhere around 50,000 dollars of "travel expenses", that were not actually travel expenses. I could read the IRS regulations and say that they were definitely taxable, and yet I had a tax preparer tell me that they were definitly not taxable. I was sure that not only was it taxable, but it was the exact sort of payment that the tax code authors had in mind when they wrote the regulation. I was perfectly happy to not pay taxes on it, but I stashed away enough of the money to be sure I could pay the back taxes if the IRS came knocking wanting their money.

I was one of a group of about 25 people, all in the same situation, and in fact almost all of them were receiving more money from me, because I was not turning in as many "expenses" as others did. (I was living in an apartment that only cost half of what my apartement allowance was, for example.)

There was another group of employees on a different program in exactly the same situation. So, in total, there was probably three million dollars of taxable income that the company was calling non-taxable, but they were passing those expense along as charges to our customer, with a markup, so my company was making a profit by not calling it taxable income, so they weren't going to stop.

When I finally talked to a lawyer, he said it was very obviously taxable, and I said, "So I should file an amended return?" He replied. "Hell no. When the IRS finds out about it they will go after your company and make them pay, because the company ought to know better. The IRS will make them pay all the back taxes plus interest and penalties."

A year later, after the payments had stopped, we got letters from our company saying there had been a mistake and that we may have to pay back taxes, and 1099 forms would be forthcoming. Needless to say, this was not a happy day in the office, because everyone but me insisted that it wasn't taxable. A week after that, we got another letter from HR saying that never mind, the company would take care of it, just as the lawyer predicted.

Anyway, the short version is that my company skipped payments on about 3 million dollars of income, because by doing so they could make a profit on those costs, and no charges were filed. No prosecutions. Back taxes with interest and penalties, but no crimes.

The IRS has a lot of discretion on whether or not to pursue penalties or to pursue criminal charges. They normally only pursue criminal charges in really egregious cases. Was this such a case? Maybe. Trump can try to explain it in court. Good luck with that. Well.....just kidding.....I actually hope this is just the tip of the iceberg and that they can pin something criminal on him, personally, but that's a matter for the courts, including prosecutors, judges, and juries.

ETA: Oh....and....I made out like a bandit. I got to keep all the 50,000 dollars, and didn't have to pay taxes. I wish I would have understood long term investing at the time.

Well I think when it enters into egregious territory is when Allen Weisselberg sits down with his secret fraud ledger to review its contents with, well I don’t know who would be above him in Trump Org so let’s just make up a name like Ronald Stump. And then after those meetings signed checks to him for things like rent, utilities, and private school tuition, and then claimed those expenses as business expenses for the company on their official documents. And then did it for 12 years.

And maybe that’s what your company did too, idk. Maybe all companies commit well documented tax fraud. Again, it’s not like they’re denying they did it, they just think nobody should care.

Anyway, although I’m sure it would be nice for him to cooperate and narrate the various frauds in detail, they wrote it all down. And from what I’ve been reading, Weisselberg isn’t the only beneficiary. So maybe the question isn’t will he flip, but who flips first.

 

[Meadmaker]

That seems unclear to me. If you are given travel expenses doing business for the company, that's not income to you. That's a business expense the company pays. It's not like you got a vacation out of it. Why should a company expense be your income?

As for the company overpaying said expenses, you might ask how that differs from them buying a product and overpaying for it.

The thing is, I wasn't travelling. I moved from California to Michigan, and they paid me as if I were travelling. They gave me my paycheck, and they gave me travel expenses. For two years, every paycheck went into a savings account, and I lived on the "travel expenses". Both me and my company benefitted from this arrangement.

It was all quite illegal, but no one was ever prosecuted, and there are many, many, cases where something similar happens, and the people doing it are caught, and they are not prosecuted.

I want to emphasize something. I'm not saying that the New York prosecutors shouldn't prosecute the Trump Organization, or the CFO, or the Big Orange Kahuna himself. I'm just saying that the prosecutors will have to show more than just that the law was broken. They have to show that it was broken in such a way that usually leads to prosecution, as opposed to just a tax penalty.

 

[dirtywick]

I think they’ve already done that. It wasn’t oversight or misinterpretation, it was deliberate fraud.

edit

Also, why would they have to prove that? Is other people have committed similar crimes and not been prosecuted a valid defense?