Trump’s name hovers over his company's tax fraud trial even though he’s not charged

“Donald Trump did not know that Allen Weisselberg was cheating on his personal tax returns,” defence attorney Susan Necheles told the jury in her opening statement Monday in New York State Supreme Court in Manhattan.

Weisselberg pleaded guilty this summer in a deal that reduces his sentence in exchange for his truthful testimony against two units of the company. The trial threatens to reveal the inner workings of the real estate empire that set Trump on his path to the White House.

“The evidence will be crystal clear,” Necheles said, asking the jurors to remember, when they deliberate on their verdict at the end, that “this is not a referendum on President Donald Trump.”

Elephant in Room

That is one of the few things the defence and prosecution agree on: The jury must focus on the defendants - the two business units. In her own opening earlier Monday, Assistant District Attorney Susan Hoffinger told the panel that after Trump won the US presidency, Weisselberg directed an unnamed underling to erase any mention of secret payments from the ledgers.

“The evidence will show that when Donald Trump was elected president at the end of 2016, these companies finally had to clean up” the tax practices, Hoffinger said. “There was concern about extra scrutiny of these companies because of Donald Trump’s election.”

Even though Trump isn’t charged in the case, it took only about half an hour for his name to come up on Monday, with Hoffinger mentioning it several times.

“This case is about greed and cheating - cheating on taxes,” she told the jury about the more than decade-long tax dodge prosecutors allege. The units, Trump Corp and Trump Payroll Corp, paid their already highly compensated executives even more by helping them falsify their tax obligations, she said. The two are accused of evading payroll taxes by compensating some employees, including Weisselberg, with perks such as company cars and rent-free apartments instead.

‘Everybody Wins’

Trump signed off on the payment of private school tuition for Weisselberg’s grandchildren, Hoffinger told the jurors.

“During the years of the tax evasion scheme, the Trump Corporation actually paid out the expenses I described,” except for the tuition, she said. “That was paid by Donald Trump personally.”

After describing the alleged scheme, Hoffinger summed it up.

“Everybody wins here - Allen Weisselberg and these companies,” she said. “Of course, everybody but the tax authorities.”

Controller Takes Stand

After openings, prosecutors called to the stand the trial’s first witness, Trump Organization Controller Jeffrey McConney. McConney, a ruddy man with white hair and a mustache, has worked for the firm for more than three decades, earlier as an assistant controller for Trump’s father, Fred.

In her opening statement, Hoffinger had told jurors they would hear from McConney and and see false W-2 forms concealing Weisselberg’s actual compensation, invoices of executives’ personal expenses and notes from the company detailing bonuses and payment checks - all evidence of the firm’s alleged scheme.

Under questioning by Assistant District Attorney Joshua Steinglass, McConney testified that defence attorney Necheles had advised him on how to answer questions on the stand.

“Did she tell you to hit certain points?” Steinglass asked.

“Yes,” McConney said.

Dramatic Moment

There was a dramatic moment when Steinglass asked McConney if he had declined to meet with the district attorney’s office recently to prepare for trial. McConney said, “Yes, my attorney objected.”

Steinglass asked the judge for permission to treat McConney as a “hostile witness,” allowing prosecutors to cross-examine their own witness and try to impeach his credibility - a highly unusual move.

With the jury out of the courtroom, Necheles argued that prosecutors failed to show that McConney was being “hostile” to them and exhibited a “reluctance to testify”.

New York State Supreme Court Justice Juan Merchan agreed, declining the prosecution’s request for now.

“I haven’t seen this witness refuse to answer a question,” he told Steinglass.

McConney got back on the stand and, with the jury in the courtroom again, answered a question about Trump Payroll Corp.

“It’s not like a candy store that generates income,” he said.

‘Witch Hunt’

Weisselberg pleaded guilty in August, striking a deal with the Manhattan district attorney’s office under which he must testify truthfully against the firm, in exchange for a sentence that could be as short as 100 days in jail; the charges against him could have meant years in prison. Trump has called the case “the greatest witch hunt in American history”.

The two units face multiple counts, including conspiracy and criminal tax fraud. If convicted, they could have to pay back taxes and fines totalling about $1.6-million. That would hardly put the parent company out of business, but the trial - the first involving the firm since the former president left office - could tarnish the firm’s reputation.

District Attorney Alvin Bragg, who inherited the case from Cyrus Vance Jr and was criticised for not securing an indictment against Trump himself, was sitting in the back of the courtroom Monday. The prosecution kicked off the trial with its opening statement after four days of jury selection last week. The trial is expected to last about six weeks.

The case is People v Trump Organization, 01473-2021, New York State Supreme Court (Manhattan).