Trump Org and Allen Weisselberg, the CFO, have been indicted by the Special Grand Jury in New York. Weisselberg was charged with Grand Larceny in the Second Degree. It is a sweeping indictment revealing a 15 year scheme to defraud the IRS.  The indictment shows a pattern and practice of avoiding the payment of taxes.

Prosecutors allege that Allen Weisselberg, the 73-year-old accountant and CFO, received as much as $1.76 million in compensation over a 16-year-period—for cars, an apartment rental, and tuition for Mr. Weisselberg’s grandchildren at a private school—in a way that kept them off the books for tax purposes. The indictment says he avoided paying $901,112 he owed in taxes and collected federal and state tax refunds of $133,124 he wasn’t entitled to. (WSJ Opinion)

What does the indictment really tell us?  It is Cyrus Vance and Leitia James’ way of telling Trump and his bevy of lawyers we have the goods and we are coming first for Allen Weisselberg and your business. If Weisselberg wants to save himself and his sons from the possibility of doing time in prison he will need to “flip” on Trump, specifically, tell the prosecution team the truth about what Trump did and how he, as the trusted CFO, helped him to do it.

The Back Story

For two years the New York District Attorney, Cyrus Vance, has been investigating Trump and Trump Organization for potential criminal financial fraud that occurred prior and during Trump’s presidency. Trump has long been known to have overvalued and undervalued his properties depending on how the valuation benefited him personally although that is not part of this current indictment. Many real estate guys play around with valuation of their properties to get an advantage, but not to the extent Trump was reportedly doing that. Lying to banks, financial institutions and the IRS about the value of assets (loan fraud, tax fraud) can be a crime. That is at least part of what is being scrutinized by the Special Grand Jury.

The Evolution of the Investigation

Cyrus Vance began this investigation while Trump was in office. Vance was finally able to get Trump’s tax returns after a prolonged court battle that went all the way to the Supreme Court. The Supreme Court (yes, even the Trump appointed justices) ordered the release of Trump’s tax returns allowing Vance’s office to do a deep dive investigation into those documents Trump tried so hard to hide from the American people. As the secret proceeding has moved forward, we learned from reporters that Mark Pomerantz had been hired to oversee the investigation.  He is a seasoned trial lawyer who understands how to effectively prosecute complex financial crimes. That choice of a lead prosecutor told us that Vance’s office is serious about going after Trump and Trump Org.

We also learned that the Attorney General’s Office was investigating Trump Org for civil violations and just recently it was announced that the investigation had a spun off a criminal component and that staff from the AG’s Office was on loan with the State’s Attorneys Office to coordinate the case that is developing. The Attorney General and the States’ Attorney of NY are working on this case together.

We also learned that the heat was on Allen Weisselberg, Trump’s accountant and the CFO of Trump Org. The pressure on Allen has been built from criminal cases developed against his two sons with the help of one son’s former wife, Jennifer Weisselberg. This is consistent with the typical way prosecutors build a case against a Mafia boss: namely, start with lower level people with close ties to the next level up in the chain of actors and create pressure on the person or people who know more and are more in the center of the circle of knowledge with the mob boss as the target at the top of the pyramid.

Michael Cohen, Trump’s former attorney, has been very vocal about the relationship Allen Weisselberg, the CFO of Trump’s empire, has had over the years with Trump and Trump Organization. He says that Weisselberg was the gatekeeper who knew where “every penny” was spent having to do with anything and everything Trump was engaged in from the inauguration, to his campaign for president, to the kids’ business accounts to Trump Org. and more. In other words, Weisselberg, along with financial documents, probably hold the key to the jail cell that Trump may some day be doing time in. That is, unless Weisselberg stays loyal to Trump and stonewalls the investigators.

What Will Weisselberg Do?

How loyal will Weisselberg be to Trump? It will depend on the level of pressure Weisselberg feels. He is in his 70’s, so going to prison would be a hardship. But, given comparable cases of tax evasion, the 1.7 million he failed to pay taxes on might not result in a very long jail term, if any at all. Greater pressure might come from the possibility that his sons could be indicted, found guilty and possibly be sentenced to prison for accepting valuable “gifts” from Trump such as tuition for private school for their children without paying taxes on those gifts. Trump personally signed some of those checks, by the way, getting Trump closer to peril for himself.

Tactically, Trump will try to keep Weisselberg loyal by saying what a great guy he is and claiming these perks are perks that everyone takes. We are already hearing these claims from Trump’s orbit.  If Weisselberg does decide to “flip” then Trump will allege Weisselberg was a skunk who did all these bad things totally without Trump’s knowledge. And since proving Trump’s knowledge and intent is crucial to a successful prosecution of Trump, Weisselberg could be the lynchpin for a successful prosecution of Trump.

Weisselberg has that information. It is well known that Trump and Weisselberg were the last people in the room together when decisions were made. Trump trusted his CFO in a way he trusted no one else including his own kids. However, in an interesting twist, there was a second set of books kept that document in detail expenses that were paid to people in the Trump Organization that were hidden from the IRS and “off the books”. That will be very useful road map for the prosecution in proving its case for tax evasion, but will not do much to show Trump’s intent. He could claim Weissleberg took these actions on his own without consulting him. Trump did not use email which is normally a good way to prove the intent of a defendant. Trump was well schooled about how to be a Mafia boss and avoid accountability.

Usually when the heat is on like this, co-conspirators lawyer up and start blaming each other to get the heat off of themselves. We know Trump’s modus operandi is ALWAYS to throw his buddies under the bus to save himself, so this will be no different. What is looks like now is that if Weisselberg refuses to help the prosecution the result might be a light prison sentence for himself and his sons and Trump’s continued support. The prosecution will have to assess whether they can prove Trump’s knowledge and intent beyond a reasonable doubt without Weisselberg.  If Weisselberg flips, then Trump will almost certainly be indicted because that will mean they can prove up Trump’s state of mind: knowledge, and intent.

Get your popcorn ready.

What Is the Continuing Work of the Special Grand Jury?

Grand juries generally hear more than one case and sit for a month at a time. But this is a special grand jury that will meet 3 days a week and is currently empaneled for 6 months (although that time frame can be extended). It is likely that the Trump financial crimes are so complex and extensive that it will take up the majority if not all of their time.

The reason for a grand jury is to bring in every single document and witness that sheds light on what happened in to testify and that way the prosecutor tells the grand jury the story of the financial crimes carried out by the defendants. When a witness testifies before the grand jury a court reporter transcribes everything that is said. This can be used at trial for cross examination. It comes in handy if a witness changes his or her story. If that happens, the prosecutor uses the grand jury transcript to question the witness to establish that the witness, who was under oath, said something different  before the grand jury. People go to jail if they lie under oath. So you can see how grand juries are the way to “lock in” testimony.

A witness who testifies before this grand jury can also get immunity from prosecution him or herself. That creates a huge incentive for witnesses to come in and tell their story truthfully so they can get the benefit of immunity. The way to be sure the witness is telling the truth is to use supporting documents to cross check the witness’ testimony. Witnesses come before the grand jury without their attorney, by-the-way. There is no attempt by the prosecutor to put in any defense or anything rehabilitative for that witness or for anyone who is a subject or target of the investigation. Everything presented to the grand jury is from the perspective of the prosecution.


Will Trump Skate AGAIN?

There have been many instances when people thought Trump would be found guilty but he skated away. There was the Mueller Report, the Emoluments Clause cases, two impeachments, allegations of rape and sexual harassment, not to mention the Stormy Daniels case that got Michael Cohen fitted for HIS orange jumpsuit, and a multitude of other matters that Trump was able to weasel out of by paying people off or by rigging the system both before he was president and while he was president.

Are things different now?

Trump is not the president anymore and Bill Barr is not his fixer anymore. Trump cannot fire these prosecutors as he threatened to do with the Mueller team. Trump cannot pardon potential witnesses as he did with the Mueller investigation to gain their loyalty. Trump didn’t try to proactively self-pardon himself as he left office either, which might have caused people to believe he was guilty. Trump has said that taking the Fifth tells you the person is guilty so he probably also thought a self-pardon made him look too guilty. However, he no longer has the magical powers of the presidency anymore and a lot of people who do have power are quietly hoping for his demise.

If congressional Republicans could express their real feelings, a lot of them would love to see Trump out of power forever. He is gumming up the works for Republican presidential hopefuls. Ron DeSantis would love to get Trump to shut up, for example. DeSantis wants to start jockeying for position in the GOP horse race for 2024, but he and others are being prevented by Trump’s power over the GOP. The base still adores Trump and Trump has every incentive to try to be president again since that would shield him from being prosecuted. While he was president he was shielded from accountability thanks to the OLC opinion that a sitting president cannot be indicted.

What is Going on Behind the Scenes?

At this point the focus is on Weisselberg but everyone knows what is at stake for Trump. The lawyers for Weisselberg and the prosecutor, Carey Dunne, are probably talking to each other at length. If Weisselberg wants to cooperate he will have his lawyer make a proffer, which is an accounting of what he would admit to and provide by way of testimony. The prosecutor would respond with what the evidence shows and what the prosecution would require for Weisselberg to get a deal. Will he cooperate or not? Stay tuned. Trump’s future is on the line.