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Trump Organization sentenced to pay $1.6 million penalty in tax fraud case

Manhattan District Attorney Alvin Bragg at a news conference after the sentencing hearing of the Trump Organization on Friday in New York. (Michael M. Santiago/Getty Images)
6 min

NEW YORK — The Trump Organization was ordered to pay $1.6 million in fines to the state on Friday — the maximum allowed by law — following its December conviction on tax crimes carried out by two of its longtime executives.

The Manhattan District Attorney’s Office argued for the top possible financial punishment under New York law for the former president’s private company, describing egregious and deliberate long-term conduct that benefited both former president Donald Trump’s namesake company and the executives involved in the cheating.

“The sheer magnitude of this fraud merits the largest financial sanction authorized by law,” Joshua Steinglass, an assistant district attorney, said at the company’s sentencing.

Steinglass said the Trump Organization “cultivated a pervasive culture of fraud, underreported executive compensation, falsified business records and otherwise helping their senior management evade taxes to keep their own costs as low as possible.”

New York Supreme Court Justice Juan Merchan handed down the sentence.

The financial penalty, though small in business terms, combined with the criminal trial’s exposure of the inner-workings of Trump Organization and a conviction, provided a significant blow to the family business Donald Trump has touted for years as a fabulous success story. It came amid ongoing intense legal and legislative scrutiny for Trump, who has been under investigation by the Justice Department, U.S. lawmakers, local district attorneys and a state attorney general.

The former president faces possibilities of criminal or financial penalties even as he has launched a 2024 bid to return to the White House.

The probes include the Justice Department investigating the handling of classified documents seized from Mar-a-Lago on Aug. 8 and efforts by Trump and his allies to overturn the results of the 2020 presidential election, with a special counsel appointed in November to oversee both investigations; the Fulton County, Ga., district attorney leading a parallel criminal probe related to the 2020 election; and New York authorities investigating Trump and others for possible wrongdoing, including how he valued his assets for loan and tax purposes.

The company now carries a criminal conviction as it faces the New York attorney general’s ongoing $250 million lawsuit. In that matter, the Attorney General, Letitia James, is focused on 23 of the Trump Organization’s current and past assets, including the D.C. hotel in the Old Post Office building, the Mar-a-Lago Club in Florida and Trump’s triplex penthouse apartment in Manhattan.

Trump financial officer Allen Weisselberg sentenced to five months in jail

The Trump Organization and its growth into a real estate, hospitality, branding and golf resort behemoth is what catapulted Trump to fame and ultimately into politics. It helped land him a national stage on NBC’s prime-time “Apprentice” and “Celebrity Apprentice” productions, both filmed mostly at the Trump Organization’s headquarters at Trump Tower on Fifth Avenue in Midtown Manhattan.

On Dec. 6, after a trial that took more than a month, a New York Supreme Court jury found the Trump Organization guilty on charges including scheme to defraud, conspiracy, criminal tax fraud and falsifying business records. The Trump Corporation and Trump Payroll Corp., operating under the same corporate umbrella, were convicted on 17 counts. Trump was not charged in the case.

The tax case had already yielded a guilty plea from longtime Trump Organization finance chief Allen Weisselberg, 75, who was the key witness against the company. He pleaded guilty in August to 15 felonies and agreed to testify in exchange for a significantly reduced sentence of five months in jail and five years of probation, which was imposed in court on Tuesday. He also paid the state more than $2 million in back taxes, fines and interest. He had faced up to 15 years in jail.

Weisselberg admitted to orchestrating a long-standing set of illegal practices that benefited himself, other executives and his employer and to personally avoiding taxes on $1.7 million in unreported income.

Weisselberg’s perks included a prime Manhattan apartment, Mercedes-Benz vehicles issued by the company for himself and his wife, and private school tuition payments for his grandchildren worth $200,000 a year. He accepted the expenses as gifts for at least a decade beginning in 2005 and later began reimbursing the company for them — but still came out ahead because it enabled him to use pretax funds for personal costs.

According to the testimony at trial, the Trump Organization began eliminating the illegal practices around 2017 when Trump took office and when an internal audit was conducted at the company by a tax attorney. After those corrections were in place, Weisselberg said he sought, and was given, a raise to compensate for the expenses he had to start paying himself.

The company saved about $25,000 in its Medicare employer tax responsibility as a result of fraud and also saved on salary costs by paying its executives less, prosecutors argued at the trial.

Weisselberg told the jury that he acted only with another executive, comptroller Jeffrey McConney, to cheat on taxes in various ways relating to executive compensation. Weisselberg blamed himself for the crimes, saying it was his “own personal greed that led to this” and maintaining that the Trump family was not involved in the scheme.

Weisselberg also said there was a longstanding Trump Organization practice of issuing annual bonuses to executives from company subsidiaries and classifying them as non-employee contractor payments, which is illegal.

Defense lawyer Nicholas Gravante Jr. said after the trial that Weisselberg had finalized his official departure from the Trump Organization on Tuesday and was pleased with a severance package. Gravante said he was not involved in the severance talks. Weisselberg was on the Trump Organization payroll through the trial.

Trump Organization spokeswoman Kimberly Benza said in a statement Friday that Weisselberg, the Trump Organization and Trump were victims. She described the prosecutors as politically motivated.

“We did nothing wrong and we will appeal this verdict,” she said.

Manhattan District Attorney Alvin Bragg, whose office secured the Trump Organization conviction, still has an open investigation into Trump’s business practices and other matters.

In brief remarks after the company’s sentencing, Bragg said the company’s punishment was “not enough” and said state laws for corporate tax fraud should carry harsher penalties. He also said the sentencing “closes this important chapter of our ongoing investigation into the former president and his businesses.”

“We now move on to the next chapter,” he said.