Trump Organization allegedly kept two sets of books

The Washington Post's David Farenthold reports on the Trump Organization and its CFO being indicted for a sweeping tax fraud scheme. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

The Trump Organization and its Chief Financial Officer Allen Weisselberg pleaded not guilty Thursday to crimes related to what prosecutors called a “sweeping and audacious” scheme since 2005 to avoid taxes on compensation for the CFO and other executives of the company owned by ex-President Donald Trump.

The 15-count indictment, which was broader in scope than many legal observers expected, is the first set of criminal charges to emerge from probes of Trump and his company by the Manhattan District Attorney’s office and the New York state Attorney General’s office. Those investigations are continuing.

The indictment says the Trump Organization and Weisselberg devised the scheme to compensate Weisselberg and other company executives in an “off the books” manner, allowing them to receive “substantial portions of their income through indirect and disguised means.”

Weisselberg, 73, had the rent, utilities and garage expenses for his apartment on Manhattan’s Upper West Side paid for by the Trump Organization, without that compensation being reported to tax authorities, and without paying related taxes, the indictment says.

He also received from the company Mercedes-Benz cars for him and his wife, private school tuition for two grandchildren, unreported cash to be used for holiday gratuities and other benefits, all of which were hidden from tax authorities, the indictment said.

In all, Weisselberg alone received about $1.76 million worth of “indirect compensation,” the indictment said.

He thus evaded paying more than $900,000 in taxes that he should have paid, and received more than $136,000 in falsely claimed refunds, according to the indictment, which was issued by a special grand jury in Manhattan.

A prosecutor said in court that the “the former CEO” of the Trump Organization — ex-President Trump — “signed, himself, many of the illegal compensation checks” to executives.

Trump has not been criminally charged.

The scheme “was orchestrated by the most senior executives, who were financially benefitting themselves, by getting secret pay raises at the expense of state and federal taxpayers,” said Carey Dunne, the prosecutor from DA Cyrus Vance Jr.‘s office, during the defendants’ arraignment in Manhattan Supreme Court.

The indictment says that Weisselberg and the company also schemed to “conceal his status as a New York City resident and enabled Weisselberg to avoid the payment of New York City income taxes.”

Weisselberg, who has worked for the Trump family for 48 years, for much of the scheme’s time frame had another residence on Long Island, New York. But the indictment says that since 2005, he “spent most of his days in New York City,” which would make him a city resident for tax purposes.

The indictment also says that the Trump Organization maintained internal spreadsheets to track the value of the compensation paid to Weisselberg and others, which was not disclosed to either the IRS, or to New York state and city tax authorities.

The indictment refers to conduct by an unindicted co-conspirator who participated in the scheme. That person is not Trump himself, according to NBC News, which cited a law-enforcement official.

Weisselberg, who surrendered to the DA’s office early Thursday morning, was taken into the courtroom in handcuffs by authorities while wearing a white mask.

Weisselberg’s attorney told a judge that the defense team objected to the prosecution’s claims.

Vance and James were both in court during the hearing. A judge ordered the parties back to court on September 20 for a status conference.

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