Criminal Investigation

NY attorney general has been looking into the taxes of Trump Organization

Prosecutors are seeking to find leverage that could sway Weisselberg into cooperating with authorities

Donald Trump responded to the James teaming up with Vance's office by calling the investigation a "political and partisan Witch Hunt"

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INVESTIGATIVE PRESS GROUP

The New York attorney general's office has opened a criminal tax investigation into top Trump Organization officer Allen Weisselberg, increasing the legal pressure on the long-time aide to former President Donald Trump, people familiar with the investigation say. The pressure on Weisselberg is mounting from two directions with the attorney general looking into his personal taxes, while prosecutors in the district attorney's office are digging into his role at the Trump Organization, his personal finances, and benefits given to his son Barry, a long-time employee of the Trump Organization.

Prosecutors are seeking to find leverage that could sway Weisselberg into cooperating with authorities, people familiar with the investigation said, potentially raising the legal stakes for Trump and his family. It's a common tactic used by prosecutors to try to get individuals to "flip" to help build a case higher up the corporate ladder. Vance's office is coordinating with James' office on its criminal investigation into Weisselberg.

Weisselberg has not been accused of any wrongdoing.

The tax investigation into Weisselberg's personal finances by New York attorney general Letitia James was opened several months ago and is being handled by a small unit within the office that has authority to bring criminal charges, people familiar with the investigation said.

Those investigators have been coordinating with prosecutors in the Manhattan district attorney's office led by Cyrus Vance Jr, which has been investigating the Trump Organization, going through Trump's tax returns, and recently has been examining perks the company gave to employees, Weisselberg's finances, and benefits he and his son received, people familiar with the inquiry said.

On Tuesday, the attorney general's office said it was also joining the district attorney's office's criminal investigation into the Trump Organization and has informed the company that its investigation is no longer solely civil in nature.
The attorney general's office tax investigation is focusing on Weisselberg as an individual, but it could expand to include actions he has taken in his role at the Trump Organization, the people said.

Weisselberg, who has handled the Trump Organization's finances for 40 years, including as its chief financial officer, recently beefed up his legal team, adding Bryan Skarlatos, a prominent tax specialist and criminal defense lawyer, people familiar with the arrangement say.

Skarlatos is working with Mary Mulligan, a criminal defense attorney who has represented Allen Weisselberg for several years. Skarlatos and Mulligan declined to comment.

Details of the scope of the New York attorney general's investigation have not been previously reported. The Washington Post first reported that a lawyer assigned to James' criminal unit was the point of contact for Weisselberg's former daughter-in-law Jennifer Weisselberg, who has been cooperating with investigators.

One theory prosecutors are exploring is whether there was a practice at the Trump Organization to dole out benefits to employees instead of salaried compensation to lower its payroll taxes, people familiar with the investigation said.

Recently, prosecutors have started looking into rent payments on Weisselberg's Manhattan apartment, the people said.

On Wednesday, Trump responded to the James teaming up with Vance's office by calling the investigation a "political and partisan Witch Hunt" and an "investigation...in search of a crime." Lawyers for the Trump Organization declined to comment.

Even before they teamed up the Vance and James investigations have been underway for more than two years and are looking at, among other things, whether the company improperly inflated the value of assets to its properties to obtain favorable terms for loans, insurance coverage and tax benefits, while also deflating the value of reduce real estate taxes.

New York attorney general adds 'criminal capacity' to probe of Trump Organization
Investigators are also exploring whether the Trump Organization committed tax fraud involving its Seven Springs estate in New York as well as its handling of hush money payments made to Stormy Daniels to silence her alleged affair with Trump, which he denies.

The attorney general's criminal investigation into Weisselberg's personal finances began, in part, because of documents shared by his former daughter-in-law Jennifer Weisselberg, one person told CNN. She told CNN in March that she has been speaking with prosecutors from James' office since September.

Her attorney Duncan Levin previously told CNN that she has 25 years-worth of bank records, credit card records and tax records in her possession. Weisselberg has also met with the district attorney's office multiple times and was subpoenaed for documents.

Jennifer Weisselberg was married for 14 years to Barry Weisselberg, who for two decades managed Trump Organization businesses contracted out by New York City in Central Park, including Wollman Rink and Lasker Rink. It is not clear if he is still employed by the Trump Organization.

The lavish lifestyle that Jennifer and Barry Weisselberg lived during their 14 years of marriage was largely funded by Allen Weisselberg, Barry Weisselberg testified during a 2018 divorce deposition obtained by CNN.

Documents from Jennifer and Barry Weisselberg's divorce show thousands of dollars of payments for cars, rent, tuition, medical bills and more coming from Allen Weisselberg to his son's family.

The spending and benefits are what has attracted scrutiny by prosecutors in both offices. The district attorney has questioned Jennifer Weisselberg about benefits she received during her marriage, including access to Trump-owned rent-free apartments, she previously told CNN. More recently, their interest has turned to questions around tuition payments for her children.

Barry Weisselberg said in the August 2018 deposition that was taken as part of the divorce proceedings, his father paid for their children's school tuition at Manhattan private school Columbia Grammar & Preparatory school, which currently run about $54,000 annually per child, according to the school's website.

"My father feels that if it's involving the children that he would like to contribute as much as he can for his grandkids, whether it's camp, whether it's school," Barry testified in 2018.

Barry Weisselberg testified that he believed those payments from his father were "financial assistance" and not loans. A statement of net worth for Barry Weisselberg filed in 2020 as part of a continuation of the couple's divorce proceedings said that Barry's parents paid for the children's tuition and that, "absent this financial assistance, (he) could not afford private school."

Those tuition payments are an area authorities are now scrutinizing, according to people familiar with the investigation. Columbia Grammar & Preparatory school, which Trump's youngest son Barron attended, was also attended by Weisselberg's grandchildren, according to people familiar with the matter. The Wall Street Journal first reported that the district attorney's office subpoenaed the school for information about tuition payments.

Frank Perrone Jr., an attorney for Columbia Grammar & Preparatory School previously told CNN the school would not comment on issues involving students, their families or alumni, but that it would "comply with lawful requests from the authorities."

Direct payments for someone else's tuition from a person to a school would, in themselves, not raise red flags for tax law violations, said Laura Cunningham, a Cardozo Law professor specializing in tax law. While annual limits for how much one person can gift another person are currently capped at $15,000, direct payments for tuition and medical bills are exempt from this, she said.

But Cunningham said it's a different story if the tuition or medical payments are coming from someone's employer.

In April, Jennifer Weisselberg told CNN she believes that at least some of her two children's tuition payments were paid for by Donald Trump saying Trump paid for one child and Allen paid for the other.

"I know for a fact Donald wrote those checks," she told CNN in April.

Levin, Jennifer Weisselberg's attorney, told CNN that she would not comment further on matters related to her children at this time.

"Jen Weisselberg has plenty to say on this subject, but she will continue to provide that and other information to relevant authorities including the Manhattan District Attorney's Office," he said.

When asked during the 2018 deposition if Donald Trump personally paid for any household or personal expenses during his marriage, Barry Weisselberg said, "I don't know."

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