The Manhattan DA's bombshell indictment against Trump's company and CFO is just the tip of the iceberg

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  • The indictment against Trump Org. and its CFO could be the beginning of a legal tornado for Trump.

  • Experts say the speed with which prosecutors handed down the indictment is bad news for Trump.

  • He's also facing the possibility of other employees flipping, and his company taking a huge financial hit.

  • See more stories on Insider's business page.

The Manhattan district attorney's office on Thursday dropped a highly anticipated indictment against the Trump Organization and its longtime CFO, Allen Weisselberg. The sweeping 25-page document charged the defendants with 15 felonies including scheme to defraud, conspiracy, grand larceny, tax fraud, and falsifying business records.

On its face, the indictment isn't perilous for former President Donald Trump, who has spent the last several months accusing the DA's office of political persecution while privately expressing alarm about the case. He wasn't charged with any crimes this week and he was not the unindicted co-conspirator mentioned in the document. Weisselberg and the Trump Organization both pleaded not guilty.

That said, Thursday's development could signal potentially serious legal and financial problems for the ex-president down the road.

The first and most risky possibility is that Trump himself could be charged if investigators discover that he engaged in criminal conduct. The probe is still ongoing, and prosecutors named him several times in the indictment while laying out the facts of the case. Carey Dunne, one of Manhattan District Attorney Cyrus Vance Jr.'s top deputies, also mentioned Trump at Weisselberg's arraignment Thursday.

"This was a 15-year-long tax fraud scheme," he said. "Contrary to a statement from the former CEO, this was not a standard tax plan."

Dunne also appeared to hint at Trump's role in some of the alleged illicit activity outlined in the indictment, saying, "The former CEO signed, himself, many of the illegal compensation checks" to Weisselberg.

"One might've thought before today: They're charging Weisselberg b/c they don't have goods on Trump," tweeted Daniel Hemel, a professor at the University of Chicago Law School, when the indictment was unsealed. "They've got goods on Trump."

donald trump allen weisselberg
Trump and Allen Weisselberg. REUTERS/Carlo Allegri//File Photo

A speedy indictment and the looming danger of additional cooperators

Another sign of trouble for the former president is the speed with which the DA's office came down with the indictment. Vance opened the investigation in 2019 but prosecutors gained access to the documents they needed just a few months ago.

"It's not going to be lost on Trump's lawyers that the government showed with this indictment how quickly they were able to put together what looks like a very solid case, considering how short a time they've had Trump and his company's records," said Patrick Cotter, a former federal prosecutor who was on the team that convicted the Gambino crime boss John Gotti.

"If you're Trump and all your records are now in the hands of prosecutors and they've come back this quickly with an indictment against your company and your CFO, that's going to make you pause and realize that if you've done anything illegal, there's a very good chance these prosecutors will find it," Cotter added.

Then there's the fact that the first person hit with criminal charges was Weisselberg, the Trump Organization's chief bookkeeper who's been described as Trump's "disciple" because of his allegiance to the former president.

"Loyalty is a powerful force, and Weisselberg's personal and professional connection with Trump and Trump's family is a long-standing one that goes back several decades," said Jens David Ohlin, a dean at Cornell Law School.

This week's indictment is the first big test of that loyalty.

"Any time your close confidants or people who know you or your business well for an extended period of time are criminally prosecuted, that's dangerous," Cotter said. "If any of those people know something that can get you into trouble, they'll obviously be tempted to cooperate with the government."

Weisselberg, for his part, has stayed mum, and experts speculated before the indictment dropped that he may have been holding out for the best deal possible. Some also suggested he refused to cooperate because Trump employs his son, Barry, and the Trump Organization provides the Weisselbergs with various financial perks known as fringe benefits.

Aside from his loyalty to Trump, Weisselberg and his lawyers may just have done the math and decided it was better not to flip. If he went to trial and was convicted a few years down the line, the judge would likely grant some leniency because of Weisselberg's age of 73, his status as a first-time, nonviolent offender, and the fact that the amount of income he's accused of evading taxes on is not astronomically high as far as white collar cases go.

Allen Weisselberg entering court.
Allen Weisselberg (C) former US President Donald Trumps company chief financial officer arrives to attend the hearing for the criminal case at the criminal court in lower Manhattan in New York on July 1, 2021. TIMOTHY A. CLARY/Getty Images

But that calculus could change - and Trump could find himself in hot water - if investigators dig up more evidence against Weisselberg and hit him with additional charges.

"What's happening right now is there's a standoff between prosecutors and Weisselberg," said Randy Zelin, a criminal defense attorney at Wilk Auslander LLP. "The prosecutors know they need cooperators. They need the Allen Weisselbergs of the world who know where all the bodies are buried. So indicting him is prosecutors' way of saying, 'OK, we didn't get your attention before when we asked you to cooperate voluntarily. Do we have your attention now?'"

Investigators could also bring charges against other Trump Organization employees, many of whom prosecutors said received the same type of untaxed benefits Weisselberg did.

"As prosecutors go through this evidence and threaten other company executives, they may not all be guys in their 70s," Cotter said. "They might be in the prime of their life and they're going to think about the fact that they could go to jail for five, six, seven years if they get the wrong judge. Those are the guys that may have more motivation to cooperate."

Vance's case could hit Trump where it hurts: his finances

There are also financial challenges Trump may have to consider in the future, even if he isn't criminally charged.

If the Trump Organization goes to trial and is convicted of the charges it was indicted for, the criminal court will very likely impose significant fines on the company, and civil tax agencies would be able to use that conviction to get financial judgments against the Trump Organization.

"With tax evasion, what the IRS does, and what I always tell people, is figure out what amount you cheated on your taxes with, you double it, and that's probably what you're going to end up paying," Cotter said. "So the corporation would take a serious financial hit. As for how that affects Trump personally, it's hard to say, but there are absolutely significant, not bankruptcy-causing, but significant financial implications if his company loses. As the owner slash shareholder, Trump would share in that loss."

The Trump Organization issued a lengthy statement after Thursday's indictment saying the investigation "is not about the law; this is about politics."

Trump himself also released a statement, saying, "Do people see the Radical Left prosecutors, and what they are trying to do to 75M+++ Voters and Patriots, for what it is?"

Read the original article on Business Insider