Trump Company’s CFO Had Secret Payments Deleted, Jury Is Told

(Bloomberg) -- A lawyer for the Trump Organization told jurors in its criminal tax fraud trial that the alleged scheme was carried out by longtime chief financial officer Allen Weisselberg and others -- not by Donald Trump and definitely not by the company.

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“Donald Trump did not know that Allen Weisselberg was cheating on his personal tax returns,” defense attorney Susan Necheles told the jury in her opening statement Monday in New York State Supreme Court in Manhattan.

Weisselberg pleaded guilty this summer in a deal that reduces his sentence in exchange for his truthful testimony against two units of the company. The trial threatens to reveal the inner workings of the real estate empire that set Trump on his path to the White House.

“The evidence will be crystal clear,” Necheles said, asking the jurors to remember, when they deliberate on their verdict at the end, that “this is not a referendum on President Donald Trump.”

That is one of the few things the defense and prosecution agree on: The jury must focus on the defendants -- the two business units. In her own opening earlier Monday, Assistant District Attorney Susan Hoffinger told the panel that after Trump won the US presidency, Weisselberg directed an unnamed underling to erase any mention of secret payments from the ledgers.

“The evidence will show that when Donald Trump was elected president at the end of 2016, these companies finally had to clean up” their tax practices, said Hoffinger, who is chief of investigations for the Manhattan DA’s office. “There was concern about extra scrutiny of these companies because of Donald Trump’s election.”

Read More: Trump Is Elephant ‘Not in the Room’ for Tax-Fraud Trial

Even though Trump isn’t charged in the case, it took only about half an hour for his name to come up on Monday, with Hoffinger mentioning it several times.

“This case is about greed and cheating -- cheating on taxes,” she told the jury about the more than decade-long tax dodge prosecutors allege. The units, Trump Corp. and Trump Payroll Corp., paid their already highly compensated executives even more by helping them falsify their tax obligations, she said. The two are accused of evading payroll taxes by compensating some employees, including Weisselberg, with perks such as company cars and rent-free apartments.

‘Everybody Wins’

Trump personally signed off on the payment of private school tuition for Weisselberg’s grandchildren, Hoffinger told the jurors. After describing the alleged scheme, she summed it up.

“Everybody wins here -- Allen Weisselberg and these companies,” she said. “Of course, everybody but the tax authorities.”

Trump has called the case “the greatest witch hunt in American history.”

After openings, prosecutors called to the stand the trial’s first witness, Trump Organization Controller Jeffrey McConney. McConney, a ruddy man with white hair and a mustache, has worked for the firm for more than three decades, earlier as an assistant controller for Trump’s father, Fred.

In her opening statement, Hoffinger had told jurors they would hear from McConney and and see false W-2 forms concealing Weisselberg’s actual compensation, invoices of executives’ personal expenses and notes from the company detailing bonuses and checks -- all evidence of the firm’s alleged scheme.

Read More: Trump Firm’s Tax Fraud Trial Promises Ex-CFO as Star Witness

Under questioning by Assistant DA Joshua Steinglass, McConney testified that defense attorney Necheles had advised him on how to answer questions on the stand.

“Did she tell you to hit certain points?” Steinglass asked.

“Yes,” McConney said.

Dramatic Moment

During jury selection last week, prosecutors said some of their witnesses wouldn’t meet with them. That problem became apparent Monday when McConney testified that he had refused to prepare his testimony with the DA’s office, saying his lawyer objected, though he added that he had met with a Trump attorney on Sunday.

Steinglass asked the court for permission to treat McConney as a “hostile witness,” allowing prosecutors to cross-examine their own witness and try to impeach his credibility -- a highly unusual move.

New York State Supreme Court Justice Juan Merchan denied the request.

“I haven’t had the opportunity to see this witness refuse to answer a question,” Merchan said.

Read More: Trump’s Deepening Peril Put Squeeze on CFO to Take Deal, Testify

Still, when McConney resumed his testimony, he pushed back at times -- for example, when the questioning suggested he had overseen all of the payroll disbursements.

“We were relying on people who worked with us for a number of years to do their jobs right,” he said. “To say I’m responsible for it -- I guess you could say it from the 50,000-foot level, but there were others.”

There was the occasional playful moment as well.

“I know you’re trying to trick me,” McConney said with a smile after Steinglass misspoke, briefly confusing gross income with net income.

Company Ledgers

Prosecutors did get the general ledgers the Trump Organization kept during the alleged conspiracy entered as evidence in the case, after they agreed to remove the names of Trump children and grandchildren. The ledgers include comprehensive records of payments the company made to its senior executives. Steinglass argued they “go directly to how camouflaged these transactions are.”

While the judge didn’t release them to the public, the ruling let Steinglass begin walking jurors through records that showed Weisselberg and his wife got perks like a Mercedes-Benz each, leased and paid for by the company.

Read More: Trump Organization, CFO Plead Not Guilty to Tax Fraud Scheme

Manhattan District Attorney Alvin Bragg, who inherited the case from Cyrus Vance Jr. and was criticized for not securing an indictment against Trump himself, was sitting in the back of the courtroom Monday. The trial is expected to last about six weeks.

The case is People v. Trump Organization, 01473-2021, New York State Supreme Court (Manhattan).

(Adds fights over McConney and the company’s ledgers in the last two sections.)

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