Trump Org is battling prosecutors over 3 little words that could swing the New York tax-fraud trial
The tax-fraud trial of Donald Trump's real-estate empire is about to start its fourth week.
The Manhattan case involves 2 million documents. But just three words could swing the outcome.
It's the legal phrase "in behalf of —" and it's the subject of a heated, behind-the-scenes battle.
Donald Trump's business empire is in a pitched, behind-the-scenes battle with prosecutors over three little words that could make or break the company's ongoing Manhattan tax-fraud trial.
The three words are "in behalf of."
That's not a typo.
It's "in behalf of," not "on behalf of," a stilted, musty-sounding phrase that has smart and seasoned lawyers on both sides of the case reaching for legal treatises, decades-old case law, and even merriam-webster.com as they scramble to define it.
The words have permeated the three-week-old trial taking place at New York Supreme Court in lower Manhattan, though the jury has barely heard reference to them.
They are crucial to each of the 15 criminal charges against the Trump Organization — charges alleging that the former president's real-estate and golf-resort company conspired with its own top financial executives in a 15-year tax-dodge scheme.
And they will loom large when testimony concludes in mid-December and New York Supreme Court Justice Juan Merchan instructs jurors on how to apply New York's corporate liability law in reaching a verdict.
It's not enough, they'll be told, for Trump Org executives to get caught selfishly stuffing their pockets.
To find the Trump Organization guilty of fraud, the jury must find that its executives not only broke the law but did so while acting "within the scope of his or her employment and in behalf of the corporation."
But a nagging and very reasonable question remains unanswered, and it's only a matter of time before it's posed by jurors themselves: What on earth does acting "in behalf of" a company even mean?
Even the judge hasn't quite figured it out.
"We do not yet know," New York Supreme Court Justice Juan Merchan told the warring lawyers before testimony began Thursday, looking down the road toward deliberations, "how we will instruct them if they ask for additional instructions."
The tax dodge is the easy part
Not quite halfway through their case, prosecutors are having a relatively easy, if plodding, time of proving to jurors that the Trump Organization's two top money men indeed ran a 15-year tax-dodge scheme, their guilt being the first element of the law in deciding if the company, too, is guilty.
It helps that both men have already admitted their roles in the scheme.
The former CFO, Allen Weisselberg, pleaded guilty in August, admitting that he conspired with the company's top payroll guy, Jeffrey McConney, to hide hundreds of thousands of dollars in executive pay each year from tax authorities.
Weisselberg, who's due to testify next week, personally enjoyed some $1.76 million in rent-free apartments, luxury cars and other goodies over the years, perks logged as compensation in internal company ledgers but never noted on W-2 forms.
And on Monday, McConney, who is testifying under a grant of immunity, will spend his fourth day on the witness stand, where he's been corroborating that he, Weisselberg, and other Trump executives, including the company's top lawyer and its chief operating officer, all received significant chunks of their yearly pay in the form of these untaxed fringe benefits.
The looming leap for prosecutors, though, is proving that at least Weisselberg, the trial's most important witness, was motivated by more than what one defense lawyer downplayed in opening statements as "individual, personal greed."
Which is where those powerful, perplexing three words come in.
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Bilge and thermometers
In a case based on 2 million documents, the defense hopes the short phrase could swing the whole case its way.
"If the People fail to prove beyond a reasonable doubt that the acts were done 'in behalf of' the Corporate Defendants but were instead for Weisselberg's (or others') benefit, then the jury must acquit the Corporate Defendants," Trump Organization lawyers argued in a mid-October filing.
Prosecutors, meanwhile, find the three words so worrisome, they asked the judge — unsuccessfully — to strike them from the case entirely.
In defense of their love or hate of the three words, the sides have cited a gamut of arcane case law and other source material.
That includes a 2017 federal appellate decision on a Liberian cargo ship that dumped 2,640 gallons of oily bilge off the coast of North Carolina, and a 1992 New York appellate decision on a Brooklyn thermometer company convicted in an employee's mercury poisoning.
Oddly, that case, People v. Pymm Thermometer, was a landmark prosecution brought by then-Brooklyn District Attorney Elizabeth Holtzman, an ardent Trump critic.
Holtzman — who, as a US Congresswoman, voted to impeach Richard Nixon — is the author of "The Case For Impeaching Trump." She found it odd, to say the least, that lawyers for Trump's business tried to use her thermometer case to their advantage.
"It's paradoxical that a case that I brought to hold a company and its officers accountable is being used by a company that's trying to avoid being held accountable," she said, declining to comment otherwise on an ongoing trial.
First of many battles
The first face-off over "in behalf of" came just days before jury selection began on October 24, as the sides sparred over what prospective jurors would be told about the trial and over what interim interpretation of "in behalf of" they should rely on for opening statements.
"As evidenced by the papers you both submitted and research that we have been doing, it is far from clear what 'in behalf of 'means,'" the judge said at that October 20 pre-trial conference.
"We are all wrestling with this at this point," agreed defense lawyer Alan Futerfas.
The defense wanted "in behalf of" defined as "for the benefit of," and for jurors to be told the Trump Organization can only be found guilty if Weisselberg and McConney broke the law while intending to benefit the company.
But the only witnesses who could give jurors direct evidence of Weisselberg and McConney's intentions would be Weisselberg and McConney themselves.
The trouble is, both men, while technically DA witnesses, remain on Trump's payroll, and their lawyers are paid for by Trump's company. Both continue to meet with the defense in preparing their testimony.
They must testify truthfully or face severe prison terms. But Weisselberg's guilty plea, though written by prosecutors, makes no mention of any intent to benefit Trump's company. Neither, so far as the public record has shown, does McConney's grand jury testimony.
Faced with the threat of Weisselberg sticking to both his plea and the company line by testifying— as defense lawyer Michael van der Veen promised in opening statements — that "Weisselberg did it for Weisselberg," it's no wonder prosecutors did not at all like this "intent to benefit" definition at all.
They asked the judge to instruct jurors that the company is guilty if its executives merely broke the law while performing "the business of the corporation."
Merchan, the judge, told the parties he needed more time for a decision.
At a second pre-trial conference the next day, the parties went at it again. One of the lead prosecutors, Joshua Steinglass, pushed back once more against "this notion that we have to prove intent to benefit the company."
"There is a real dearth of authority on this subject," the judge acknowledged in response. "Honestly, I wish I had the time to write on it. I think it is very interesting."
Then he rendered his interim decision.
Much of the case law being cited, the judge said, was not quite on point, including the bilge and thermometer decisions. For the time being, he said, he favors "the plain and ordinary meaning of the phrase 'in behalf of.'"
For this, he turned to Merriam-webster.com, which defines "in behalf of" as "in the interest of, or for the benefit of."
The judge said he'd also rely on a classic legal guide, "New York Criminal Law," which requires proof of "conduct engaged in for the corporation's benefit and not mere personal gain" before a company can be found guilty.
So at least for now, the defense got pretty much what it asked for.
But both sides are expected to file lengthy motions, called "requests to charge," in the coming weeks, as they continue to fight over what instructions the judge will give jurors when they step out of the deliberations room, weeks from now, and ask for guidance on those three little words that could swing the trial.
Attorneys for Trump Organization and a spokesperson for the district attorney's office declined to comment. A lawyer for Weisselberg, Nicholas Gravante, also declined to comment, except to say, "Mr. Weisselberg has continued to meet and prepare with both sides."
Gravante, of Cadwalader, Wickersham & Taft, added, "He looks forward to testifying so he can take one more step towards having this unfortunate situation behind him."
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