Former President Trump might no longer occupy the White House, but he still finds himself in the judicial system more often than the average American.
Photo Courtesy: Spencer Platt/Getty Images
Accusations Made
Trump's latest lawsuit concerns the release of his tax return information by The New York Times in a late September 2020 article; information was furnished to them by Mary Trump. Trump is calling it an "insidious plot."
Months ago, in an attempt to stop the impending release of Mary Trumps' book, Donald Trump Jr. sued Mary and her publisher, claiming that she violated a "confidentiality pact." A judge already ruled in early July of 2020 that the author was not bound to the agreement, and her publisher certainly was not either. The book admits, without shame, that Mary Trump was a source for the New York Times tax return article.
The lawsuit claims that the Times and Mary Trump had "actual malice" in their plans, a standard set by the United States Supreme court in 1964 when a state-level politician sued the New York Times for defamation and libel. However, the lawsuit does not claim libel or defamation but instead focuses on the violation of confidentiality agreement and the unjust enrichment originating from therein.
According to an interview with Mary Trump on The New Abnormal by Daily Beast (February 16, 2021), she was the source for the tax story, and that she was encouraged to retrieve the documents by journalists at the New York Times. The exchange from the podcast is as follows:
Molly Jong-Fast (Host): You were ultimately the source for the tax story.
Mary Trump (Guest): Yeah, um, I'm actually really proud of that. But I have to be honest with you, I didn't even remember I had [the Confidential Records]. It's entirely down to the brilliant Susanne Craig for, one, reminding me that I had them and, two, so effectively and tenaciously trying to convince – I mean it took her months before I did – so it's entirely down to her.
Tax records are protected by 26 USC 6103, which guarantees that the information furnished to the IRS remains confidential. Tax records shall remain confidential without the taxpayer's consent or a formal request from the Joint Congregational Committee on Taxation. Connecticut has a similar law that runs concurrent to the federal law.
With Mary's public statements and published book, the facts laid out in the complaint are more or less corroborated, making a legal defense by Mary based on the facts extremely difficult.
Photo Courtesy: Carlo Allegri/Reuters
Former CFO indicted
Former Trump Organization Chief Financial Officer, Allen Weisselberg, has been charged with tax evasion for his role in the scheme. From a high level, the scheme involved giving 'fringe' benefits to senior members of the company, which is not illegal, but failing to report those benefits as income to the IRS and paying the appropriate amount of tax on them is.
The scheme was reportedly launched as long ago as 2005, which would mean the unpaid tax would have been collecting interest since it was 'due.' Furthermore, any amounts uncovered in the investigation into the organization's practices likely represent only a portion of the total amount of fraud, as much is hidden in company books.
'Fringe' benefits are non-cash benefits that companies can give employees as a cash compensation supplement. Examples of fringe benefits are too numerous to name. However, in the case of Weissleberg, the benefits included housing in company-owned apartments with a market value significantly above the rent he paid, which was not reported as income.
The IRS requires when companies give discounts to employees, especially employees with the ability to make decisions about the company's finances, that the employee report the 'fair value' of the benefits to the IRS. Unfortunately, this did not happen and amounts to tax fraud, according to the IRS.
Weisselberg's responsibility as CFO puts him directly in the line of fire by federal prosecutors looking into the company. His office had to sign off on the tax compliance actions taken on behalf of the Trump Organization and he accepted the fringe benefits. The indictment shows his direct involvement in the organization's financial policy and decision-making. Thus creating a personal criminal, civil, and otherwise financial liability for the company's actions under the Sarbanes-Oxley Act and "responsible corporate officer doctrine" of which are illegal, fraudulent, negligent, or some combination therein.
Weisselberg has pleaded not guilty to the charges. Nevertheless, prosecutors are expected to place immense pressure on the former Trump Organization CFO and his family. With the power to waive fines and jail time or drop charges altogether, the prosecution's power to entice cooperation among defendants is significant.
The importance of Weisselberg's case cannot be understated as it represents the first in possibly many cases against high-ranking Trump Organization officials who had a part in the schemes, including possibly Donald Trump Jr. himself. Moreover, if the government creates a deal enticing enough for Weisselberg to turn states-witness against his former employer, the power of his testimony could be the pivotal factor in any criminal case against the former president.
Remembering that the most famous mobster in the United States, Al Capone, was not convicted on the crimes he was accused of most publicly, but on tax evasion could help guide predictions on the outcomes of the current tax cases pending against Trump-related parties.
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