Trump Organization Chief Financial Officer Allen Weisselberg walked into a New York City courtroom Thursday in handcuffs to face 15 counts of financial crimes, including fraud, conspiracy and grand larceny. And even though Donald Trump, whose business also faced 10 counts, wasn’t there physically, his presence loomed over everything. Including the nickel-and-dime details of the alleged crimes.
According to New York City prosecutors, the Trump Organization took part in a scheme to hide nearly $1.8 million of Weisselberg’s compensation from tax authorities over roughly 16 years, allowing Weisselberg to enjoy perks like an apartment and two Mercedes-Benz cars while dodging about $556,000 of federal taxes, $107,000 of state taxes and $238,000 of local taxes. That works out to $900,000 of total savings—or about $60,000 a year. If that doesn’t sound like much money for a guy like Weisselberg, who earned $940,000 annually, that’s because it isn’t. And if it’s pennies for Weisselberg, then it’s even less for Donald Trump, who is worth an estimated $2.4 billion.
Both Weisselberg and the Trump Organization plead not guilty on Thursday.
Why might they have put themselves in a position to be accused of such a scheme? Take a look at the history of the business. For decades, the Trump family has been confoundingly cheap and extremely adverse to paying taxes, dating back to Fred Trump, the former president’s late father, who built an empire in Brooklyn and Queens before seeding his son’s ambitions in Manhattan. “He’d go into the houses, and he’d check for nails,” Donald Trump said in a 2016 speech. “My father would go and he’d pick up the sawdust. He’d pick up the nails, the extra nails. He’d pick up the scraps of wood. He’d use whatever he could use and recycle it in some form or sell it.”
Fred Trump engaged in all sorts of maneuvers to transfer money to his children while avoiding tax bills. When Donald Trump was just 3 years old, Fred gave the future president and his siblings a plot of land, before completing a big development on it. The elder Trump then proceeded to rent the land from the younger Trumps for years, paying them for the privilege of doing so—thereby showering his children with about $60,000 annually and avoiding gift taxes on the transfers.
Donald Trump inherited both his father’s money and his frugality. In 1989, Spy magazine famously set out to determine who was the cheapest person among a group of really rich people. The magazine created a fake company, named the National Refund Clearinghouse, and mailed checks of $1.11 to 58 of the wealthiest, most famous people in the country. Out of the 58, 26 cashed the checks. So Spy repeated the experiment, sending checks of just 64 cents to the 26 cheapskates who had deposited the first check. Those were cashed by 13 recipients. Finally, the magazine sent checks of just 13 cents. Only 2 people cashed them. One was a Saudi arms trader, and the other was Donald Trump.
It’s no surprise that Weisselberg—who started working with the Trumps nearly 50 years ago and rose to become Donald Trump’s go-to money man—embraced the family’s penny-pinching ways. “He’s a real nickel-and-dime guy—he got that from Fred,” says Barbara Res, a former Trump Organization executive, speaking about Weisselberg. “That’s also the way that people that don’t know what they’re doing handle financial matters. You know, they can’t see the forest because they’re looking at the trees.”
Weisselberg likely knows more about the inner workings of the former president’s finances than anyone else. Now he’s in a position to decide whether to turn on Trump because of a scheme that saved him merely $60,000 a year or so, according to prosecutors. Put it another way: The culture of cheapness that the Trumps established inside their business might wind up costing the family in the end.
“I believe Weisselberg is going to provide testimony,” Michael Cohen, a former Trump lawyer who flipped on his old boss when facing legal pressure of his own, said on MSNBC Thursday night. “He didn’t do it yesterday. That we know. But it’s a very big difference, and I’ve been there. And I can tell you that the feel of the handcuffs behind your back—it’s not comfortable.”
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The Trumps Have Always Been Cheap. Now It May Cost Them - Forbes
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