The Trump Organization was convicted after a truly embarrassing defense

By | December 6, 2022

Ankush Khardori writes:

As of Tuesday afternoon, Donald Trump’s company is a convicted felon. The result comes courtesy of the jury in the criminal trial of the Trump Organization, which found Trump’s namesake company guilty on all 17 counts of the indictment.

The result is significant but not exactly surprising. The Trump Organization was indicted by the Manhattan District Attorney’s Office in the summer of 2021 along with the company’s chief financial officer, Allen Weisselberg, over a yearslong scheme to avoid paying taxes on compensation and benefits that Weisselberg received. Weisselberg pled guilty in August, which, given the way that corporate criminal liability works, dramatically simplified the case. (He promised to serve a five-month jail term.)

Ordinarily, a corporate defense in this scenario would face extraordinarily long odds, and most companies (at least the ones with competent counsel and non-crazy clients) would have settled. That is because corporations are typically criminally liable for the criminal activities of their employees, assuming that the conduct at issue was intended — at least in part — to benefit the company. Once you have a guilty plea from a corporate employee, the company has very limited remaining lines of defense. You can accuse the employee of lying to save himself, perhaps, or try to argue that the conduct was not intended to benefit the company, but these are generally not great arguments.

The Trump Organization’s lawyers reportedly pushed hard to argue that Weisselberg was acting solely in his self-interest — purely to lower his personal tax liability — but this made almost no sense in the context of the particular criminal scheme here. That is because if Weisselberg simply wanted more money, he could have lobbied for a higher salary, but the scheme he and others at the company settled on saved both him and the Trump Organization money. As one of the prosecutors explained, this was “by far the most significant benefit” to the company, which paid Weisselberg less as he managed to net about a million dollars over the course of the scheme. According to the DA’s office, the company would have had to pay about $3.5 million if Weisselberg’s benefits had been accurately reported to tax authorities.

Corporations cannot be imprisoned, so the principal sanction against the company will be a fine — and not a particularly large one. Under New York law, the potential fine tops out at around $1.6 million, so this is not exactly going to bring the company down. The Trump Organization will presumably appeal, but its odds of success are very low. [Continue reading…]

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