Fahrenthold: ‘Cheapness won out’ in Trump Organization’s record keeping

Last week, a grand jury in Manhattan filed criminal indictments against the Trump Organization and its CFO Allen Weisselberg. Washington Post reporter David Fahrenthold was there to cover it.

“It’s nice to have some activity, finally. We’ve been hearing about what was going to happen, all these predictions — it was nice to actually see what the prosecutors had,” Fahrenthold told Dave Ross on Seattle’s Morning News.

“So we got confirmed on Wednesday night last week that the Trump Organization and its CFO had been indicted. And then Thursday morning, we were deployed all around the courthouse,” he continued. “I was watching one door for Weisselberg to come in. Somebody else was camped out in the hallway for like six hours to get the shot of him walking by. … We got to feel like real New York City police reporters.”

The company’s statement is that this is an inappropriate use of a local prosecutor’s power to target a political opponent. As Dave Ross explains, the point the company is making is that charges of tax evasion like this are usually handed as civil infractions and with a fine, but in this case criminal charges are being discussed. So why is this a criminal case?

“The difference, usually, between civil cases and criminal cases is in a civil case, all you have to do is prove that somebody evaded taxes. They didn’t pay the taxes they should have,” Fahrenthold said. “A criminal case, you need to prove that they knew what they were doing and they did it anyway. And what prosecutors have said is that they actually got a road map to the criminal case from the Trump Organization itself. That the Trump Organization kept a secret set of books, in which they basically detailed all the money that they were hiding from the IRS.”

“And by finding that second set of books, prosecutors got proof of two things they needed: They got proof of how big the fraud was because they could see exactly how much money had been hidden and that they understood that the Trump Org knew what they were doing was wrong because they kept this other set of books and hid it from everybody else.”

So how did the organization evade taxes?

“So take Allen Weisselberg, who is the CFO of the Trump Organization,” Fahrenthold explained. “They set his pay every year at $940,000 a year. But what the prosecutors said was that they then schemed for ways to hide as much of the $940,000 from the IRS as they could. And so they did things like they paid for an apartment for Allen Weisselberg and they took that out of the $940,000. They bought cars, or leased cars for Weisselberg and his wife, they took that out of the $940,000.”

He says the company also paid tuition for Weisselberg’s grandchildren and bought carpet for his house in Florida, all out of the $940,000.

“So then they got down to $700,000 was left, and they paid him $700,000 in his paycheck,” Fahrenthold said. “But then they only told the IRS about the part they put in the paycheck, the $700,000. The rest of it that they paid out in all those other ways, even though to the Trump Organization that was Allen Weisselberg’s pay, they didn’t tell the IRS about it and they avoided taxes on that chunk of his pay.”

The company, however, kept records that explicitly showed the $940,000 was his pay, and they’re hiding part of it. But it wasn’t just about the unaccounted-for $200,000.

“They say that Weisselberg alone got $1.7 million of untaxed income and he should have paid $900,000 of taxes on that,” Fahrenthold said. “It’s not billions of dollars. But talking to tax law experts the last couple of days, they said, ‘look, when you stumble across a case like this where a company kept two sets of books, you prosecute it,’ and there’s two reasons you prosecute it. One, is it’s easy. The company has given you a roadmap to prosecute them. Number two, if you don’t do something like that, if you let people get away with two sets of books with that kind of blatant tax evasion, you undermine the whole tax system.”

So why did the company even keep a set of books on what they were doing that was allegedly illegal? Fahrenthold sees it as a collision of two of former President Donald Trump’s values.

“One was not keeping records. That’s usually his MO,” he said. “But the other one was cheapness, and the cheapness won out here.”

“Allen Weisselberg, they set his salary at $940,000, but they didn’t just sort of pay him fringe benefits willy-nilly. They kept track of them because they wanted to make sure that in this scheme, Allen didn’t get a dollar more than he was supposed to,” Fahrenthold explained. “And that’s the purpose of these records, is to make sure Allen doesn’t get extra money as part of the scheme. He only gets the $940,000 he’s promised. In the course of tracking that and saving themselves money, they allegedly created a roadmap for prosecutors.”

For now, however, Donald Trump himself has not been named in the charges. So, Dave Ross asks, what if it turns out that Trump told his lawyers, “hey, this is what I want to do. You guys take care of it. I don’t want to know, just make sure it’s legal and that you tell me it’s legal.”

“That’s going to be the crux of the next phase of this case, is questions like that,” Fahrenthold said. “As you said, Trump’s CFO is charged but not Trump himself. Trump’s company was charged, but not Trump himself. To go from the charges we have today to charges against Trump, you would need some kind of proof of Trump’s intent that he said, ‘OK, I know this is illegal, I want you to do it anyway.'”

“And if there is something in the middle, like his lawyers told him it was OK, or Weisselberg didn’t tell him they were doing this, that breaks the chain and you couldn’t charge Trump with these crimes,” Fahrenthold added. “And I think that’s why prosecutors are so interested in getting the cooperation of Allen Weisselberg is he’s one of the few people who could really tell them what Trump said, and what was in Trump’s mind at the time.”

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