Today, Explained - Law & Order: Special POTUS Unit

Episode Date: July 1, 2021

The Trump Organization and its top lieutenant have been indicted for tax fraud. Andrew Prokop says the case could have uge implications for American politics. Transcript at vox.com/todayexplained. Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit Superstore.ca to get started. Andrew Prokop, Senior Correspondent at Vox. Big news for the former president's company today. What happened? The Trump organization and its chief financial officer, Allen Weisselberg, were indicted by Manhattan District Attorney Cyrus Vance Jr. and were arraigned in court in New York today. All right, you're looking at pictures right now of Alan Weisselberg, the CFO of the Trump Organization, coming into the Manhattan courthouse. You see

there he is handcuffed, escorted by law enforcement. These were the first charges brought in what is reportedly a much broader investigation by Vance of the former president's company. And so they are relatively limited right now, but they may get bigger down the road or they may not. These charges include 15 felony counts, including a scheme to defraud, conspiracy, grand larceny, and falsifying tax records. So as everyone might recall, when the former president ran for president in 2016, he sort of did so on the basis of his great success in business, specifically in the Trump organization. Could you just remind people who may have totally, you know, blacked out what that organization was?

What was the Trump organization? Well well what is the trump organization it it still exists it's still around and um basically it is donald trump's company and within it are various smaller entities uh that are basically everything that we associate with a Trump business, hotels, real estate properties, and all of the licensing stuff that he would kind of license his his brand name to from, you know, Trump steaks to Trump vodka. But, you know, the big ticket items are various real estate properties he owns or has lent his name to, as well as his golf courses. And of course, when he entered the White House, he supposedly handed off all of his business stuff. What was that transition like? So when Trump assumed the presidency, he handed over control of the Trump Organization to a three-person committee.

His son, Donald Trump Jr. Colin, we'd be running the Trump Organization even if Donald Trump wasn't our father. Yeah, I don't know about that. His son, Eric Trump. Nippleteason. No. It's nepotism, bud. It's not nippleteason. And the chief financial officer, Alan Weisselberg.

And I guess we're all familiar with Eric and Don Jr. Who's Alan again? So Weisselberg hasn't been as prominent a media figure as the Trump family members, but close viewers of The Apprentice may recall that he did make an appearance there. Alan? Well, I think Apex had a very good plan. They would diversify not just in location, but also in services. He's really been a central key part to the Trump operation for a long time, decades, in fact. It was in the early 1970s when Weisselberg

started out as an accountant for Donald Trump's father, Fred. And he's risen through the ranks now in the Trump organization and eventually rose to become the chief financial officer. And he was basically viewed as Trump's money man. He knew all the finances of the company like the back of his hand. And a Trump biographer, Tim O'Brien, said that Weisselberg knows where all the financial bodies are buried. So what is this guy, Allen Weisselberg, who knows where all the financial bodies are buried in trouble for now? So as the CFO of the Trump organization, Weisselberg received an official salary.

But on top of that, he received various other extra lucrative perks, which are known as fringe benefits. This is like how Vox's offices, when we had an office, used to have like peanut M&Ms for us. And free avocados, yes. I wasn't going to mention that because it sounds too luxurious. Yeah, well, it might not be the Trump Organization's level, but we did have some luxuries. Too bad we've been working from home for so long. What do they have at Trump Org? So for the CFO, at least, private school tuition for Weisselberg's grandchildren was paid with checks signed by Trump himself or by Weisselberg and was allegedly understood to be part of Weisselberg's compensation package. That was to the tune of several hundred thousand dollars.

Way fancier than free avocados. A little fancier, yeah. Wesselberg was also provided a rent-free apartment on Manhattan's Upper West Side, as well as leased Mercedes-Benz cars for him and his wife. Did you buy a company car for everyone in the family except me? Well, according to the books, I gave you four. And so with fringe benefits like these, they're not technically part of the employee's salary, but they do have monetary value. And under the law, they should be considered taxable income that's paid out by an employer to an employee. So prosecutors allege that both the Trump Organization and Weisselberg avoided paying taxes on these perks and therefore committed tax fraud. They argue that the Trump organization

should have paid payroll taxes and that Weisselberg should have paid state income taxes. So essentially what they're saying here is that the Trump organization and Allen Weisselberg were all cheating on their taxes. Basically, yes. And specifically in this area of fringe benefits. And so Trump has fired back that this is actually quite normal. He's said in a statement that he was being investigated for practices that are, quote, standard practice throughout the U.S. business community and in no way a crime. And there are some indications that it is pretty unusual for a company to face indictment solely over this issue of fringe benefits. It's been hard

for reporters and experts who have been looking at this to come up with any similar example. It does seem a bit unusual. But the reason for that is because this is part of a broader investigation into Trump's company that New York prosecutors are undertaking. I guess there's probably no way of knowing, but is this just an attempt to get the guy who knows where all the financial bodies are buried to flip, a la, say, Michael Cohen? Yes, that is very clearly what this is. Word has gotten out that New York prosecutors have been urging Weisselberg to flip, to make a plea deal, and to agree to cooperate in the larger case that they're trying to build,'s cooperation so they have clearly been pressuring him leaning on him but it has not worked so far weisselberg pleaded not guilty today and so

we will see whether that changes in the weeks and months to come what this means for the former president, in a minute on Today Explained. Support for Today Explained comes from Aura. Aura believes that sharing pictures is a great way to keep up with family, and Aura says it's never been easier thanks to their digital picture frames. They were named the number one digital photo frame by Wirecutter. Aura frames make it easy to share unlimited photos and videos directly from your phone to the frame. When you give an Aura frame as a gift, you can personalize it, you can preload it with a thoughtful message, maybe your favorite photos. Our colleague Andrew tried an Aura frame for himself.

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BetMGM operates pursuant to an operating agreement with iGaming Ontario. Andrew, there have been countless investigations into the former president. We've covered countless ones with you alone. The Mueller investigation, of course, hearings and impeachments in Congress, of course. But these charges are coming from the Manhattan District Attorney's Office. Remind us why. So these charges are about violating New York state law, not federal law. And basically, all of the previous investigations into Trump for violating federal law have kind of fizzled out or gone nowhere. Obviously, the Mueller investigation ended up charging many people and Rudy Giuliani is potentially facing indictment in another case that's going forward. But as far as Trump himself,

there doesn't seem to be any federal investigation that poses him any real imminent danger at this point. New York, announced that they weren't going to pursue further charges in the matter of the hush money payments for women who had had affairs with Trump. So, of course, you will remember friend of the show, Michael Cohen. Been hearing rumors about this Michael Cohen cat, something about a phone company, a Russian oligarch, Fabergé Eggs. Fabergé Eggs? Yeah, that's right. See, I'm scrambling for answers here. Huh. This sounds like a job for Procop. Cop? I thought you were a PI.

No, no, I'm Andrew Procop, politics reporter over at Vox. Trump's longtime lawyer and fixer, who during the 2016 campaign helped arrange payments worth several hundred thousand dollars to Stormy Daniels and Karen McDougal. This is not a jumbo trek for some sort of charity auction. This is Donald Trump's personal bank account. This is what proves to the public that Cohen was telling the truth, at least about this and how he wanted to cover up alleged contact with women in 2016. Cohen pleaded guilty to violating federal campaign finance law over those payments. But there was a question of whether other people were on the hook for charges as well.

And one of the other people that might have been on the hook was Allen Weisselberg, who was the CFO of the Trump Organization and who played a role in arranging these payments and making sure they would happen. But in 2019, the feds announced that they were not going to pursue further charges in this case. So Manhattan District Attorney Cy Vance said that he was going to look into the matter. He was going to, now that the feds were done with it, he was going to open up his own investigation to see if state laws were violated in the matter of the hush money payments. And from there, Vance's investigation broadened. Cohen has spoken with him about the Trump organization's business practices in general. And what's really at the heart of Vance's investigation, according to reports, is something bigger than just this matter of taxes on fringe benefits.

What is it? So this gets back to another allegation that Michael Cohen has made about Trump that really gets to the heart of the Trump organization's overall business practices. It involves the overvaluing or undervaluing of real estate. to value properties because he was taking out a loan on them or because he wanted to inflate his overall wealth for insurance purposes, he would tend to lean towards valuing the properties he owned very high. But then he would turn around when it came to valuing them for property taxes. Because if your property value is very high, then you have to pay a lot of property taxes. So the same properties that he would say were quite valuable when he

was trying to get loans, he would say were really not that valuable when it came to paying property taxes. So the question here is whether there's a systematic pattern of bank fraud, insurance fraud or tax fraud from the company related to these very valuable properties they own. But they haven't brought any charges to that end yet. that this would be a difficult case for prosecutors to make unless they get cooperation from weisselberg from someone who knew trump's state of mind and who can say that yes trump knew what he was doing was wrong or illegal the defense that trump could have in a case like this is saying oh hey my cfo he's the guy who is the money man. And he told me that this was all legal and it was fine. So if Weisselberg were to testify that, no, actually, he knew that this was against the law, but we did it anyway, that would be huge for the prosecutors.

So they seem to be bringing this fringe benefits tax case against Weisselberg in part to pressure him to flip to help them make this broader case against Trump. That's the plan. But we don't know if it will work or if they have a case if Weisselberg holds strong and does not flip. And what's the end game here? Is it to put the former president behind bars? Is that something that anyone actually thinks could happen here? What are they really after? Well, obviously, there are massive implications to all this for American politics and for the 2024 presidential race in particular. Trump may run again. He's been hinting lately that he will run again. Have you made up your mind? Yes. Of course, we won't know for sure until we see it.

But, you know, a lot of people are very nervous about Trump and especially about his conduct in the wake of the 2020 election. They view him as like a fundamental danger to American democracy. Is this part of what is motivating prosecutors? It's impossible to say. It would arguably be improper if they were motivated by that. Trump has called this investigation, like he calls all investigations into him, a politicized witch hunt.

But I believe the political forces driving today's events are just that. Cyrus Vance Jr. is an elected Democrat. And, you know, it's probably impossible to fully separate out partisan politics and the implications for the future of the country from a case like this. It's a little worrying if this really is on the minds of prosecutors. I'm sure they would say that it's not and that they're following the evidence and the facts where they lead. But it's hard to say for sure. And it's hard to say, especially without knowing the full picture of what Vance has found. Maybe he really does have strong evidence of criminality and he's part of the way toward building a bigger case that we just haven't seen yet. Or maybe this really is the best he's got and he's kind of like like this epic letdown. I mean, we've seen the transcripts of the so-called perfect call to the president of Ukraine. I mean, we've heard the phone call to the election managers in Georgia. We know the former president is a shady dude who did a lot of shady shit.

And surely that extended to his business practices. And yet the best thing the Manhattan DA can come up with, at least as far as we know at this point, is that Alan Weisselberg's grandkids went to private school on the Trump organization's payroll. Like, it just feels like there's always this big promise of corruption and malfeasance. And what we end up with is some tax scheme that's kind of wonky and maybe widely practiced across the country. Well, firstly, not paying your taxes is bad and you should pay your taxes. All listeners of Today Explained should pay their taxes. Is this an infomercial?

Secondly, the comparison that's going around right now is when the feds were trying to get Al Capone, who they knew was a bad guy, who they knew was a criminal who had done a lot of bad things. And what they ended up actually having the case for and the evidence for was tax evasion. And, you know, that's a little underwhelming, maybe, considering all of the far more impressive or horrifying stuff Al Capone was involved with. But it's the case that they were able to make. And I think there's also something to be said here for, you know, even if even if we all think we know that Trump is a really bad person who's breaking laws left and right in our system, you actually need to find the evidence to prove that in a way that you think will hold up in a court of law and that won't be thrown out on appeal.

And so that is what District Attorney Vance is trying to do at this point. And whether he will succeedains to be Seen at Vox.com. I'm Sean Ramos-Furham. This is Today Explained. We're a part of the Vox Media Podcast Network. The team is comprised of Will Reed, Victoria Chamberlain, Halima Shah, Emily Sen, and Miles Bryan. Our editor is Matthew Collette,

engineer is Afim Shapiro, and our supervising producer is Amina Alsadi. Music is made by Breakmaster Cylinder. Facts are checked by Laura Bullard. Liz Kelly Nelson is Vox's Veep of Audio. Jillian Weinberger is the deputy. You can get in touch with us on Twitter. I'm at Ramesh Verm,

ProCops at AWProCop. The show's at today underscore explain. Pay your taxes! Thank you.