Prosecutors Zero in on Trump Foundation’s CFO
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Manhattan District Attorney Cyrus Vance Jr.’s criminal investigation of the Trump Organization is scrutinizing the actions of one of the president’s oldest and most trusted deputies, ProPublica has learned.
The focus on Trump Organization CFO Allen Weisselberg, a 72-year-old accountant now running the business with Trump’s two adult sons, stems from his involvement in arranging a payment to porn actress Stormy Daniels in exchange for her silence about an alleged sexual encounter with Trump (which Trump has denied).
Federal prosecutors from the Southern District of New York, or SDNY, contended that the Trump Organization had improperly booked reimbursements for the hush-money scheme as “legal expenses,” with the aid of sham invoices. They granted legal immunity to Weisselberg and later closed their 18-month investigation with the guilty plea of one Trump associate, Michael Cohen. But Weisselberg’s immunity deal applied only to federal proceedings.
Now Vance’s state grand jury is examining whether Weisselberg, among others — and even the Trump Organization — should face state criminal charges for falsification of business records, according to a source familiar with the investigation. Neither Weisselberg nor the Trump Organization responded to requests for comment. Vance, through a spokesman, declined to comment.
A handful of lawyers and investigators from Vance’s office, led by Chris Conroy, chief of the DA’s major economic crimes bureau, traveled to the federal minimum-security prison camp in Otisville, New York, on Oct. 30 to meet for the third time with Cohen, who is serving a three-year prison sentence, according to two sources knowledgeable about the matter. Much of the discussion involved Weisselberg.
Neither the president nor his sons appear to be in Vance’s crosshairs at this point in the investigation, which is at an early stage, according to the source familiar with the investigation. But, the source added, New York prosecutors are far from ruling that out.
The investigation is playing out amid an unusually public conflict between the offices of the Manhattan DA and the U.S. attorney, which are headquartered across the street from each other in Lower Manhattan.
Vance originally launched his investigation back in August 2018, after Cohen’s guilty plea and public testimony revealed the Trump Organization’s deceits.
But when one of Vance’s staffers placed a courtesy call to inform the federal prosecutors of their investigation, according to the source familiar with the investigation, the DA was asked to “stand down.” The reason: The U.S. attorney’s office said it was still investigating the Trump Organization, pursuing additional targets. (A spokesperson for the SDNY declined to comment.) Vance agreed to put his investigation on hold.
As late as May 2019, federal prosecutors told U.S. District Judge William Pauley that their investigation was “ongoing.” For months before that, the SDNY seemed to be gathering evidence for possible charges against people beyond Cohen. At least, that was the public impression created by the prosecutors’ decision to grant immunity and non-prosecution agreements, respectively, to Weisselberg and executives with the National Enquirer, who collaborated with Cohen on a second hush-money payoff, to former Playboy centerfold Karen McDougal. (Trump denied that relationship, too.)
Vance’s probe remained on hold for nearly a year — until July 18, 2019 — when Pauley revealed that federal prosecutors had informed him their investigation was “effectively concluded.”
With that, the Manhattan DA quickly restarted his state investigation. On Aug. 1, a grand jury subpoenaed an array of records from the Trump Organization involving the hush-money payments and Cohen’s work for Trump. The DA contended that the subpoena applied to Trump’s tax records.
Over the next few weeks, Trump’s business turned over 3,376 pages of documents, court filings show. Those documents did not include tax records. A subsequent filing by the DA asserted that “approximately two-thirds” of those 3,376 pages consisted of “non-substantive Google alerts.”
On Aug. 29, the DA subpoenaed Mazars USA, Trump’s accounting firm, demanding Trump’s personal and business tax returns dating back to 2011, as well as work papers and financial statements. Lawyers for the president then filed suit in federal court on Sept. 19 to quash the Mazars subpoena.
The U.S. Department of Justice intervened in the case, backing Trump’s request to keep the dispute in federal, rather than state, court. The DOJ supported further delays to consider Trump’s claims in federal court, but it did not then take a position on the merits of the underlying dispute.
The DOJ pleadings were co-signed by the SDNY. Privately, SDNY representatives, wary of appearing to do Trump’s bidding, insisted that their office’s role was limited, likening it to merely serving as local counsel.
That’s when the tensions between the federal and state prosecutors surfaced — but they were largely ignored by the press, which focused on the bigger issue of whether the president can quash the subpoena for his taxes. Vance’s office bristled at the DOJ’s unusual decision to jump in with support from the SDNY.
The Manhattan DA’s office argued in court that the delay caused by the SDNY’s request to stand down has harmed its ability to bring a case. The clock is now running out on the DA’s ability to bring misdemeanor false-records charges. Because the last disguised reimbursement payment, signed by Trump, is dated Dec. 5, 2017, the two-year statute of limitations expires next month. (Convicting a person of a misdemeanor fake-records charge requires proving an “intent to defraud,” according to lawyers. The charge can also be prosecuted as a felony, which has a five-year statute of limitations. Proving the felony requires not only establishing an intent to defraud, but also that the intention was aimed at committing or concealing a second crime, such as claiming improper deductions on a tax return or making a false representation on a financial statement.)
At a hearing in federal court on Sept. 25, Carey Dunne, general counsel for the DA’s office, complained that the feds were aiding Trump’s efforts to run out the clock: “It is what they want in the end. … What that means, if they get further delay, basically they win and we lose, without an adjudication by this court, and that’s not what should happen today.”
Dunne made a similar argument in an Oct. 3 letter to the federal judge overseeing the subpoena battle. As he put it, “delaying enforcement of the subpoena will likely result in the expiration of the statutes of limitation that would apply to some of the transactions at issue in the grand jury investigation.” Dunne called the DOJ’s involvement “all the more audacious in view of the fact that, until quite recently and for more than a year, DOJ prosecutors in this very district conducted a highly publicized grand jury investigation into some of the very same transactions and actors that have been reported to be at issue in this matter.”
Federal district and appeals courts quickly rejected Trump’s claim of blanket immunity from criminal investigation, and he has now petitioned the Supreme Court to hear his case. If the court refuses to hear it, Vance’s investigators could be combing through Trump’s tax records by year-end. A decision to hear the case would push any resolution well into 2020.
The scrutiny of Weisselberg stems from his reported role in hiding the hush-money payments. Cohen gave congressional committees a detailed account of how, at Trump’s direction, he strategized with Weisselberg in October 2016 about how to fund the $130,000 payment to Daniels.
The adult-film actress was then threatening to go public. It was a fraught moment, immediately after the broadcast of the “Access Hollywood” tape, in which Trump talked about grabbing women by their genitals, and just one month before Election Day.
Cohen testified that he and Weisselberg argued over which one of them should come up with the hush money. Eventually, Cohen tapped a home-equity line of credit, a funding source that would be hidden from his wife. According to government filings, it was decided the Trump Organization would reimburse Cohen through monthly payments disguised as a legal retainer, and Cohen submitted sham invoices to paper over the deceit. Along with Donald Trump Jr., Weisselberg signed two of the monthly checks for Cohen. Trump signed six others.
Prosecutors said Cohen carried out his actions “in coordination with and at the direction” of Trump, who they identified in filings as “Individual-1.” Those filings identified two other Trump Organization figures — “Executive-1” and “Executive-2” — as processing Cohen’s phony monthly invoices. Those two executives were the Trump Organization’s controller, Jeff McConney, a 32-year veteran of the company, and Weisselberg, according to a source familiar with the matter. (Previous published reports incorrectly identified Weisselberg as “Executive-1” and McConney as “Executive-2.”) McConney did not respond to an emailed request for comment.
One of Cohen’s lawyers later released a surreptitious recording Cohen made of a September 2016 conversation with Trump discussing the arrangement to pay McDougal. In it, Cohen is heard telling Trump: “I’ve spoken to Allen Weisselberg about how to set the whole thing up.”
Cohen was the only identified participant in the scheme to be charged in the federal investigation. (In addition to federal tax and false-statement crimes, he pleaded guilty to illegal campaign contributions for the payoffs, which benefited Trump’s campaign by silencing the women through Election Day.) A DOJ policy memo barring federal prosecution of a sitting president protected Trump.
That shield, however, doesn’t apply in state court, making the president, Trump Organization executives including Weisselberg (whose federal immunity, as noted, also doesn’t apply in state proceedings) and even the Trump Organization itself potential targets.
A company can be charged if a high-ranking officer with authority to “bind” the business engages in illegal conduct, according to Adam Kaufmann, a white-collar attorney and former investigations chief for the Manhattan DA’s office.
Weisselberg’s employment dates back to the era of Fred Trump, the president’s father, and he has a reputation as the ultimate company man. In deposition excerpts filed by the New York attorney general in her case against the Trump Foundation — which resulted in its shutdown, admissions of wrongdoing and an order to pay $2 million to charity — Weisselberg, who served as the foundation’s treasurer, was questioned about Trump’s use of the charity for a political event before the Iowa presidential primary.
He described receiving a phone call one morning in January 2016, as he was preparing for a dental appointment, asking him to fly to Iowa that night to write “some checks.” What did he think about this request “to bring the checkbook,” an assistant attorney general asked. “It doesn’t matter what I thought,” Weisselberg replied. “He’s my boss. I went.”
As for Cohen, he has been attempting to insert himself into the investigation as a witness. His lawyers have been laboring to reduce his three-year term, offering the carrot of Cohen’s cooperation regarding what they claim is a litany of Trump Organization crimes. Recently, word was conspicuously leaked that he had stories to tell about his own contact with Lev Parnas and Igor Fruman, the Rudy Giuliani associates indicted for using foreign funds to influence U.S. elections.
Federal prosecutors, who last year declined to urge a major reduction in the range for Cohen’s projected prison term, citing “a pattern of deception that permeated his entire life,” among other things, have rebuffed repeated entreaties from Cohen’s lawyers to reengage. Cohen’s lawyers had hoped such cooperation would prompt federal prosecutors to request a special post-sentence “Rule 35” reduction in his prison term before the one-year window for such a request expired.
The Manhattan DA’s team, with different targets and no power to urge a sentence reduction, has been more receptive. At the team’s last meeting with Cohen and his lawyers, they discussed the possibility of obtaining a trove of evidence that federal agents seized in the raids on Cohen’s apartment, office and hotel suite in April 2018. The feds recently returned a flash drive containing the evidence — including files, contracts, notes and tape recordings — to Cohen’s legal team.
Cohen’s legal team, which includes Lanny Davis, has also urged congressional leaders to intervene on his behalf. Cohen’s team is promoting a new, albeit improbable, image for the man who once was proud to call himself Trump’s fixer: “the John Dean of his generation.”Your support matters…
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