NEW YORK – Criminal charges of tax fraud unsealed against Donald Trump’s company on Thursday are a blow to a company already reeling from the canceled agreements following the insurgency at the United States Capitol and the impact of the coronavirus pandemic on hotels and clubs.
The indictment may make it harder for Trump to make new deals, get bank loans, and bring new money to his sprawling, indebted business.
The former president himself has not been charged by prosecutors, but investigations are ongoing.
Here’s a look at the business and the challenge it now faces:
WHAT IS THE TRUMP ORGANIZATION?
The company is a business entity encompassing hundreds of companies and partnerships that own or manage office buildings, hotels, residential towers, golf clubs, trademark rights, licensing agreements and other assets. worldwide.
These various companies share staff with the Trump Organization, including Trump’s two grown sons, Donald Jr. and Eric, both executive vice presidents, and Allen Weisselberg, the indicted CFO.
WHAT ARE THE ALLEGATIONS?
An indictment from the grand jury indicted the Trump Organization with conspiracy to help senior executives cheat on their taxes by not reporting offsets such as free use of apartments and cars, payment of school fees, or reimbursement of personal expenses.
The company has pleaded not guilty, as has Weisselberg, one of Trump’s longest-serving and loyal employees.
The company says neither she nor Weisselberg did anything wrong and claimed the charges were politically motivated.
Weisselberg is also accused of cheating on his taxes by disguising that his full-time residence was in New York City, where he was subject to city income tax.
WHAT IS TRUMP’S CURRENT ROLE WITHIN THE COMPANY?
Trump resigned from positions he held in hundreds of Trump Organization entities in more than 20 countries before taking the presidential oath four years ago.
It was his attempt to allay fears that he was using the presidency to help his business. At the time he created a trust to hold his assets and entrusted the daily control of it to his two adult sons and to Weisselberg.
But Trump remained the sole or primary owner of those hundreds of companies and could profit from them at any time. Recently, he returned to his former offices at Trump Tower on Fifth Avenue, but it is unclear to what extent he fulfilled his former role of overseeing operations.
WILL THE FEES HARMFUL THE COMPANY’S ABILITY TO DO BUSINESS?
If the Trump Organization is convicted, it will have to pay a fine of double the amount of unpaid taxes, or $ 250,000, whichever is greater. The company may also be required to modify its mode of operation.
But even in the absence of a conviction, the indictment could be problematic.
“The companies that are indicted, whether private or public, large or small, face serious collateral consequences,” said Daniel Horwitz, white-collar defense lawyer at McLaughlin and Stern and former prosecutor in the office of the Manhattan District Attorney.
“Companies in the financial services industry are reluctant to do business with them,” Horwitz said. “Their access to capital is limited or cut off, as is their ability to place their liquid assets with banks and brokerage houses.”
WHAT HAPPENED TO THE OTHER COMPANIES THAT HAVE BEEN CRIMINAL CAUTION?
Giant accounting firm Arthur Andersen began to lose audit business after criminal charges were brought against him. filed in connection with his work on Enron, and that finally had to fire tens of thousands of workers. In 2005, the Supreme Court overturned his conviction for obstructing justice, but it was too late and the business collapsed.
Other companies hit hard by criminal charges include the now defunct 1980s junk bond giant Drexel Burnham Lambert, the once massive hedge fund SAC Capital and the BP oil company, which has had to pay billions in criminal charges for its role in the explosion of a drilling rig in the Gulf of Mexico.
WHAT IS THE LIKELY BLOW ON TRUMP’S BUSINESS?
The Trump Organization may have a harder time making deals to put Trump’s name on buildings or merchandise, attract tournaments to its golf courses, and borrow money.
He may be able to withstand the blows. It’s a sprawling business, but its operations are simple and behind the scenes: it runs golf clubs and hotels, collects checks from companies occupying offices it owns, and charges license fees to buildings and the like. using his name.
While some businesses have collapsed after criminal charges, others have survived or even thrived, including Bank of America, which was convicted of reckless mortgage lending practices. Others who have received what are called deferred criminal charges have done well afterwards, including drug giant Bristol-Myers Squibb, who has been charged with account fraud, and JPMorgan Chase & Co., who was caught as part of Bernard Madoff’s massive fraud.
Shares of all three companies are at or near all-time highs.
WHAT ARE THE FORMER PRESIDENT’S FUTURE BUSINESS PLANS?
He didn’t say, but there are obvious movements.
Branding experts say the company could still use Trump’s fame to close licensing deals around the world. In the years that surround his television hit, “The Apprentice”, Trump made deals put his names on suits, ties, steaks and residential tours in Las Vegas, Chicago and New York.
The Trump brand has been damaged by its rhetoric and divisive positions. It’s unclear how successful a new licensing effort would be.
While in office, hotels and residential towers in many cities stripped his name out of their buildings. His company had abandon plans for new hotel chains due to a lack of interest from potential partners.
Most damaging of all were the accusations Trump instigated at the bloody siege on Capitol Hill in January. Real estate brokers, lenders and other businesses cut ties soon after.
The Associated Press reported earlier this year that condo prices in many buildings that have allowed the use of his name have fallen sharply, with brokers saying some potential buyers even refuse to look at apartments in buildings with Trump’s name above the door.
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