Former Trump Executive, Already Jailed, Could Face More Fraud Charges
Manhattan prosecutors this week warned that they might file new fraud charges against Allen H. Weisselberg, a longtime top executive at Donald J. Trump’s real estate business — increasing pressure on Mr. Weisselberg to cooperate in a broader investigation into the former president, according to people with knowledge of the matter.
Mr. Weisselberg, the Trump Organization’s former chief financial officer, is already serving a five-month sentence in the Rikers Island jail complex after pleading guilty to unrelated tax fraud charges. While he testified against the company at its trial on the same charges last year, he has for years refused to turn on Mr. Trump directly.
But as the Manhattan district attorney, Alvin L. Bragg, jump-starts his office’s effort to indict Mr. Trump, his prosecutors are using the prospect of additional charges to exert leverage over Mr. Weisselberg, the people with knowledge of the matter said. The potential charges, which prosecutors conveyed to the former executive’s legal team this week, center on insurance fraud and could lead to a significant prison sentence for Mr. Weisselberg, who is 75.
He is facing the new round of pressure as the prosecutors begin to present evidence to a grand jury about Mr. Trump’s involvement in paying hush money to a porn star during the 2016 presidential campaign. On Monday, the prosecutors began questioning witnesses in the grand jury about the hush money paid to Stormy Daniels, the porn star who said she had an affair with Mr. Trump.
The potential new charges against Mr. Weisselberg are unrelated to the hush money, but he has long been the missing piece in any criminal case against the former president. In August, when he pleaded guilty in the tax case, Mr. Weisselberg accepted that he would serve time on Rikers Island and said he had no incriminating evidence to offer about Mr. Trump. And before that, Mr. Weisselberg was charged in the tax case only after resisting a pressure campaign from prosecutors seeking his testimony against Mr. Trump.
But the threat of prison time could change the equation for Mr. Weisselberg, who would face a stark choice: serving significant time behind bars late in life or turning on the former president, whose finances he handled for decades. If he cooperated now, after stymieing the investigation into Mr. Trump time after time, Mr. Weisselberg would be likely to avoid prison altogether.
Prosecutors have already secured the cooperation of Michael D. Cohen, the longtime fixer for Mr. Trump who turned on him after pleading guilty to federal charges involving the hush money. Last month, the district attorney’s office interviewed Mr. Cohen, who paid $130,000 to Ms. Daniels, and was later reimbursed by Mr. Trump.
The acceleration of the long-running investigation in Manhattan comes as Mr. Trump is facing intense legal pressure from several other corners. Federal prosecutors in Washington, D.C., are scrutinizing his removal of sensitive documents from the White House and his conduct during the Jan. 6, 2021, attack on the Capitol, and a district attorney in Georgia may seek to indict the former president for his attempts to reverse his 2020 election loss in the state.
Mr. Trump has denied all wrongdoing and accused investigators of carrying out a politically motivated witch hunt against him. And when The New York Times reported this week that Mr. Bragg, a Democrat, had impaneled the grand jury, Mr. Trump’s company issued a statement arguing that reviving the hush-money inquiry under what it called a “dubious legal theory” was “simply reprehensible and vindictive.”
Until recently, there were few visible signs of progress in Mr. Bragg’s investigation. A year ago, he called off plans to seek an indictment of Mr. Trump in a case centered on whether the former president lied on his financial statements to secure favorable loans and other benefits — an inquiry developed under his predecessor, Cyrus R. Vance Jr.
But this year, his second leading the office, Mr. Bragg appears to have grown more comfortable with the idea of pursuing charges against Mr. Trump. While Mr. Bragg’s office is continuing to scrutinize whether Mr. Trump fraudulently inflated the value of his assets on annual financial statements, the focus of the inquiry has returned to the hush money.
That investigation has died and come back to life so many times that some prosecutors took to calling it the “zombie” case.
A spokeswoman for the district attorney’s office declined to comment, as did a lawyer for Mr. Weisselberg.
The basis for an insurance fraud charge against Mr. Weisselberg first emerged publicly in a court filing early last year as part of the New York attorney general’s civil investigation into Mr. Trump and his family business. That inquiry, separate from the district attorney’s criminal investigation, eventually resulted in a September lawsuit against Mr. Trump, three of his adult children and his company. It is scheduled to go to trial in the fall.
The filing from the attorney general, Letitia James, accused Mr. Weisselberg of lying to an insurance company when he claimed that the value of the Trump Organization’s real estate holdings had been assessed by an independent appraiser, when in fact they had not been. The insurer, Zurich North America, apparently relied on Mr. Weisselberg’s assurances to renew the Trump Organization’s coverage.
That same accusation also appeared in the lawsuit Ms. James brought in September, accusing Mr. Trump and his company of committing “staggering” fraud by overvaluing its assets by billions of dollars on his financial statements.
The district attorney’s office last year subpoenaed Zurich and questioned the appraiser, according to people with knowledge of the matter, who added that there is no suggestion of any wrongdoing by either the insurer or the appraiser.
If Mr. Weisselberg were to decide to cooperate rather than face indictment, he could be valuable to prosecutors on a number of fronts. He had direct knowledge of the hush-money deal and was involved in reimbursing Mr. Cohen for the $130,000 payment to Ms. Daniels, whose real name is Stephanie Clifford, according to court records in Mr. Cohen’s federal case.
And, according to Mr. Cohen, Mr. Weisselberg was involved in a discussion with Mr. Trump about whether to pay Ms. Daniels.
But paying hush money is not inherently illegal. Mr. Bragg’s case would most likely hinge on showing that Mr. Trump and his company falsified records to hide the payout from voters days before the 2016 election, a low-level felony charge that would be based on a largely untested legal theory.
It has been a long two years for Mr. Weisselberg, who was first charged in the summer of 2021. Prosecutors accused him — as well as the Trump Organization — of engineering a tax fraud scheme in which he and other company executives were compensated in off-the-books perks, allowing them to evade the full weight of their tax burden.
The following summer, Mr. Weisselberg pleaded guilty and agreed to testify at trial against the company, which refused to settle. On the stand, the executive said that he had acted to enrich himself, but that the company had also benefited. His testimony helped lead to the conviction of the company on 17 counts of tax fraud, scheming to defraud and other crimes.
Even one trial was an ordeal for him. Asked on the stand if he was embarrassed, Mr. Weisselberg grew emotional.
“More than you can imagine,” he said.