Former president Donald J. Trump’s family real estate business was ordered on Friday to pay a $1.6 million criminal penalty for its conviction on felony tax fraud and other charges, a stinging rebuke and the maximum possible punishment.
The sentence, handed down by a judge in State Supreme Court in Manhattan, caps a lengthy legal ordeal for Mr. Trump’s company, the Trump Organization, which was convicted in December of doling out off-the-books perks to some of its top executives. One of the executives who orchestrated the scheme, Allen H. Weisselberg, pleaded guilty and testified at the company’s trial. He was sentenced on Tuesday to serve five months at the notorious Rikers Island jail complex.
The financial penalty is a pittance to the company, and the former president, who collected hundreds of millions of dollars in revenue each year while in office. But the verdict branded the company a lawbreaker, exposed a culture that nurtured illegality for years and handed political ammunition to Mr. Trump’s opponents. Prosecutors also continue to press a criminal investigation against the man himself.
The Trump Organization’s lawyers on Friday sought a smaller penalty, pinning the blame on an outside accounting firm, Mazars USA, which they said should have halted the wrongdoing. They also blamed Mr. Weisselberg, who they say carried out the scheme without intending to benefit the Trump Organization. But Joshua Steinglass, a prosecutor in the Manhattan district attorney’s office, argued that the company carried out “a multidimensional scheme to defraud the tax authorities.”
“To avoid detection, they simply falsified the records,” he explained. “This conduct can only be described as egregious,” adding that although the maximum fines may have limited impact on the corporation, “this court should nonetheless impose such fines.”
The judge overseeing the case, Juan Merchan, agreed, imposing the maximum $1.61 million.
“These are arguments that were made throughout the trial,” Justice Merchan said about the defense’s contention that Mazars and Mr. Weisselberg were to blame. “This is not what the evidence has shown, and it is certainly not what the jury found.”
The Manhattan district attorney, Alvin L. Bragg, called in a statement for the state to change the law “so that we can impose more significant penalties and sanctions on corporations that commit crimes in New York.”
The Crisis at Rikers Island
Amid the pandemic and a staffing emergency, New York City’s main jail complex has been embroiled in a continuing crisis.
He elaborated on that call in an interview on Friday morning, saying that the lack of a serious penalty “allows a corporation, if it wanted to be brazen, to price this kind of behavior in.”
“The direct consequence needs to be stiffer,” he said. “While we need to think long and hard before we add to our penal law, I think this is an area where we should.”
Susan Necheles, one of the company’s lawyers, said in court on Friday that the company would appeal the conviction and contended that, “The D.A., as usual, or again, does not understand the tax law.”
The trial cast a harsh light on the inner workings of the Trump Organization, and despite the resolution of the case on Friday, Mr. Trump and his family business are still under investigation in Manhattan.
Mr. Bragg’s prosecutors continue to scrutinize the former president’s role in the payment of hush money to a porn star who said she had an affair with Mr. Trump, according to people with knowledge of the matter. They are also still conducting a broader examination of Mr. Trump’s business practices — and whether he fraudulently inflated the value of his assets.
The tax fraud case against the company and Mr. Weisselberg, 76, was brought by Mr. Bragg’s predecessor, Cyrus R. Vance Jr., who before leaving office in December 2021, authorized prosecutors to begin presenting evidence to a grand jury about Mr. Trump and how he valued his assets. In the early weeks of Mr. Bragg’s tenure last year, he chose not to seek an indictment of Mr. Trump based on that inquiry.
The tax fraud trial — which ended with the company’s conviction on 17 counts of tax fraud, a scheme to defraud, conspiracy and falsifying business records — hinged on whether Trump Organization executives who collected the off-the-books perks did so to help the company. Under New York State law, a company can be held criminally liable for the crimes of its top executives if they acted “in behalf of” the company. Ultimately, Justice Merchan ruled that the “in behalf of” phrase would require prosecutors to prove that Mr. Weisselberg was acting not solely to enrich himself, but also to help his employer.
Mr. Weisselberg, an architect of the scheme, received an array of lucrative under-the-table benefits, including a rent-free apartment, free Mercedes-Benzes and private school tuition for his grandchildren. At trial, the company’s lawyers portrayed Mr. Weisselberg as a rogue actor, making “Weisselberg did it for Weisselberg” a refrain.
Mr. Weisselberg’s testimony, however, indicated that the Trump Organization had benefited because the scheme had reduced a small portion of the company’s taxes and allowed it to avoid raising the salaries of some executives engaged in the scheme.
“All of these corrupt practices were part of the Trump Organization executive compensation package, and it was a lot cheaper than simply paying higher salaries to those executives,” Mr. Steinglass said at the sentencing on Friday.
In a statement, the Trump Organization said that its two corporations, as well as Mr. Weisselberg, were victims and that the former executive had been “threatened, intimidated and terrorized.”
“These politically motivated prosecutors will stop at nothing to get President Trump and continue the never ending witch-hunt which began the day he announced his presidency,” the company’s statement said. “We did nothing wrong and we will appeal this verdict.”
In recent days, the Trump Organization parted ways with Mr. Weisselberg, according to people with knowledge of the matter, concluding a half-century of his work for the Trump family.
Yet the company was careful not to turn its back on him. It paid Mr. Weisselberg his bonus for last year, as well as a severance package, the people with knowledge of the matter said.
The payouts come as Mr. Bragg’s prosecutors continues to investigate Mr. Weisselberg’s dealings at the Trump Organization — and potentially as they seek his cooperation with the broader inquiry into the hush money and Mr. Trump’s business practices. While Mr. Weisselberg agreed to testify against the company, he has not turned on Mr. Trump himself.
On Friday, Mr. Bragg referred obliquely to the future of the Trump investigation.
At a news conference in the hallway of the courthouse, he said that the sentencing merely closes one episode of the Trump investigation. “We now move on to the next chapter,” he added.