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Dan Horwitz was Quoted in The Wall Street Journal

Thu 13 May 2021 News Releases

Officials are looking into tuition payments for the grandchildren of Trump Organization CFO Allen Weisselberg, who has been pressured to help the probe into the former president

By Corinne Ramey

New York prosecutors have subpoenaed a Manhattan private school as they seek the cooperation of the Trump Organization’s chief financial officer in their investigation of former President Donald Trump and his company, according to people familiar with the matter.

The subpoena seeks information from Columbia Grammar & Preparatory School, where grandchildren of Trump Organization CFO Allen Weisselberg are students, the people said. From 2012 to 2019, more than $500,000 of the children’s tuition was paid for with checks signed by either Mr. Weisselberg or Mr. Trump, the two children’s mother, Jennifer Weisselberg, told The Wall Street Journal. She is the former wife of Mr. Weisselberg’s son Barry.

Ms. Weisselberg said she told Manhattan prosecutors that she and Barry understood the tuition payments to be part of her ex-husband’s compensation package at the Trump Organization, where he worked. Former prosecutors not involved in the probe said the Manhattan district attorney’s office could be examining whether the Weisselbergs evaded taxes with the tuition-payment arrangement.

The subpoena marks a separate front in the investigation of Mr. Trump by Manhattan District Attorney Cyrus Vance Jr. ‘s office, which has for months been seeking Allen Weisselberg’s cooperation, according to people familiar with the matter. Mr. Weisselberg has worked for the Trump Organization for decades and is regarded as Mr. Trump’s confidant and his company’s financial gatekeeper. Mr. Weisselberg hasn’t been accused of wrongdoing.

Prosecutors often seek the cooperation of someone possibly involved in a crime to obtain confidential information and provide a potential road map to records or documents. Typically, prosecutors offer a potential defendant leniency in exchange for their help. Putting pressure on a possible defendant’s family is one way to encourage cooperation.

“Without an insider it can be difficult to put all the pieces in a white-collar case together,” said Daniel Horwitz, chairman of the white-collar defense and investigation practice at firm McLaughlin & Stern. “The way that cooperation is typically obtained is by demonstrating to the potential cooperator that they have no better option.”

People who know Mr. Weisselberg say he is faithful to the Trump Organization, and they questioned whether he would ever breach that loyalty. In 2017, Mr. Weisselberg became a co-trustee charged with managing the president’s business assets.

The district attorney’s office has said it is conducting a complex financial investigation into possible loan, bank or insurance fraud by the Trump Organization and its officers. Prosecutors have obtained Mr. Trump’s tax records and subpoenaed lenders, an insurance broker and other entities for financial information about Trump properties in New York City, Westchester County, N.Y., and elsewhere.

A spokeswoman for Mr. Trump didn’t respond to a request for comment. Mr. Trump has called the investigation a witch hunt and said it was politically motivated.

Frank Perrone Jr., a lawyer for Columbia Prep, said it is the school’s practice to comply with all lawful requests made by authorities.

Columbia Prep is a private school of roughly 1,300 prekindergarten through high-school students on Manhattan’s Upper West Side. Tuition this academic year ran more than $50,000.

Ms. Weisselberg told the Journal she and her ex-husband never paid their children’s tuition. She said she delivered some checks to the school that were signed by Mr. Trump. She said others, beginning around 2015, were signed by Allen Weisselberg.

The Wall Street Journal viewed records from Ms. Weisselberg showing Columbia Prep received more than $500,000 in payments. The records don’t show who made the payments.

Last month, prosecutors subpoenaed Ms. Weisselberg, requesting information obtained through her divorce, including tax records, net-worth statements and financial records related to the Trump Organization, the Journal has reported.

Documents filed by Barry Weisselberg in the couple’s divorce say that his parents pay the children’s tuition.

“Absent this financial assistance, [Barry] could not afford private school,” the documents say. Barry Weisselberg earned about $223,000 in 2019, according to tax documents included in the divorce filing. Barry managed an ice-skating rink that until last month the Trump Organization operated under a contract with the city.

In a 2018 deposition for his divorce proceedings, Barry Weisselberg said he didn’t know if Donald Trump had personally paid for household, family or personal expenses during his marriage. He said tuition, rent, camps and other expenses paid by his father weren’t gifts or loans, but rather “financial assistance,” according to the deposition.

A person familiar with the matter said Barry Weisselberg’s family characterizes the payments as a gift.

Bridget Crawford, a tax-law professor at Pace University, said that if someone pays a child’s tuition directly to the institution as a gift, there is no tax. But if an employer pays tuition for an employee’s child or grandchild, that is presumed to be income to the employee and isn’t a gift.

The Trumps have prior connections to Columbia Prep. Mr. Trump’s youngest son, Barron Trump, attended the school when his family lived in New York City. The former president’s now-defunct charity, the Trump Foundation, donated a total of $150,000 to the school in 2014, 2015 and 2016, tax filings show. Allen Weisselberg served as treasurer of the Trump Foundation, which was dissolved as part of a settlement with the New York attorney general’s office over allegations the charity misused funds to further its namesake’s interests.

Mr. Trump’s former personal lawyer, Michael Cohen, was chairman of the school’s board. Mr. Cohen was convicted of crimes including campaign-finance charges and is serving the remainder of his sentence in home confinement.

Ms. Weisselberg said the children of Allen Weisselberg’s other son, Jack, have attended Columbia Prep. Jack Weisselberg didn’t respond to a request for comment.

Allen Weisselberg has also emerged as a figure of interest for the Washington, D.C., attorney general, whose office last year filed a lawsuit against the Trump Organization and Mr. Trump’s 2017 inaugural committee, alleging the committee used nonprofit funds to illegally enrich the Trump family. The Trump Organization has said the allegations are false.

The attorney general’s office said in court papers filed in March that it intended to depose Allen Weisselberg. Others involved had testified in depositions that Mr. Weisselberg reviewed the inaugural committee’s financials, despite having no formal role with the committee.

Mr. Weisselberg hasn’t been deposed, according to a person familiar with the matter. A spokeswoman for the D.C. attorney general didn’t respond to a request for comment.

The Wall Street Journal