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Drive for Show, Putt for Dough: Trump’s Accountant’s Putting Method Revealed [UPDATE-3]

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[NB: Check the byline, thanks. This is a work in progress, subject to updates which will be added at the bottom of this post. /~Rayne]

Trump’s numbers guy, Allen Weisselberg, was indicted yesterday. The indictment was unsealed today and it’s revealing — not because there’s any big surprise but because the fifteen counts with which Weisselberg is charged point to the next hole(s) on this course to be played.

You can read the indictment here (thanks to Adam Klasfeld at Law & Crime News).

There are a lot of folks complaining this is puny stuff, whining that the Trump Organization and its CFO Weisselberg are getting away with a lot. Au contraire, mes amis, it’s too soon for such complaints.

Just Security’s Ryan Goodman notes right off the BIG FAT RED BLINKING LIGHTS embedded in the indictment which point to potential federal charges in the offing:

Sure would like to know how those IRS audits are coming along, hmm?

Here’s the thing: Trump, like his father before him, didn’t do something just once. If it worked — and it always has, never resulting in a criminal prosecution until now — Trump did it again. And again. What we see in this indictment is what will be found for every single business under the Trump Organization umbrella.

I will bet good money there will be other individuals who domiciled in New York whose compensation including living expenses were reported fraudulently to city, state, and federal authorities. The implication is right there in the repeated use of the word “defendants,” references to “Unindicted Co-conspirator #1,” and the conspiracy.

Which of the Trump kindred lived in New York and were also employed by a Trump Organization entity? Does this include ex-wives and their children while they lived at home?

As I noted above, this post is subject to updates; I am only through page 12 of the indictment so far. I’ll share a couple disjointed observations here.

— Jesus Christ, they kept goddamned spreadsheets documenting their criming. I feel like I’m watching The Untouchables with Elliott Ness wielding Capone’s bookkeeper’s black book.

— Trump Org paid tuition for Weisselberg’s family members (which was unreported compensation). This smells hinky; I wondered at first if an actual education facility received payment, but it’s likely. And yet this points to another possibility, that “tuition payments” may appear in the Trump Org’s books and not actually have been tuition payments.

— This is just the State of New York; where else did Weisselberg work for Trump beside NYS? Are there other states where Trump Org employees have failed to report their income? We know Florida doesn’t have personal income tax and can’t expect to see similar charges based on income tax evasion. But what about California, New Jersey, North Carolina, Pennsylvania, Washington D.C. where other Trump Org golf courses and resorts are located?

I have to say I’m surprised that Weisselberg never moved as much of the Trump Org’s business as possible to Florida because of the lack of personal income tax. There must be some other reason behind retaining a (unreported) domicile in New York instead of “moving” to Florida or any of the other six eight states which don’t have personal income tax.

Ditto the use of an entity, Trump Payroll Corp. — was this created as another opportunity to skim cash off payroll?

— The indictment spells out a period, “during the period from on or about March 31, 2005, to on or about June 30, 2021” in which the offenses occurred. This is only months after Trump’s tenure on NBC’s The Apprentice began. Is there a correlation between offenses delineated in this indictment and the reality TV series?

Is there something in any of the records related to The Apprentice which is an MGM property, and now possibly owned by Jeff Bezos’ Amazon? ~dark laugh~

I hope you stocked up on popcorn because this is going to be entertaining. We haven’t even gotten to property tax and insurance fraud suggested by Michael Cohen’s appearance before the House Oversight Committee when he testified that Trump understated asset values.

UPDATE-1 — 11:00 AM ET 02-JUL-2021 —

Before I continue I have a couple of asks, thanks for any help you can offer:

— Does anyone have access to Dun & Bradstreet? If you do can you pull up a copy of the profile on Trump Organization? I’ve not pulled a D&B in a while, not certain if it will have history of the enterprise available, but it would be VERY helpful at this point to known who the “executives” were at Trump Org according to D&B. These are likely the same individuals legitimate lending organizations understand to be the policy and decision makers for the holding company structure.

— Does anyone have a copy of proceedings mentioned last night on Maddow? (Shut it, bmaz, we know how you feel about that show.) There was a key nugget in an excerpt last night and I can’t find it because MSNBC no longer uploads their evening programs in full. It may have been a transcript related to the grand jury but I couldn’t give it my full attention at the time; it was important enough that it caught my ear, though. What caught my ear was a throwaway remark that Weisselberg had other sources of income besides Trump Org. [See UPDATE-3 below.]

By now you’ve seen Marcy’s post this morning about Weisselberg’s stagnant income requiring tax evasion. My personal suspicion is that any changes to income levels were being hidden out of sight of local, state, and federal regulators as well as banks just about the point when Trump was beginning to think seriously about a run for POTUS, Trump Org was beginning to experience liquidity problems, AND they were pursuing what I might call euphemistically “alternative financing.” Trump Org purchased 4-5 golf courses in the period 2010-2011 (I need to confirm this number and which courses) which may have required filing of documents related to operating expenses for loans. Weisselberg’s income could have been suppressed on the Trump Org’s books but augmented by income not formally reported as Trump Org payroll.

Which brings me to another observation: the indictment mentions an unindicted co-conspirator. It’s not Trump because in the section Overt Acts under item 2 the indictment reads,

2) On or before April 5, 2010, the Trump Corporation, acting through its agent, Unindicted Coconspirator #1, underreported Allen Weisselberg’s taxable income for the tax year 2009.

The term agent makes it likely it’s Mazars, the accounting firm which did the bookkeeping for Trump Org.

What’s interesting to me looking at the timeline of events: Mazars, an international firm, acquired Weiser, an accounting firm in northeast U.S., in early 2010. It may be something, it may be nothing, but the acquisition happened ahead of the stagnation in Weisselberg’s income. Of course the acquisition didn’t change a history of sketchy financial reporting by Trump Org’s previous accountants, Weiser, and Spahr, Lacher & Berk before Weiser.

The term “executives” — plural — appears throughout the indictment nine times, hence my ask for the D&B profile. D&B’s freebie profile indicates the current executives are:

Eric Trump, Chief Executive Officer
Donald J. Trump Junior, Director
Ivanka Trump, Executive Vice President
A Aamiyahh, Accountant

I wonder if Aamiyahh also qualifies as controller, which may be relevant if more decision making power comes with that title. We don’t know the history of Trump Org’s executives that I’m aware of prior to Trump’s election. Were there any other persons who may also be under scrutiny as one of the “executives,” plural?

As I understand it, the indictment’s first count of grand larceny is based on theft of tax dollars owed not one victim but two — New York State and the IRS. The charge is not in lieu of a federal charge of tax fraud, though.

The multiple counts of falsifying business records have likely set any legitimate financing entities holding Trump Org debt scurrying to check documents on which they predicated lending decisions. One might imagine a liquidity crisis at Trump Org if loans are called in.

Last bit which has been niggling at me which the New York State investigation likely couldn’t encompass: what the hell was the ~$50 million “springing loan” related to Trump’s Chicago Unit Acquisition LLC? How does it fit into the Trump Org’s financial ecosystem?

I’m sure there will be plenty more to come, it’s just a matter of time.

UPDATE-2 — 11:30 AM ET 02-JUL-2021 —

Just had two three thoughts:

— Trump’s revocable trust which was last modified on February 10, 2017 after he assumed office as president doesn’t specify how the trust is revoked. The simplicity and spareness of the document is a massive loophole of sorts; at any given time Trump could give a verbal order and the trust could have been revoked and/or restored; the inclusion of an “ethics advisor” (ha!) is a mere gesture without any real brake on transactions. The two named trustees, Donnie Jr. and Weisselberg, also provide zero checks on this trust given their weaknesses. Ditto Eric Trump’s role as Chairman of the Advisory Board of the Trust; we don’t even know who that board is (could be just Eric).

In short, the trust is like the $50 million “springing loan,” the exact terms of which are unknown to the public. Is it possible the revocable trust and the springing loan are mirror images of each other, an asset in the trust and a debt in the loan, canceling each other out to avoid/evade taxes?

— The word “employees” plural appears 19 times in the indictment of Weisselberg, of which only one use is “executives and employees.” There are some employees who are not executives who must be very itchy right now, besides Weisselberg’s son Barry, the manager of the all-cash operation Wollman Rink.

— If I were a naïve and legitimate paid member of Trump Golf Courses, I’d be panicking. What happens to the tens of thousands of dollars, even hundreds of thousands of dollars paid to become a member (not to be confused with dues or fees related to monthly/annual consumption of services) should the entire Trump holding company structure go bankrupt?

UPDATE-3 — 10:50 PM ET 02-JUL-2021 —

Community member Justlp provided a link to the full transcript for last night’s Maddow show. It contains the snippet I heard which I couldn’t pick apart at the time.

Looking at the transcript I didn’t hear exactly what I thought I heard, but it does raise questions:

The prosecutor says to the judge: While these charges are eligible for bail, we believe there is a flight risk associated with this defendant. So surrender of the passport is necessary to reasonably assure his return to court. This defendant has been and apparently will remain the CFO of a company with international tentacles, and the evidence on this would demonstrate an ample record of travel by private jet and defendant has significant means and connections to support himself outside the jurisdiction, including in places beyond our powers of extradition.

The surrender of the passport is the least restrictive alternative condition that would reasonably assure defendant`s return to court. It`s our understanding that defendant Weisselberg consents to this condition and is prepared to surrender the passport to our investigators.

Emphasis mine — it was this bit in the transcript from the indictment hearing which caught my attention. It wasn’t that he had other income streams but assets and a network outside New York State and the U.S. such that prosecutors think he’s a flight risk.

Was Weisselberg paid enough during his tenure in spite of what reported expenses he had residing in New York, or are we supposed to believe he’s a talented asset manager after hours?

Timeline: Is Volkswagen’s ‘Bug’ an EU Feature? [UPDATED]

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[photo: macwagen via Flickr]

[photo: macwagen via Flickr]

Reports this last week that Volkswagen deployed “defeat devices” — software designed to cheat diesel passenger vehicle emissions controls tests — revealed more than an automobile manufacturing group run amok. One might suspect European Union’s emissions governance after looking at a timeline of events.

NOTE: This timeline is in progress and is subject to updating as new items are identified. [Update 7:00 pm EDT – note added about translation, and note added to citation [4]]

— 1970 —
February 1970 — The Council of the European Communities issued the Council Directive 70/156/EEC, which established a mutual baseline for technical specifications of vehicles sold across the member states. This included 3.2.20. Measures taken against air pollution.

— 1992 —
July 1992 — The first standard for passenger vehicle emissions, Euro 1 through 6, is implemented. Level Euro 1 for new diesel-fueled vehicles limited emissions of carbon monoxide (CO) to 2.72 grams per kilometer, with no initial limit on nitrous oxides (NOx) alone, but a combined limit of hydrocarbon+nitrous oxides (HC+NOx) at 0.97 g/km.

— 2004 – 2009 —
Dates Vary — Vehicle manufacturers phased in the remaining Euro 4 through 6 emissions standards.

19 October 2004 — European Environment Agency published a press release, Poor European test standards understate air pollution from cars, which summarized the problem:

Inadequate test standards are underestimating emissions of harmful air pollutants from new cars and evidence indicates that many diesel car owners are making things worse by modifying their engines to increase power, the European Environment Agency warned today.

No specific orders or directions were offered to resolve the problem with emissions test standards.

— 2007 —
(Month TBD) — Volkswagen subsidiary Audi launched its “Truth in Engineering” ad campaign. This tagline remains in use to present.

— 2008 —
(Month TBD) — VW announced its “Clean Diesel” (TDI model) technology, and began selling it in 4-cylinder diesel Jetta, Beetle, Audi A3, and Golf cars to the US market.

(Month TBD) — Green Car Journal named VW’s 2009 Jetta TDI “Green Car of the Year.”

— 2009 —
September 2009 — European emission standard Euro 5a for diesel passenger vehicles enacted, limiting CO to 0.50 grams per kilometer, NOx to 0.180 g/km , and HC+NOx to 0.230 g/km.

These levels are a reduction from Euro 4 standard implemented in January 2005 (CO=0.05, NOx=0.25, HC+NOx=0.30). Read more →

Kerry, UN Fail to Resolve Afghan Election Crisis

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Two photos from Reuters today sum up the status of the Afghan presidential election. Ghani appears confident and ready to work with Kerry, while Abdullah gives Kerry the side eye.

Two photos from Reuters today sum up the status of the Afghan presidential election. Ghani appears confident and ready to work with Kerry, while Abdullah gives Kerry the side eye.

Three short weeks from tomorrow marks the date on which Afghanistan’s new president is to be sworn in. The problem, though, is that Abdullah Abdullah refuses to believe that he could have beaten Ashraf Ghani by a million votes in the first round and then lost to him by a million votes in the runoff a few weeks later. Both US Secretary of State John Kerry and the UN have tried to defuse the crisis, but neither effort has had any effect whatsoever.

No words are needed to describe Kerry’s failure. In their story on Kerry’s visit to Kabul today, Reuters carried photos of Ghani and Abdullah with Kerry in front of the same backdrop of US and Afghan flags. The photo of Ghani and Kerry could pass as a propaganda photo handed out jointly by the two governments to promote a continued relationship between the US and Afghanistan with Ghani as the new president. The photo with Abdullah, on the other hand, shows a deeply distrustful Abdullah casting a sideways glance at Kerry, who seems not to have the courage to look Abdullah in the eye, let alone shake hands as he did with Ghani. Perhaps Abdullah and Kerry did shake hands, but photographer Jim Bourg seems to have captured the essence of the crisis perfectly.

Meanwhile, the UN proposal for additional auditing has fallen flat. From the New York Times:

The United Nations proposal centered on a special audit of suspected fraudulent votes, and it appeared to be a winner when the office of President Hamid Karzai called reporters shortly after midnight Friday, the beginning of the Afghan weekend, to spread the news of the new plan.

Aimal Faizi, the spokesman for Mr. Karzai, said the president was backing the proposal, which involved a deeper audit of votes from 8,000 polling stations, or about 43 percent of the 8.1 million ballots cast. The plan had been presented to Mr. Karzai on Thursday evening by Jan Kubis, the special United Nations envoy for Afghanistan, who was to brief Mr. Abdullah and Mr. Ghani about it later on Friday, Mr. Faizi said.

But within minutes, Mr. Abdullah’s campaign said it had already made clear to United Nations officials that the plan was not acceptable during discussions on Thursday about possible ways out of the crisis. A senior aide to Mr. Abdullah said the campaign had its own plan, which would entail audits of votes from about 11,000 of the roughly 22,000 polling stations.

Western reports on the election crisis that I have read have danced around a very important central issue without ever addressing it. The huge problem that Afghanistan faces is that there is no real way to audit this election after the fact. Elections in Afghanistan do not take place in the way that elections in the West are conducted. Once outside of Kabul, Afghan society is structured around village life and women often live their entire lives without going outside the walls of the family compound. Village elders carry huge influence for all residents of the village.

In his book No Good Men Among the Living, Anand Gopal provided a couple of very informative vignettes of previous presidential elections. On page 156, we have this from the 2004 election: Read more →

Abdullah Supporters Reject Preliminary Results, Urge Parallel Government

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A few numbers will serve to highlight both the rage of Abdullah Abdullah’s supporters and the extent of the fraud which they believe to have been perpetrated on behalf of Ashraf Ghani in Afghanistan’s presidential election. In the first round of the election, there were 7,018,049 votes cast and Abdullah fell just short of winning outright (which would have occurred had he topped 50% of the vote) with 45% of the vote. Ghani finished well behind him, at 31.6%. Yesterday, the preliminary results of the June 14 runoff were announced. This time, there were 8,109,403 votes cast, an increase of just over 15% from the first round. It should also be noted that turnout in the first round represented about a 50% increase from the 2009 election. Ghani somehow surged to 54% of the vote this time, leading Abdullah by 1,024,249 votes.

In yesterday’s announcement, we learned that some votes have been thrown out over suspected fraud:

In Monday’s announcement, Mr. Nuristani said that the Independent Election Commission, while tallying the preliminary results, had already thrown out more than 11,000 votes from 1,930 polling stations. About 60 percent of the disqualified votes had been cast in favor of Mr. Ghani, with the reminder cast for Mr. Abdullah.

While 11,000 fraudulent votes sounds like a lot, note that Abdullah’s camp was already suspicious of the huge increase in turnout for the runoff compared to the first round. While there still is additional review of the voting planned which could eliminate more votes, the 11,000 votes discarded falls far short of the 2009 election and the first round this year:

In contrast to 2009, when more than 1.2 million votes were found to be fraudulent and were discarded, the two commissions threw out only 375,000 votes this time.

In the eyes of Abdullah supporters, it is easy to question how Ghani could have more than doubled the number of votes he received in the runoff (going from about 2.2 million votes to over 4.4 million) while Abdullah, who had been far ahead, only added about three hundred thousand votes (going from 3.2 million to 3.5 millon). Somehow, we are supposed to believe that Abdullah has the support of only 44-45% of the Afghan electorate, no matter how many show up and that Ghani was able to magically obtain the vote of every Afghan who voted for someone other than Ghani or Abdullah in the first round while also getting 56% of those new more than one million voters who turned up for the runoff.

It is little wonder, then, that Adbullah’s supporters completely reject the results announced yesterday:

Presidential candidate Abdullah Abdullah’s team said it would reject preliminary results from the runoff election unless fraudulent votes were excluded from the count, his running mate Mohammad Mohaqeq said in an interview with TOLOnews on Monday evening.

/snip/

Mohaqeq warned that if their team denounces the results, so to will people in various provinces, and then the government and the election commission will be responsible for the consequences.

“We want to say to the people of Afghanistan that if our conditions aren’t accepted and the assigned commission doesn’t reach an outcome and our condition that invalid votes be distinguished from genuine votes is not accepted, we will not accept the results and consequences will follow and responsibility will be on the government, the rigging commission and rigging team,” Mohaqeq said.

Abdullah has declared himself the victor, but for now is holding off on announcing a parallel government:

Embattled Afghan presidential contender Abdullah Abdullah defiantly mobilized thousands of his supporters in the heart of the capital Tuesday, vowing to challenge preliminary election results that show him trailing his rival, amid accusations of massive fraud.

“You are the victorious; you have won the vote — there is no question,” Abdullah shouted to a cheering crowd at a spacious conference hall in western Kabul. “We would rather be torn into pieces than accept this fraud,” he said. “We reject these results . . . and justice will prevail.” The former foreign minister alleges election officials rigged the vote in favor of his opponent, former finance minister Ashraf Ghani, in a June 14 presidential runoff.

There were fears that Abdullah and his team would use the rally to declare a parallel government, which would have aggravated Afghanistan’s political crisis and raised the risk of bloodshed. But Abdullah stopped short of announcing his own cabinet Tuesday, drawing jeers from the audience, which urged him to declare himself president.

“Long live Abdullah!” his supporters cried. “Announce your government!”

John Kerry is slated to visit Kabul on Friday and is warning that the US will withdraw support for Afghanistan if a parallel government is announced. Given the speed at which events seem to be unfolding, Friday could well be too late for Kerry to have any impact (if that ever had been possible anyway). Does Kerry’s announcement signal that the US will only accept Ghani as the winner?

High Urban Turnout, No Major Violence, But How Successful Was Afghan Election?

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With no catastrophic attacks taking place and reports of over 7 million people voting, on first impressions it would appear that Afghanistan’s presidential election on Saturday was a resounding success. Digging a bit deeper, though, reveals disturbing evidence of hundreds of violent incidents that received little attention and large areas of the country where the electorate was too scared of the Taliban to vote. Another large cautionary note is that the slow rate of vote counting means that it will be a long time before there can be any meaningful analysis of the extent of vote-stuffing. Further, the US goal of a new president clearing the way to a signed Bilateral Security Agreement is likely to be put off further, as any runoff will not happen until late May, which could well be past the point at which the US will have to decide if it will invoke the zero option and withdraw all troops from the country at the end of the year.

The New York Times gives us the rosy version of the voting:

After enduring months of Taliban attacks and days of security clampdowns, Afghans reveled Sunday in the apparent success of the weekend’s presidential election, as officials offered the first solid indications that the vote had far exceeded expectations.

Two senior officials from the Independent Election Commission said the authorities supervising the collection of ballots in tallying centers had counted between seven million and 7.5 million total ballots, indicating that about 60 percent of the 12 million eligible voters had taken part in the election. The officials spoke on the condition of anonymity because results will not be released for weeks.

Even this report, though, cautions that fraud could still be a problem and will take time to detect:

Afghan election observers backed up the numbers offered by election officials, as did Western diplomats, though the latter struck a more cautious tone. But both said that some votes would invariably be thrown out because of fraud.

The question was how many, and whether Afghanistan would see a repeat of the 2009 election, which was marred by widespread ballot stuffing and other fraud. Turnout that year was about 38 percent, though some estimates put it lower. The memory of what happened that year still hovers here, giving many reason to hesitate before declaring this weekend’s vote an unqualified success.

It took days for the full extent of the problems with the 2009 election to emerge, and the ensuing political crisis lasted months, souring relations between President Karzai and the United States, embittering many Afghans and helping fuel a Taliban insurgency that was gaining momentum.

But the claims of no large attacks overshadowed the news that there were actually hundreds of attacks aimed at the voting:

The anti-government armed militants carried out 690 attacks across the country during the presidential and provincial council elections on Saturday.

Defense ministry spokesman, Gen. Zahir Azimi said Saturday that the attacks by militants included direct fire, rocket attacks, improvised explosive device (IED) attacks and suicide attacks.

/snip/

Azimi also added that 164 militants were killed and 82 others were injured during the attacks while Afghan army soldiers seized various types of weapons belonging to the assailant militants.

He said at least 7 Afghan national army soldiers were martyred and 45 others were injured during these attacks.

That Khaama Press account did not cite figures on civilian deaths or injuries, but this Reuters article does note some civilian deaths: Read more →

As Fraud History Emerges for Bales, US Pushes FISA Court as Ideal for Afghan Night Raid Approval

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The background for Staff Sergeant Robert Bales, the suspect in the mass killing of civilians in Afghanistan last week, became much murkier with the revelation that his career as an investment manager ended in a judgment of $1.4 million against him for fraud. He was accused of “churning” a client’s retirement account, selling off holdings in safer investments to purchase more volatile penny stocks. In the meantime, the fallout from the attack continues, as the US continues its effort to reach a SOFA agreement with Afghanistan ahead of the NATO summit in Chicago scheduled for May. The latest offering appears to be establishment of a system in which Afghan judges would be put into position to approve “warrants” before night raids take place. Deputy National Security Adviser Denis McDonough took to the airwaves on NPR this morning to hold up the US FISA court as the shining example on which the Afghan system should be modeled.

In this morning’s Washington Post, we get quite a few details on the fraud case against Bales. The former client, Gary Liebschner, had employed the firm Bales worked for to manage his retirement account:

That is not the man that Liebschner said he dealt with when Bales was much younger and listed as the “investment executive” on his retirement account. The fund held stock that Liebschner had inherited and earned during his AT&T days, as well as other investments.

/snip/

A severe reaction to medication left Liebschner hospitalized and in a rehabilitation center from November 1998 until June 1999. At the time, his wife, Janet, who took time off from her nursing job, was pressed for money to cover car and mortgage payments, as well as the cost of renovations to their home to make it wheelchair-accessible, she said.

She hadn’t previously been in charge of the couple’s finances, she said, but after she began to examine account statements, she realized that the fund had been severely depleted.

Her husband’s retirement account had nearly $700,000 in 1998, his statements show. By early 2000, the fund had about $30,000 in it.

That is an appallingly bad job of investment management, and it is easy to see how a finding of fraud was found against Bales and the firm for which he worked. A big caveat here, though, is whether Janet Liebschner withdrew funds to cover the home renovation and other expenses listed, and if so, how much was withdrawn. We don’t have the exact dates of when the account sat at about $700,000 or when it was found to be depleted, but the period of 1998 through 2000 was fairly robust for investments. Below is a chart of the Dow Jones Industrial Average from the beginning of 1998 through the end of 2000. There was a dip in mid-1998 that gave up the gains from earlier that year, but then from the fall of 1998 through the end of 2000, the market advanced by roughly 33%, from about 7500 to about 10,000: Read more →