The $1.6 million penalty two Trump companies must pay for their tax fraud crimes is the maximum under the law, but it is likely to be eclipsed by longer-term blowback to the Trump Organization.
The two business units were sentenced on Friday in New York State Supreme Court after a felony conviction last month. The real punishment lies ahead, in potential fallout that goes beyond reputational damage to freezing the firm out of coveted deals, bank loans and government contracts, legal experts say.
"Doing business with a company that has been found guilty of unscrupulous practices may exceed the risk tolerance of lenders, insurers and potential business partners," said Barbara McQuade, a former federal prosecutor who now teaches at the University of Michigan's law school.
The sentencing comes after the jury returned its verdict against the two units on all 17 counts, including conspiracy, criminal tax fraud and falsifying business records. The case stems from a scam spanning more than a decade to hide taxable income by compensating executives with unreported perks like luxury cars and private school tuition.
At the center was longtime chief financial officer Allen Weisselberg, who became the prosecution's star witness at last year's trial.
Now the stain of the felony will likely make it harder for Trump's company to secure bank loans, at least in the U.S., experts say. It will also make it more difficult to win government contracts, like the one that let Trump develop Washington's Old Post Office into a luxury hotel.
"Does any company want to disclose they're entering into a deal with a company convicted of tax fraud?" said Frank Agostino, a former Internal Revenue Service lawyer now in private practice and specializing in tax cases. Some companies, lenders and municipalities are bound by "morals clauses" that prohibit doing business with felons, he said.
Trump Probe Continues
Manhattan District Attorney Alvin Bragg, whose office won the verdict along with the state attorney general's office, called it a "historic sentencing."
"It's the first time ever for a criminal conviction of former president Trump's companies, and indeed I would go so far as to say the first time ever for any former president," Bragg said after court.
He added that New York state penalties for corporations convicted of crimes were "not enough" compared with federal fines for corporate wrongdoing, and "need to change in order to capture this kind of decade-plus, systemic, egregious fraud."
But Bragg said it wasn't over. He said the sentencing of the two companies and, earlier this week, Weisselberg "closes this important chapter of our ongoing investigation into the former president and his businesses. We now move on to the next chapter."
The Trump Organization said in a statement that it "did nothing wrong" and would appeal the verdict.
"New York has become the crime and murder capital of the world, yet 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 firm said in a statement. It said Weisselberg, too, was a "victim" and was "threatened, intimidated and terrorized" into testifying for the prosecution.
