Donald Trump’s business faces twin probes set for big next steps

While Donald Trump has been focused in recent weeks on the fallout over the FBI search of his Mar-a-Lago home in Florida, two investigations into his business affairs back in New York could require his attention again soon.

Yahoo Finance spoke with a range of experts about what penalties could be ahead for Trump’s bottom line if his company finds itself criminally convicted or the subject of civil action, or both, in ongoing cases where the odds seem to be stacked against the former president.

“I’m anticipating very, very serious penalties,” says Norm Eisen, a former special counsel during the first impeachment and trial of Trump.

The overlapping investigations — and Trump’s exposure in other legal areas — could build on each other, says Eisen, who’s been tracking developments closely.

On one front, a criminal probe from the Manhattan District Attorney recently secured guilty pleas on 15 criminal tax fraud charges from Allen Weisselberg, Trump’s long-time CFO. Alvin Bragg, the Manhattan DA, says Trump’s company will be directly implicated “in a wide range of criminal activity.”

A criminal trial there is coming this October.

Meanwhile, New York Attorney General Letitia James and her team recently questioned Trump directly as part of their civil investigation into whether his business lied about the value of its real estate holdings to evade taxes and secure loans. Trump reportedly invoked the Fifth Amendment more than 440 times that day, though James has said she has “significant evidence” there.

She is expected to announce a decision in the coming weeks on whether Trump will be sued.

Donald Trump departs Trump Tower two days after FBI agents raided his Mar-a-Lago Palm Beach home, in New York City, New York, US, August 10, 2022. REUTERS/David 'Dee' Delgado

Donald Trump outside Trump Tower in New York before heading to a deposition with the New York Attorney General, Letitia James, on August 10. (REUTERS/David ‘Dee’ Delgado)

Nevertheless, history suggests Trump’s businesses could also defy the odds and evade severe penalties. In Eisen’s words, Trump is “a Houdini of alleged crime” with a long record of being able to escape charges even when his legal options have seemed sparse.

From ‘a very severe fine’ to the ‘corporate death penalty’

Still, if the legal proceedings lead to a penalty phase, serious punishments could be in the offing, according to Miriam Baer, ​​a former federal prosecutor in Manhattan who’s currently a vice dean at Brooklyn Law School.

A potential conviction for Trump’s business could lead to “a very severe fine” and more, she says. One option there is a judge could order the government to oversee the inner workings of the business for the foreseeable future — to ensure the criminal activity doesn’t continue.

Businesses traditionally aim to avoid criminal convictions — even though judges can’t incarcerate corporations — in part, because of the associated stigma. But Trump isn’t your typical business owner.

Trump signage is displayed on the Trump International Hotel Las Vegas on April 2, 2022 in Las Vegas, Nevada.  - The real estate development is a 64-story hotel, condominium, and timeshare property located on Fashion Show Drive.  (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)

Donald Trump owns a variety of assets from real estate to hotels to wineries to gold courses. (PATRICK T. FALLON/AFP via Getty Images)

The best way to avoid an unpredictable trial is what’s known as a deferred prosecution agreement. But that “is by definition a compromise with the government and so as someone who does not like the concept of compromise, I wouldn’t expect [Trump] to do that,” Baer says.

Publicly, Trump has shown zero interest in settling and maintained a posture of bluster towards in both cases — claiming New York’s attorney general is on a “Radical Witch Hunt”.

Behind the scenes, Eisen suggests that penalties like a “corporate death penalty” could even be on the table. The good government group the Citizens for Responsibility and Ethics in Washington (of which Eisen formerly served as chair), has a similar take.

“Depending on the gravity of abuse allegations, the Trump Organization may even face possible dissolution in addition to hefty penalties,” says Virginia Canter, the group’s Chief Ethics Counsel.

Canter also points out that the New York Attorney General’s office has a track record of success against Trump. The office previously won a $2 million judgment against his foundation and was part of a $25 million decision against Trump University. Both organizations have since been shuttered.

‘Corporations don’t go to prison’

Trump did win one significant concession recently with the news that Weisselberg has pledged not to testify against him personally.

Allen Howard Weisselberg, the former Trump Organization CFO, exits New York State Supreme Court with his lawyers in the Manhattan borough of New York City, US, August 18, 2022. REUTERS/Brendan McDermid

Allen Weisselberg, the former Trump Organization CFO, exits New York State Supreme Court with his lawyers in New York City on August 18. (REUTERS/Brendan McDermid)

Trump of course owns his company, but avoiding criminal testimony against his person is a distinction that matters, says Gregory Gilchrist, a professor focused on corporate law at the University of Toledo.

“The simple fact is that corporations don’t go to prison,” Gilchrist says. Instead, he notes, “The organization pays a fine, there’s headline news about the fine, and no people are punished.”

While Trump may avoid criminal charges here, he’d feel any fines.

“If there are penalties placed on the Trump Organization, this won’t be coming out of some other shareholder’s pocket or something like that,” says Dan Alexander, a senior editor at Forbes who wrote a book on Trump’s businesses. fined $5 million or $20 million or $100 million, that will be directly subtracted from his personal net worth.”

Alexander — who’s part of the team charged with tracking Donald Trump’s ever elusive net worth — says that in spite of giving up public control of the Trump Organization to his two sons in 2016, Trump has actually increased his stake ownership in recent years. Trump also helped reorganize the company’s debtwhich appears to have put it on sounder financial footing now than it was during his presidency.

Kimberly Guilfoyle, Eric Trump, Donald Trump Jr, and Tiffany Trump wait for US President Donald Trump's acceptance speech as the 2020 Republican presidential nominee during the final event of the 2020 Republican National Convention on the South Lawn of the White House in Washington, US, August 27, 2020. REUTERS/Carlos Barria

Eric Trump and Donald Trump Jr are the executive vice president’s of the Trump Organization while their father continues to actually own the vast majority of the business. (REUTERS/Carlos Barria)

Of course, the possible hits to Trump’s business and bottom line comes alongside a dizzying swirl of ongoing investigations.

Charges under the Espionage Act are a possibility following the FBI seizure of classified documents stored at Mar-a-Lago. On Friday, the Justice Department unsealed a redacted version of the affidavit used to secure the search warrant revealing they are working with “a significant number of civilian witnesses” as they build their case. The Justice Department is also reportedly looking at criminal charges around Trump’s role in the Jan. 6 Capitol riots. Then there is the DC attorney general preparing for trial over possible fraud at Trump’s 2016 inaugural committee. And prosecutors in Georgia are digging into his alleged interference in Georgia’s election in 2020. And even the Securities and Exchange Commission is investigating Trump social media company’s arrangement with Digital World Acquisition Corp (DWAC).

This also comes ahead of a widely expected third run for the presidency that Trump could announce as early as this year.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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