Frohsin Barger & Walthall managing partner Jim Barger was recently quoted in a Wall Street Journal story that detailed the recent criminal action filed by the New York state prosecutors against the Trump Organization, the business entity best known for being helmed by former US President Donald Trump.
The article explains the implications of the charges being against a corporation, rather than an officer. In June 2021, prosecutors unveiled a 16-charge indictment against the Trump Organization and its long-serving CFO Allan Weisselberg. The charges allege widespread practices of organizational evasion of payroll taxes and the payment of illegal benefits to company executives.
As a professor of white-collar crime at the University of Alabama School of Law, in addition to managing partner of Froshin Barger & Whitehall, Jim Barger explained the significance of the decision to criminally charge the Trump Organization.
The indictment against a corporation is unusual, because, while the practice has been allowed since the middle 1800s, it has fallen out of favor as a tool of corporate accountability because of the development of regulatory entities such as the Securities Exchange Commission that typically handle such matters now. Modern prosecutions of corporate firms have mainly been reserved for closely held corporations, and businesses that have been criminally charged by the Manhattan district attorney’s office have typically been even smaller than the Trump Organization.
New York law provides for the charging of a corporation for misconduct that was “authorized, solicited, requested, commanded, or recklessly tolerated” by the company’s senior management and executives, and there is no requirement that an individual actor also be charged. The statutory penalty for a criminally convicted company is a fine, often more severe than what would be imposed in a civil action. Typically, the largest consequence is the damage done to a company’s reputation.
“There is a stigma attached to corporations that have been criminally convicted,” Barger explained. “People typically don’t want to do business with criminal corporations.”
Given Weisselberg’s individual charges, he potentially faces a penalty of up to 15 years if convicted of second-degree grand larceny, which carries the highest sentence.
To read the full article click here. https://www.wsj.com/amp/articles/the-trump-organization-prosecution-what-is-in-the-charges-11625181211