The Trump Organization's lawyers tried to argue for a smaller penalty on Friday by shifting the blame onto Weisselberg and outside accounting firm Mazars USA. However, Joshua Steinglass, a prosecutor for the Manhattan district attorney's office, called the company's conduct "egregious" as they carried out "a multidimensional scheme to defraud the tax authorities."
"To avoid detection, they simply falsified the records," he said.
Steinglass acknowledged that the financial penalty will not severely hurt the Trump Organization, but that "this court should nonetheless impose such fines."
Judge Juan Merchan agreed and doled out the maximum penalty of $1.61 million.
Merchan said that the defense's repeated argument that only Mazars and Weisselberg were to blame was unsupported by the evidence, and that "it is certainly not what the jury found."
The Manhattan district attorney, Alvin Bragg, argued in a statement that New York should change its law "so that we can impose more significant penalties and sanctions on corporations that commit crimes."
Bragg also pointed to a symbolic victory in his message.
"While corporations can't serve jail time, this consequential conviction and sentencing serves as a reminder to corporations and executives that you cannot defraud tax authorities and get away with it," he said.
Trump Organization lawyer Susan Necheles said in court on Friday that the company plans to appeal the conviction and that "the D.A., as usual, or again, does not understand the tax law."
The trial ended with the Trump Corporation and Trump Payroll Corporation being found guilty of all 17 counts of tax fraud. Under state law, companies can be held criminally accountable for crimes of its top executives if they acted "in behalf of" the company, which Merchan says prosecutors must prove by showing Weisselberg didn't act in his sole interest, but also that of his employer. Despite the end of this trial, Trump and his family business are still under investigation in Manhattan.
Legal experts predicted the fallout from Friday's sentencing is likely to go beyond the fine.
Former U.S. attorney and UCLA Law professor Harry Litman wrote that the "collateral financial and practical consequences could be far greater," than the relatively small financial penalty.
Trump organization sentenced to fine of $1.6M for the fraud conviction (trial at which Weisslberg testified). Collateral financial and practical consequences could be far greater.
— Harry Litman (@harrylitman) January 13, 2023
"It spells doom for the Trump Organization — I really see it as a death knell," said Bennett Gershman, a former prosecutor in the New York State Anti-Corruption Office, in an interview with CBS MoneyWatch.
Gershman says the company will have a hard time finding business or lending partners in the future.
"It would be implausible for any responsible lending institution, bank, insurance company or institutions that provide financial support for companies to have anything to do with the Trump Organization now," Gershman added. "Here you are convicted of a financial crime where your existence depends on financing."
Cornell University law professor Randy Zelin told CBS that while the financial penalty is negligible (the Trump Organization made $2.4 billion in revenue from 2017 to 2020, according to Forbes), the collateral consequences are significant, especially for a company that relies on banks and insurers to keep hotels, golf resorts, and other properties open.
"A criminal conviction will impact the ability to get licenses, to borrow money, to get insurance, to do business with anyone," Zelin explained. "Who wants to lend money to or insure a convicted felon organization? There will be statutory disqualifications because of the convictions."
Legal experts say that the Trump Organization may look to foreign investors, including Saudi Arabia, if it faces issues with domestic banks and lenders as a result of the conviction. In November, Reuters reported that the Trump Organization signed a deal with Dar Al Arkan, a Saudi real estate developer that will use the Trump brand for a $4 billion project in Oman that will include a golf course, hotel and villas.
While Trump was not personally charged, his company's conviction will likely help to speed up James' civil suit against the former president. "With the conviction, the pending New York Attorney General's case will go on a fast track," Zelin said. "The AG now has set in stone proof of fraud."
"It's the NYAG who has the power to kill the company," Zelin said, adding that Trump is "no longer Teflon Don."
