Prosecutor turns focus on Donald Trump as company's tax fraud trial ends

By Karen Freifeld and Luc Cohen

NEW YORK (Reuters) - Donald Trump's namesake real estate company engaged in tax fraud and the former U.S. president knew it was going on, a prosecutor said in closing arguments in the Trump Organization's criminal trial on Friday, countering defense assertions that Trump was unaware of the scheme.

In his final day of closing arguments, prosecutor Joshua Steinglass said Trump authorized an array of perks and payments for top executives, including apartment rent and Christmas bonuses, that cheated tax authorities by being either unreported or misreported as non-employee compensation.

"The whole narrative that Donald Trump was blissfully ignorant is just not real," Steinglass told the 12-person jury in a New York state court.

Trump, he said, was "very hands on when it came to compensating his top people."

The Trump Organization has pleaded not guilty to charges it engaged in a 15-year tax fraud by covering executives' personal expenses, reducing salaries to account for the expenses, and paying employees as though they were independent contractors.

Its lawyers have said the fraud was the work of a rogue employee, longtime chief financial officer Allen Weisselberg, looking out for himself.

Weisselberg pleaded guilty in August and testified, at times appearing conflicted, for the prosecution.

"Their own witnesses...testified time and again that President Trump did not know anything of Weisselberg's tax scheme," defense lawyer Susan Necheles said in her closing argument on Thursday.

Trump was not personally charged.

Company lawyers objected when Steinglass showed jurors a Trump-initialed memo said it showed the former president "explicitly sanctioning tax fraud."

Justice Juan Merchan, who oversees the trial, sustained that objection, meaning jurors must disregard the statement.

But he let Steinglass argue about what Trump knew, saying the defense had opened the door by trying to distance Trump from the case.

If convicted on tax fraud, falsifying business records and other charges, Trump's company faces up to $1.6 million in fines.

The jury is expected to begin deliberations on Monday.

'FREE CARS FOR YOU'

Steinglass said tax fraud helped Trump's company keep salaries down, shift tax deductions to Trump entities such as his Mar-a-Lago club, reduce payroll taxes, and make executives happy and loyal, in part by lowering their personal tax bills.

He highlighted Weisselberg's testimony that the company saved hundreds of thousands of dollars by covering his expenses instead of giving him a raise.

Steinglass said Trump approved luxury apartments for Weisselberg and his son, and for chief operating officer Matthew Calamari and his son. He said Trump also authorized car leases for both executives and their wives.

"This is all part of the Trump executive compensation package," Steinglass said. "Free cars for you, free cars for your wife, free apartments for you, free apartments for your kids."

Weisselberg is on paid leave from the company, and will serve five months in jail under his plea agreement.

He testified that he did not scheme with anyone in Trump's family, and was embarrassed about betraying their trust after nearly five decades of employment.

He also said he still hopes to collect a $500,000 bonus in January.

Trump, a Republican, has called the charges politically motivated. Manhattan District Attorney Alvin Bragg is a Democrat, as is his predecessor Cyrus Vance, who brought the charges last year.

(Reporting by Luc Cohen and Karen Freifeld in New York; Editing by Alistair Bell)