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Trump Organization and CFO Allen Weisselberg charged with tax crimes

Yahoo Finance's Rick Newman breaks down the charges against the Trump Organization and its CFO Allen Weisselbebrg.

Video Transcript

ADAM SHAPIRO: All right, we're about 35 minutes to the closing bell. We're going to keep an eye on markets. The three indices are all in the green right now. Let's talk about the headlines that were breaking as we were coming into the stream. And that was the historic indictment on tax charges, 15 counts of tax-related crimes against the Trump Organization, and their chief financial officer, Allen Weisselberg.

Now there is the criminal element of this, and there's the political element of all of this. And the person who can best explain what happens next and to put it into context for us is Yahoo Finance's Rick Newman. And were there surprises with any of this? Was it considered a huge amount? I think I read that the fraud wasn't in excess of $1 million. But the percent of taxes avoided would be minuscule on that, right?

RICK NEWMAN: Well, no, I don't think so. I'm just reading the indictment now, Adam. I haven't finished it, but the indictment is persuasive. And the Trump Organization lawyers basically said this is small potatoes. Prosecutors never bother to prosecute anybody, to go after anybody for failing to pay income tax on fringe benefits.

But in this instance, fringe benefits are not things like a free lunch or a T-shirt or some swag. And these prosecutors say they total, just for this one employee, Allen Weisselberg, the CFO, totaled $1.7 million in income that he did not pay taxes on over a period of 15 years. There is something like almost $200,000 in leases for a Mercedes. There's free apartments. There some cash that gets-- that goes out at the end of the year for all kinds of different expenses.

And the indictment also says there were other Trump Organization employees who got paid in the same way. So that suggests they're not even remotely done here. In fact they're just starting-- they're just getting started. So if they've got the goods on what seems to be this relatively common misreporting practice inside the Trump Organization, they could have a lot more. And of course, that's what's probably going on here. They're trying to put the screws to Weisselberg so that he gives up more secrets about where money came from going into the Trump Organization and where it went when it went out.

ADAM SHAPIRO: Let's break it down between Trump Organization and Weisselberg. I realize it's pretty much all in the same, but Trump Organization. What are the worst case scenario consequences for the Trump Organization from this? I mean, the best is that nothing happens.

RICK NEWMAN: Well, I don't think nothing's going to happen. I mean, Weisselberg for sure, if he doesn't make some kind of agreement with prosecutors, this is going to go to trial. And this indictment suggests that prosecutors have a lot more information, including perhaps on the Trump children, Don Jr., Eric, and Ivanka, and probably on Trump himself. I mean, this indictment points out that Trump signed many of these checks.

So if this is a crime, if Weisselberg does end up getting convicted of a crime-- and this is a real crime, by the way. This is not a trivial crime. This is tax fraud, if it's true. Then Trump would be complicit in that. So for Trump, I think for Donald Trump himself, I think there's clearly the possibility that he himself could end up prosecuted.

Now, as you point out, that is politically fraught. Trump is already claiming this is a political witch hunt. But I don't know, Adam. I feel like there's a little bit of an outrage factor here for people who might start to learn some of these details and think to themselves, I don't get these kinds of benefits. And I have to pay taxes on everything I get. And just because you're a rich guy working at a company where the boss can give you a Mercedes and free apartments, you get a lot of extra income that ordinary people don't get.

ADAM SHAPIRO: Rick, I think you said outrage. And I'm having some trouble with the IFB. It's a little overmodulated. But can you reiterate for me would that outrage come from people who are traditionally critics of the former president, or would the outrage come from his supporters, who might have some kind of unification around this?

RICK NEWMAN: I did say outrage. And let's-- Adam, let's take it out of the political context, and just think about what's going on with regard to taxation. I mean, we're in the midst of this huge leak of tax data to ProPublica, regarding all these rich people who can earn $2 billion in a year from, basically, appreciation on stock and never pay any tax on it. I mean, we're just-- we're hearing now that the tax gap, the amount that what mostly wealthy taxpayers owe to the IRS that the IRS never collects, could be $500 million a year, perhaps as much as a trillion dollars a year.

I mean, there's just mounting evidence that the tax system is rigged against working people who have basically have to pay all the taxes they owe. And if you're a wealthy person with a lot of capital holdings, you-- it's just so much easier to evade taxes. This prosecution of Allen Weisselberg plays right into that narrative. So the timing is terrible for Weisselberg. This comes at a time when ordinary people increasingly think the tax system is rigged against them. And there's just a lot more evidence that it actually is, including this indictment.

ADAM SHAPIRO: Well, there's going to be a lot to read up on all of this. Rick Newman, we appreciate your helping us at least start to grapple what is at stake here.