Could Trump’s empire collapse?

Donald Trump’s chief financial officer faced a courtroom in New York on Thursday in what must surely be the beginning of the end of this tediously long drama and one that could still end with the former President of the United States forced into financial ruin.

Yet if that remains a possible (if still distant) endpoint, the charges brought against the Trump Organisation and Allen Weisselberg were an underwhelming way to begin and amounted to alleged corruption on a scale much smaller ($1.7 million) than we were led to expect.

Once the grand jury’s indictments were unsealed, we learned that the Trump Organisation is said to have gifted benefits to its senior executives in ways that would diminish their tax burden. Lawyers for the business group were quick to find a courtroom step on which to proclaim it all politically motivated (Trump would again call it a “witch hunt”) and the transgressions so small that they would not usually be prosecuted.

They might be right on the former point but not the last. Donald Trump spent five years claiming his tax returns were “under audit”. He helped make them the Great Unsolved Mystery of his presidency. It was hardly surprising when authorities in New York decided they’d like to solve it; even less so that the irregularities they found were liable for prosecution.

Yet if the charges were a little less than we expected, we shouldn’t overlook how much of this was pure psychodrama. Allen Weisselberg was led into court in handcuffs, making the point rather crudely that this whole episode was about putting pressure on the one man best positioned to turn on Trump. That’s something that Weisselberg has refused to do thus far and, in all likelihood, that is unlikely to change. The charges he faces range (depending on which legal expert you ask) between one and one hundred years but the likelihood is that he’ll never face a day in prison. As the prosecution of Paul Manafort proved, when it comes to white-collar crime and sentencing men in their seventies (Manafort is 72, Weisselberg a year older), judges tend towards leniency.

That doesn’t mean, however, that Weisselberg’s appearance in court proved Trump’s defence unbreachable. It rather spoke to the deliberate strategy employed by Manhattan’s district attorney, Cyrus R. Vance, Jr. As an opening gambit, this wasn’t at all a bad one. Weisselberg might yet talk (there’s nothing like handcuffs around one’s wrist to focus the mind) but, if he doesn’t, the prosecution has still not yet played its hand.

Whilst the 15-count indictment includes evidence of grand larceny and tax fraud, just as noticeable is the evidence that hasn’t yet been presented. The New York Times has reported extensively on what it knows about Trump’s tax returns, a sample of which the paper possesses thanks to Trump’s niece, Mary. This was backed up by the testimony of Trump’s former fixer, Michael Cohen, who claimed that the real-estate developer has a history of inflating the price of his properties to secure loans but deflating them again for tax purposes.

None of that appeared in the charges of Thursday.

We instead got our first proper insight into a company that projects itself large upon the New York landscape, but one that we now see scrambling around in the dark to save a “mere” $1.7 million. Perceptions are important, especially for Trump who has come to rely on his personality much more than his inherited wealth or supposed fiscal genius. Trump’s empire has become grossly over-reliant on loans, whilst the value of his properties has fallen precipitously with his political fortunes. Before his election loss last year, Forbes reported that he faced loan repayments of around $900 million before the end of 2024. The likelihood of him finding lenders willing to refinance his debt gets less likely as his legal exposure grows. Financial author and journalist, Kurt Eichenwald, said on Twitter on Thursday that the collapse of Trump’s empire “may be the biggest real estate corp bankruptcy in history”.

That might yet take some time – if it happens at all – but Thursday was a reminder that Trump’s fortunes do rest on the untested loyalties of his senior executives. Only one needs to crumble for the rest to come crashing down. Given those fine margins, any lender with millions invested in Trump would probably be wise to think about getting their money back today before the rush begins tomorrow.