(Bloomberg) -- Donald Trump’s company was found guilty of engaging in a tax fraud over more than a decade, in which executives including former chief financial officer Allen Weisselberg evaded taxes on company-paid perks including free apartments and luxury cars.

It is the first time a Trump business has been convicted of criminal conduct and comes as the former president is running for a second term. The momentous verdict also comes as he faces a raft of other legal perils, including criminal probes of his handling of classified documents and of efforts by Trump and his allies to overturn the 2020 election.

The jury reached its verdict Tuesday on the Trump Organization’s Trump Corp. and Trump Payroll Corp. units after a monthlong trial. During the trial, prosecutors in the office of Manhattan District Attorney Alvin Bragg showed that over a 13-year period, Trump executives often disguised holiday bonuses as consulting fees and that Trump even paid for the private school tuition of Weisselberg’s grandchildren.

Trump wasn’t charged.

The financial penalty at sentencing is likely to be only about $1.6 million, but the impact on the Trump Organization may be greater. For example, it could have trouble making deals in the future. 

Read More: Trump ‘Explicitly Sanctioned Tax Fraud,’ Prosecutor Tells Jury

The firm faces “a host of intangibles,” said Bennett Gershman, a professor at Pace University’s law school. “The parent company, as a felon, could be barred from having contracts with government agencies, and it could make it more difficult to do business with banks,” Gershman said in an interview before the verdict. “This is a big deal.”

The verdict is the culmination of a three-year investigation of Trump and his business practices by the DA’s office and New York Attorney General Letitia James.

It was the only criminal case to stem from the investigation. But the probe isn’t over. On Monday, Bragg announced that he had hired Matthew Colangelo, a former senior Justice Department official with a record of challenging Trump and his firm, to focus on the office’s most important investigations.

Trump’s Perils

Meanwhile James is pursuing a $250 million civil suit against the Trump Organization. She claims Trump and three of his children inflated the value of the firm’s assets and is seeking penalties including a permanent ban on the four running companies in the state. 

Read More: Trump Sued by New York Over ‘Fraudulent’ Asset Valuations 

In addition, Trump faces criminal probes of efforts he and his allies made to overturn the 2020 presidential election and of his handling of classified government documents at Mar-a-Lago, his Florida home.

Trump has called the cases and investigations baseless political vendettas. In a Truth Social post last week, as the Trump Organization trial was wrapping up, he said there was “no gain for ‘Trump’” and that “we had no knowledge of it.”

Prosecutors argued that Weisselberg and Trump Organization Controller Jeffrey McConney were “high managerial agents” who acted on behalf of the companies. The defense contended that the executives cheated for their own enrichment alone and kept the two business units, Trump and his family in the dark. 

The trial provided a rare glimpse of the inner workings of Trump’s closely held company. The jurors saw how Weisselberg and other executives, including the firm’s top lawyer and chief operating officer, got significant chunks of their annual pay as untaxed fringe benefits. McConney testified that those practices were in place until Trump became president in 2017.

Read More: Trump Had Losses of $900 Million in Two Years, Jury Told 

The prosecution called five witnesses, including star witness Weisselberg, who pleaded guilty in August to skirting taxes on about $1.76 million in perks and testified in hopes of a more lenient sentence than the 15 years he could have faced. McConney also testified for Bragg’s office, under a grant of immunity, though he was ultimately declared a hostile witness after being evasive on the stand. 

The Trump companies called two witnesses, including an outside accountant for the company whom they blamed for failing to detect the fraud. 

Betrayal of the Trumps

During his testimony, Weisselberg told the jury that Trump approved his salary and annual bonuses but wasn’t aware of how his income was reported. McConney described the unusual pay practices they employed, including giving sizable Christmas bonuses to executives by calling them independent contractors, paid through a myriad of subsidiaries under the Trump Organization umbrella. 

In their closing arguments on Dec. 1, defense lawyers for the two companies told the jury that Weisselberg, who has worked for Trump’s family for nearly 50 years, had betrayed the Trumps. In a hearing without the jury, prosecutors told New York State Supreme Court Justice Juan Merchan that line of argument had opened the door to discussing whether Trump was aware of the scheme. The judge agreed.

In his own closing, Assistant District Attorney Joshua Steinglass said Trump “knew exactly what was going on” and had “explicitly sanctioned tax fraud.” He told the jury “this whole narrative that Donald Trump is blissfully ignorant is just not real” and that the two Trump companies could be held criminally liable for Weisselberg’s actions, including tuition for his grandchildren at a Manhattan private school.

Read More: Trump Knew of Alleged Tax Scam, Controller Says CFO Told Him 

To reach their verdict, the jurors had to consider the complex language of a decades-old New York law, determining whether Weisselberg, for example, not only broke the law but did so while acting “within the scope of his or her employment and in behalf of the corporation.” 

Steinglass told the jury in his closing that the businesses profited because the scheme lowered its payroll tax costs and saved on Medicare taxes as well.

Weisselberg, who remains on the firm’s payroll, now as a senior adviser, testified that he is still drawing his full $640,000 salary. He told the jurors he began as an accountant for Trump’s father, Fred, in 1973 before joining Donald Trump’s company in 1986. He grew emotional when asked, on cross-examination, whether he had lived up to the trust the Trump Organization had placed in him. 

‘Are You Embarrassed?’

“Did you betray that trust?” asked Alan Futerfas, a lawyer for Trump Payroll Corp.

“Yes,” Weisselberg said.

“And you did it for your own personal gain?” Futerfas asked.

“Correct,” Weisselberg said. 

“Are you embarrassed by what you did?” Futerfas pressed.

“More than you can imagine,” Weisselberg said, his voice cracking.

Read More: Star Witness Against Trump Firm Testifies They Cheated Together

The case is People v. Trump Organization, 01473-2021, New York State Supreme Court (Manhattan).

Read More

  • Trump Said Fight It When DA Charged His Firms With Tax Fraud 
  • ‘He Was the Boss’: Trump’s Sign-Offs Come Up in Tax Fraud Trial

--With assistance from Zijia Song.

©2022 Bloomberg L.P.