President Donald Trump and his three eldest children have recently been named in lawsuit filed by New York Attorney General Barbara Underwood. According to the suit, Trump and his children used funds from the charity to purchase personal items and make illegal political contributions while under-reporting the Foundation’s assets to the IRS.
“For more than a decade, the Donald J. Trump Foundation has operated in persistent violation of state and federal law governing New York State charities,” the lawsuit states. “This pattern of illegal conduct by the Foundation and its board members includes improper and extensive political activity, repeated and willful self-dealing transactions, and failure to follow basic fiduciary obligations or to implement even elementary corporate formalities required by law. The Attorney General therefore brings this special proceeding to dissolve the Foundation for its persistently illegal conduct, enjoin its board members from future service as a director of any not-for-profit authorized by New York law, to obtain restitution and penalties, and to direct the Foundation to cooperate with the Attorney General in the lawful distribution of its remaining assets to qualified charitable entities.
“In June 2016, the Attorney General began an investigation of the Donald J. Trump Foundation pursuant to the New York Not-For Profit Corporation Law, the New York Estates, Powers and Trusts Law, the New York Executive Law, and other applicable law governing New York State charities. The Investigation found that the Foundation operated without any oversight by a functioning board of directors. Decisions concerning the administration of the charitable assets entrusted to the care of the Foundation were made without adequate consideration or oversight, and resulted in the misuse of charitable assets for the benefit of Donald J. Trump and his personal, political and/or business interests. In sum, the Investigation revealed that the Foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or to the Trump Organization. This resulted in multiple violations of state and federal law because payments were made using Foundation money regardless of the purpose of the payment. Mr. Trump used charitable assets to pay off the legal obligations of entities he controlled, to promote Trump hotels, to purchase personal items, and to support his presidential election campaign.”
On Thursday morning, President Trump tweeted, “The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money than it took in, $19,200,000. I won’t settle this case!”
Last month, former New York Attorney General Eric Schneiderman abruptly resigned from office after several women accused him of physical abuse. Schneiderman had pursued numerous cases against Trump, including the $25 million settlement that Trump agreed to pay concerning his fraudulent Trump University.
In addition to the lawsuit seeking to dissolve the Trump Foundation and collect nearly $3 million in penalties, Underwood also sent letters Thursday to the Internal Revenue Service and the Federal Election Commission. In the letters, Underwood pointed out several federal law violations and recommended legal actions taken by the respective agencies to prevent Trump and his family from allegedly stealing funds from their own or other charitable organizations.
In the letter addressed to Acting IRS Commissioner David Kautter, Underwood wrote, “Specifically, and as detailed in the attached IRS Form 13909, the Investigation found that: (1) the President of the Foundation’s board, Mr. Trump, used Foundation assets for personal gain; (2) the Foundation impermissibly intervened in a political campaign by, among other things, attempting to influence the outcome of the 2016 presidential election; (3) the Foundation failed to report excise tax liability properly; and (4) the Foundation engaged in deceptive and/or improper fundraising practices. The Investigation further found that the Foundation engaged in impermissible political activity and a related-party transaction during the 2016 presidential Trump Campaign, as well as on one occasion in 2013. The Investigation also revealed that the Foundation entered into at least six related-party transactions that directly benefited Mr. Trump or entities that he controlled, and in some instances failed to properly report excise tax liability with the IRS.”
In the FEC letter, Underwood asserted, “The Investigation acquired substantial credible evidence that the Foundation disbursed in excess of $2.8 million to influence the 2016 Republican presidential primary election at the direction and under the control of senior leadership of the Trump presidential campaign committee and apparently with the candidate’s knowledge and approval. As such, the Foundation made – and the committee knowingly accepted – prohibited, excessive, and unreported in-kind contributions during the 2016 presidential election cycle. Moreover, the evidence of coordination and control further indicates that the Foundation and campaign may have violated the so-called soft money provisions of the Act as amended by the Bipartisan Campaign Reform Act of 2002. Finally, we refer certain additional evidence relating to a $25,000 prohibited contribution the Foundation made in 2013 to the political committee of another candidate for public office for any further action that the Commission may deem warranted under the circumstances.”
Besides dissolving the Trump Foundation under court supervision and obtaining restitution of $2.8 million and additional penalties, Underwood’s lawsuit also seeks a ban from future service as a director of a New York not-for-profit of 10 years for President Trump and one year for each of the Foundation’s other board members, Donald Trump Jr., Ivanka Trump, and Eric Trump.
In a recent statement, Underwood wrote, “As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality. This is not how private foundations should function and my office intends to hold the Foundation and its directors accountable for its misuse of charitable assets.”