Trump’s charity faces lawsuit
New York’s attorney general filed suit against President Donald Trump and his three eldest children yesterday, alleging ‘‘persistently illegal conduct’’ at the president’s personal charity and saying that Trump had repeatedly misused the non-profit organisation to pay off his businesses’ creditors, to decorate one of his golf clubs and to stage a multimilliondollar giveaway at 2016 campaign events.
In the suit, Attorney General Barbara Underwood asked a state judge to dissolve the Donald J. Trump Foundation. She asked that its remaining $1 million ($NZ1.4m) in assets be distributed to other charities and that Trump be forced to pay at least $2.8m in restitution and penalties.
Underwood also asked that Trump be banned from leading any other New York non-profit organisation for 10 years – seeking to apply a penalty usually reserved for the operators of small-time charity frauds to the president of the United States.
The allegations of sweeping misuse by Trump of his personal foundation came the same day that he faced another legal setback, with the rejection by an appeals court in New York of his request to halt a defamation lawsuit filed by a former Apprentice contestant.
That decision leaves open the possibility that Trump could be deposed in the case.
Meanwhile, Underwood sent letters to the Internal Revenue Service and the Federal Election Commission in which she identified what she called ‘‘possible violations’’ of tax law and federal campaign law by Trump’s foundation.
The claims in the New York attorney general’s suit could trigger tax penalties by the IRS, according to tax-law experts, who noted that the Justice Department can also bring criminal charges when prosecutors believe tax-law violations are ‘‘wilful.’’
Marc Owens, a former head of the IRS non-profit division, called the suit ‘‘an extraordinary catalogue of how not to run a private foundation. There’s little else [Trump] could have done that would have made it worse.’’
New York state began looking into the Trump Foundation in response to an investigation by The Washington Post.
Underwood did not run for her office: She was promoted to attorney general just weeks ago, succeeding Eric Schneiderman, D, after he resigned following allegations that he had physically abused several romantic partners.
Trump responded to the suit by calling it politically motivated.
‘‘Schneiderman, who ran the Clinton campaign in New York, never had the guts to bring this ridiculous case, which lingered in their office for almost 2 years,’’ Trump wrote on Twitter. ‘‘Now he resigned his office in disgrace, and his disciples brought it when we would not settle.’’
Underwood declined to comment on the case beyond issuing a written statement. ‘‘As our investigation reveals, the Trump Foundation was little more than a chequebook for payments from Mr Trump or his businesses to non-profits, regardless of their purpose or legality,’’ she said in the statement.
In the suit, Underwood noted that Trump had paid more than $330,000 in reimbursements and penalty taxes since
2016. But she asked the judge to require Trump to pay millions more. She said a
20-month state investigation found that Trump had repeatedly violated laws that set the ground rules for tax-exempt foundations – most important, that their money is meant to serve the public good, not to provide private benefits to their founders.
Underwood said that oversight of spending at Trump’s foundation was so loose that its board of directors hadn’t met since 1999, and its official treasurer wasn’t even aware that he was on the board.
Without any outside supervision, Underwood said, the foundation came to serve the spending needs of Trump – and then, in 2016, the needs of his presidential campaign. She cited emails from Trump campaign staff members – including then-campaign manager Corey Lewandowski – directing which charities should receive gifts from the Trump Foundation, and in what amounts, in the lead-up to the crucial Iowa caucuses. The lawsuit was filed in civil court. A spokeswoman for Underwood said she did not have jurisdiction to seek criminal charges in cases involving nonprofits.
Owens, the former IRS official, said he was surprised at the scope of the violations that the Trump Foundation allegedly committed – especially because the Trump family had enough money to hire lawyers and accountants who would explain the law. ‘‘Some of the facts are extraordinary. The failure to have board meetings since 1999, for example. You don’t see that very often,’’ he said.
Three of Trump’s adult children – Donald Trump Jr., Ivanka Trump and Eric Trump – were named in the lawsuit because they have been official board members of the foundation for years. –