New York AG Sues Trump, His Kids and His Foundation

by | June 15, 2018

By Kenneth Lovett

The Trump family's claims of good will were built on a bad foundation.

A bombshell civil lawsuit filed Thursday on President Trump's 72nd birthday accuses the commander-in-chief and his three adult children of operating a bogus namesake charity "in persistent violation" of federal and state laws for more than a decade.

The misdeeds included $2.8 million redirected to Trump's presidential campaign, along with supposed charitable funds instead used to "pay off the legal obligations of entities (Trump) controlled, to promote Trump hotels, (and) to purchase personal items," the lawsuit charged.

The lawsuit, filed by state Attorney General Barbara Underwood in Manhattan state Supreme Court, alleged the Donald J. Trump Foundation funneled its cash into Trump's personal dealings rather than assisting those less fortunate as part of its "pattern of illegal conduct."

The state wants restitution for the $2.8 million in campaign funds along with additional penalties, including a 10-year ban blocking Trump from future service as head of a not-for-profit.

"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," Underwood said. "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."

The court filing specifically accused Trump, along with daughter Ivanka and sons Donald Jr. and Eric, of "improper and extensive political activity, repeated and willful self-dealing transactions, and failure to follow basic fiduciary obligations."

Underwood also notified the Internal Revenue Service and the Federal Election Commission about possible federal law-breaking by the Trumps that falls into their bailiwick.

The President predictably did not react well to the legal action, attacking Underwood's predecessor Eric Schneiderman -- who resigned amid allegations that he physically abused four women.

"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!" he tweeted.

"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. Now he resigned his office in disgrace, and his disciples brought it when we would not settle," Trump added.

The lawsuit, stemming from a probe that began just months before the presidential election in June 2016, alleges the Trump Foundation raised $2.8 million that was used at the direction of top campaign officials to help influence the 2016 presidential election.

"The foundation's grants made Mr. Trump and the campaign look charitable and increased the candidate's profile to Republican primary voters and among important constituent groups," the lawsuit says.

The lawsuit includes an email from Trump campaign manager Corey Lewandowski.

"Is there any way we can make some disbursements this week while in Iowa. Specifically on Saturday," Lewandowski emailed Jan. 29, 2016, to Allen Weisselberg, who at the time was the Trump Foundation treasurer and is currently the chief financial officer for the Trump Organization.

The Lewandowski email was followed by at least five $100,000 grants that were made to veterans' groups in Iowa right before the Feb. 1 Iowa caucuses, the lawsuit charges. The enlarged checks given at public ceremonies even included Trump's campaign slogan: "Make America Great Again."

When a problem arose with making a grant before the Iowa caucuses to one of the designated charities, the campaign quickly secured a replacement Iowa veterans charity to appear at a campaign rally and receive a grant from the proceeds of the Iowa fund-raiser, the lawsuit says.

In an Oct. 20, 2016, filing submitted to the attorney general's Charities Bureau that Trump signed as president of the foundation, the charity asserted it held the Iowa fundraiser to raise money for veterans' organizations.

"This statement was false because, in reality, the fund-raiser was a Trump campaign event in which the foundation participated," the lawsuit charges.

The Iowa fundraiser, which was billed as "Donald J. Trump Special Event for Veterans," was planned, organized, financed and directed by the campaign, with the administrative assistance from the foundation, the suit alleges.

The actions, the lawsuit alleges, violated the Internal Revenue Service code for charities by, among other things, making expenditures to influence the outcome of an election.

"Mr. Trump's wrongful use of the foundation to benefit his campaign was willful and knowing," the lawsuit alleges. "Mr. Trump was aware of the prohibition on political activities and the requirement of restrictions on related party transactions."

The suit also claims the New York City-based foundation, which was founded by Trump, who served as its president until he became President, was also used to benefit his personal and business interests by paying off his legal obligations, promoting his hotels and other businesses, and purchasing personal items.

According to the suit, $100,000 in foundation money was used to settle legal claims against Trump's Mar-A-Lago resort in Florida, $158,000 to settle a case against Trump National Golf Club in 2008 over a hole-in-one tournament, and $10,000 to purchase a painting of Trump at a charity auction that was then displayed at the Trump National Doral in Miami.

The attorney general's office said since it began its investigation, the foundation paid taxes on three of the transactions and Trump repaid the organization, which still has not paid excise taxes on the Mar-a-Lago or Trump National Golf Club transactions.

The Foundation's stated mission is to raise money that is to be used "exclusively for charitable, religious, scientific, literary or educational purposes either directly or by contributions to organizations that qualify as exempt organizations."

The suit charges the Trump Foundation board of directors should be held accountable for violating its fiduciary responsibilities, leaving all decisions to Trump. The foundation and those tied to it, the suit alleges, violated state charities law by making false statements to the attorney general's office, engaging in self-dealing, and wasting charitable assets.

"The Attorney General's Investigation found that the Foundation is little more than an empty shell that functions with no oversight by its board of directors," the suit charges.

The lawsuit also seeks to prohibit Trump's oldest kids -- who were all board members -- from similar involvement with any charity for one year. And while Trump has said the foundation will be dissolved, Underwood's lawsuit seeks to have it done with oversight from the courts.

In a statement, the Trump Foundation called the suit "politics at its very worst," and maintained the organization was a force for good.

"The foundation has donated over $19 million to worthy charitable causes -- more than it even received. The President himself -- or through his companies -- has contributed more than $8 million," the statement said.

"The foundation currently has $1.7 million remaining which the NYAG has been holding hostage for political gain. This is unconscionable -- particularly because the foundation previously announced its intention to dissolve more than a year and a half ago."

The probe began under former AG Schneiderman, who abruptly resigned on May 7, hours after a New Yorker magazine story alleged he physically assaulted four women.

Schneiderman while in office brought more than 100 legal challenges against the Trump administration. Even before Trump was President, Schneiderman filed a $40 million lawsuit alleging pervasive fraud at a school known as Trump University created by the real estate mogul. That case was settled for $25 million.

(c)2018 New York Daily News