Trump Foundation To Shut Down, Liquidate, Amid Investigation

Under fire from the New York Attorney General, Donald Trump's questionable charitable foundation is shutting down.

In the midst of a lawsuit filed by the New York State Attorney General, The Trump Foundation has agreed to cease operations and distribute its remaining assets to charitable causes under Court supervision:

The Donald J. Trump Foundation will close and give away all its remaining funds in response to a lawsuit filed by the New York attorney general’s office, which had accused the Trump family of using the charity for self-dealing and political gain, the office announced on Tuesday.

The attorney general, Barbara Underwood, accused the foundation of “a shocking pattern of illegality” that was “willful and repeated” and included unlawfully coordinating with Mr. Trump’s 2016 presidential campaign.

“This amounted to the Trump Foundation functioning as little more than a checkbook to serve Mr. Trump’s business and political interests,” Ms. Underwood said.

The closure of the foundation is a milestone in the investigation. But the broader lawsuit, which also seeks millions in restitution and penalties and a bar on President Trump and his three oldest children from serving on the boards of other New York charities, is proceeding.

What assets remain after penalties will be directed to charities that must be approved by the attorney general’s office, and the process will be subject to judicial supervision. Ms. Underwood and a lawyer for the foundation signed the stipulation agreeing to the dissolution.

“This is an important victory for the rule of law, making clear that there is one set of rules for everyone,” Ms. Underwood said. “We’ll continue to move our suit forward to ensure that the Trump Foundation and its directors are held to account for their clear and repeated violations of state and federal law.”

Mr. Trump had said after the 2016 election that to avoid any appearance of conflict of interest, he would dissolve the foundation following revelations of its financial mismanagement. But the attorney general’s office blocked the president from doing so, amid concerns about the handling of the foundation’s documents and assets.

Alan S. Futerfas, a lawyer for the foundation, characterized Ms. Underwood’s announcement as making a “misleading statement.”

“The foundation has been seeking to dissolve and distribute its remaining assets to worthwhile charitable causes since Donald J. Trump’s victory in the 2016 presidential election,” he said. “Unfortunately, the N.Y.A.G. sought to prevent dissolution for almost two years, thereby depriving those most in need of nearly $1.7 million.

“The N.Y.A.G.’s inaccurate statement of this morning is a further attempt to politicize this matter,” he added.

The investigation of the foundation was begun by Eric T. Schneiderman, the former attorney general, who was an antagonist of Mr. Trump before stepping down amid revelations of sexual misconduct this year.

Next month, the ongoing case will fall to the incoming attorney general, Letitia James, a vocal critic of Mr. Trump who said recently that she would “use every area of the law to investigate President Trump and his business transactions and that of his family.”

Ms. Underwood’s office sued the Trump Foundation in June, charging it with “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.”

Nonprofit foundations are supposed to be devoted to charitable activities, but the attorney general’s office, following a two-year investigation, accused the Trump Foundation of being used to win political favor and even purchase a $10,000 portrait of Mr. Trump that was displayed at one of his golf clubs. The existence of the portrait was first reported by The Washington Post.

Mr. Trump was required to sign annual I.R.S. filings in which he attested that the foundation did not engage in political activity.

The lawsuit accused the foundation of virtually becoming an arm of the Trump campaign, with its campaign manager, Corey Lewandowski, directing the foundation to make disbursements in Iowa only days before the state held its presidential nominating caucuses.

“Is there any way we can make some disbursements [from the proceeds of the fund-raiser] this week while in Iowa? Specifically on Saturday,” Mr. Lewandowski wrote to the foundation’s treasurer in an email disclosed in the lawsuit.

Such charities are also barred from advancing the self-interests of its executives over the charity’s mission, but the attorney general’s office said in a court filing this year that the foundation had entered into a number of “prohibited self-dealing transactions that directly benefited Mr. Trump or entities that he controlled.”

One of those was revealed by a note in Mr. Trump’s handwriting that said $100,000 of Trump Foundation money should be directed to another charity to settle a legal dispute between the Town of Palm Beach and Mr. Trump’s Mar-a-Lago resort.

The attorney general’s office is seeking for the Trump Foundation to pay $2.8 million in restitution, which is the amount raised for the foundation at an Iowa fund-raiser in 2016 that Mr. Trump held on the day that he avoided attending a debate with his Republican rivals. The foundation reported $1.7 million in assets in 2017 to the Internal Revenue Service.

As noted, the New York Attorney General’s Office filed a civil suit in June alleging that the foundation had violated several New York laws regarding the operation of charitable organizations in the state. The lawsuit also named the President, his sons Donald Jr. and Eric, and his daughter as Defendants along with the foundation itself and alleged that the defendants had utilized the foundation as a virtual bank on behalf of the senior Trump and his business interests rather than in the manner of an actual charitable organization. As a result, the lawsuit sought to dissolve the foundation as well as to examine its books and records to determine if the money that had been donated for ostensibly charitable purposes was, in fact, being used to benefit Trump, The Trump Organization, and Trump’s campaign for President. There were also claims related to the violation of certain state tax laws that apply to charitable organizations. As noted, this was a civil lawsuit, but the fact that the Trumps were named individually as Defendants leaves them open to significant potential liability and the filing of the civil claims does not preclude the filing of criminal charges should the basis for those charges be discovered as the case went on. The most recent development in the case came roughly a month ago when the New York Judge presiding over the case rejected an effort by the attorneys for the Defendants to dismiss the case.

While the White House and the attorneys for the foundation and the Trump Organization are seeking to portray this as some sort of victory for the President given the fact that he had allegedly intended to dissolve the foundation all along, it’s clear that this is not the case. For one thing, unlike a private dissolution, this dissolution and distribution of assets will be required to take place under court supervision and the New York Attorney General will no doubt be monitoring the process closely to make sure that the foundation’s remaining assets go to legitimate charitable organizations. For another, while the dissolution does resolve one aspect of the civil lawsuit that had been filed against the foundation, the remainder of that lawsuit remains in place and Trump and his children still face the prospect of significant civil liability if the allegations made by the Attorney General end up being proven in a court. So, while this action may resolve part of the claim against the foundation it hardly marks the end of Trump’s legal problems on this issue.

FILED UNDER: Law and the Courts, US Politics, , , , , , , , , ,
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.

Comments

  1. SenyorDave says:

    David Fahrenthold, WaPo reporter, did amazing work prior to the election exposing the Trump Foundation as a slush fund for the Donald. In two separate cases, Trump used funds from the foundation to pay off legal judgments against him that were in excess of $100k. Using charitable funds for your own personal gain is known as “self-dealing” and is a violation of the tax laws. The Trump Foundation pretty much admitted that Trump was self-dealing.
    It follows the pattern that anything financial related to Trump is corrupt. It is amazing how consistent Trump is. This should probably be known as one of the basic tenets of Trumpism.
    Rule #1: If Donald Trump is involved with an entity that has assets, he will somehow steal some of those assets.

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  2. MarkedMan says:

    Further proof of Trump’s miser heart and his inability to keep from any money out there: one of the payments from the “charity” was $7 to the Boy Scouts. To pay for Don Jr’s enrollment fee for that year.

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  3. restless says:

    @SenyorDave: @SenyorDave:

    Hm, makes one wonder what is going to happen to the RNC?

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  4. Kathy says:

    So El Dennison committed multiple felonies while running in 2016, as part of his campaign, and his supporters, enablers, and apologists are all not just ok with it, but twisting reality into a pretzel to justify it.

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  5. restless says:

    @SenyorDave:

    Hm, makes one wonder what is going to happen to the RNC?

    from Politico

  6. MarkedMan says:

    This adds perspective to a story that broke yesterday. The GOP is merging their re-election committee with Trumps. So rather than having a separate presidential election committee and a general GOP one used to collect and distribute money for critical Senate and House races, it’s going to be a single one and it seems like Trump’s guy is in charge.

    This really made go “huh”. Could the GOP National committee be unaware that Trump is notorious for skimming? Could they be unaware that the scrutiny on this will be immense? Could they be unaware that Trump is going to view this as a personal slush fund and we will no doubt be seeing fundraisers for, say, a Wyoming congressional race to be held in Trump Tower, catered at 3 times the going rate? Or, and I honestly think this is more likely, were they hoping to cash in on the scam?

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  7. MikeSJ says:

    I have the gut feeling that if a working class person pulled this crap they’d be spending years in jail; the fact that this type of crime i.e. stealing from a charity you run is committed by the wealthy probably means that there will be a very low chance of any of the Trump’s spending actual time in the Big House.

    If you are going to steal make sure you’re rich..applies doubly for child molesting (see Jeffrey Epstein)

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  8. Stormy Dragon says:

    @MikeSJ:

    I have the gut feeling that if a working class person pulled this crap they’d be spending years in jail

    For a Trump supporter, there are two kinds of people in the world: people like them, who are protected by the law but not bound by it, and people not like them, who are bound by the law but not protected by it.

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  9. MarkedMan says:

    @MarkedMan: in fairness, I guess there is at least one more possibility: knowing that Trump is going to try to skim all the funds the Repubs are tying themselves to him so they can prevent it.

  10. gVOR08 says:

    I hope the NYT, and others, are proud of all the effort they put into innuendo about the clean, charitable Clinton Foundation instead of wasting time digging around in the Trump Foundation.

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  11. OzarkHillbilly says:

    So…. After all the money is gone, and the fraud allegations are found to be true and criminal, who’s going to pay the criminal fines? The foundation officers?

    Karma is a beach.

  12. Michael Reynolds says:

    Regular people wearing MAGA hats gave money to this Foundation, and Trump stole that money. That’s the leader of the free world. He is a thief. And the astounding thing is, it’s not the worst of it.

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  13. grumpy realist says:

    @Michael Reynolds: Well, it’s just what these people expect, no? They’re gullible suckers for the worst of infomercial huckstering, which gets ladled into their ears by TV channels such as Fox.

    We don’t have “conservative media” in the US the way we have “liberal media.” We have infotainment malarkey, with the rubes being fed a diet of fear and despair, then told to Buy Product X in order to solve all their problems. Hence the plethora of ads for gold and prepper supplies on Fox.

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  14. Jen says:

    OT, but very interesting. The sealed floor regarding the grand jury case last week has a tiny bit more clarity, because the appellate judges have issued their ruling.

    It apparently has to do with a state-owned company refusing to comply with the grand jury subpoena. Could be a country-owned bank, tech, etc.

  15. Daryl and his brother Darryl says:

    @One American:
    Mr. Lou Zer opines.

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  16. Daryl and his brother Darryl says:

    Dennison can’t run Casinos.
    Dennison can’t run a University.
    Dennison can’t run a charitable foundation.
    And Dennison clearly can’t run a country.

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  17. Michael Reynolds says:

    @grumpy realist:
    White evangelicals are the core of Trump’s support and they are raised from birth to be fleeced by any ranting white man with bad hair. In effect evangelical preachers ‘groomed’ these people for their later exploitation by Trump. Yes, Fox news is responsible, but they exploited a weakness created by evangelical Christianity. Trump voters are no different than Egyptian fellahs brainwashed from birth by the dumber/crazier iterations of Islam. These people are built with an easily-exploitable back door in their core mental software.

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