In any other administration, this would be huge news and perhaps rise to the level of impeachment talk. In early November, the state of New York filed a settlement with the Trump Foundation which required the organization to close and give nearly $4-million to charities. That sum includes a $2-million fine and the remaining $1.8 million in Foundation assets.
I have been reporting on churches, Christian nonprofits and other charities for several years and have seen some corrupt dealings. This one ranks high on the corruption scale. Trump used this foundation as a kind of slush fund to pay off debts, support his campaign, and in some cases make other political donations. Even though foundations are supposed to remain separated from the for profit business side of an enterprise, Trump regularly mixed the two worlds to advance his interests.
The New York Attorney General publicly announced an investigation into the Foundation on September 13, 2016. If you read through the settlement, you will notice that the efforts to repay funds taken from the Foundation and used for various non-charitable purposes came after that date in late 2016 or in 2017. After the NY AG started an investigation, the Foundation then started to pay back taxes on donations and funds used for non-charitable causes.
One of the key issues in the case was a fund raising event for veterans that occurred in Iowa during the 2016 campaign as a joint effort of the Trump Foundation and the Trump campaign. Trump skipped a debate there and hosted a rally which led to funds being raised and given to veterans’ groups in campaign related events, thus mixing campaign work with the Foundation. In making her ruling about damages, Judge Saliann Scarpulla referred to this event along with Trump’s general negligence which is described in more detail below. About Trump’s management of the Foundation, Judge Scarpulla wrote:
As a director of the Foundation, Mr. Trump owed fiduciary duties to the Foundation, pursuant to N-PCL § 717; he was a trustee of the Foundation’s charitable assets and was thereby responsible for the proper administration of these assets, pursuant to EPTL § 8-1.4. A review of the record, including the factual admissions in the Final Stipulation, establishes that Mr. Trump breached his fiduciary duty to the Foundation and that waste occurred to the Foundation.
Mr. Trump’s fiduciary duty breaches included allowing his campaign to orchestrate the Fundraiser, allowing his campaign, instead of the Foundation, to direct distribution of the Funds, and using the Fundraiser and distribution of the Funds to further Mr. Trump’s political campaign. The Attorney General has argued that I should award damages for waste of the entire $2,823,000 that was donated directly to the Foundation at the Fundraiser. In opposition, Mr. Trump notes that the Foundation ultimately disbursed all of the Funds to charitable organizations and that he has sought to resolve consensually this proceeding.
As stated above, I find that the $2,823,000 raised at the Fundraiser was used for Mr. Trump’s political campaign and disbursed by Mr. Trump’s campaign staff, rather than by the Foundation, in violation of N-PCL §§ 717 and 720 and EPTL §§ 8-1.4 and 8-1.8. However, taking into consideration that the Funds did ultimately reach their intended destinations, i.e., charitable organizations supporting veterans, I award damages on the breach of fiduciary duty/waste claim against Mr. Trump in the amount of $2,000,000, without interest, rather than the entire $2,823,000 sought by the Attorney General.
The judge found violations of law but didn’t fine him as much as the AG wanted her to. The judge did issue the fine in response to the factual claim that Trump breached his fiduciary duty to the Foundation. Not only did he do so in violation of laws as cited by Judge Scarpulla in the section above, there were other instances cited. I outline those below.
The settlement outlines other offenses that both sides agreed occurred.
In one 2007 case, Trump used Foundation money to pay a lawsuit settlement to a charity. It wasn’t until after the NY AG started the investigation that Trump repaid the Foundation with interest on March 10, 2017. A Trump supporter might claim that Trump always intended to repay the Foundation. My answer is that it was illegal at the start (which Trump denied) and secondly, I am skeptical that Trump would ever have paid it back without the pressure of the AG investigation.
In 2012, the Trump Foundation gave $157,000 to the Martin Greenberg Foundation to satisfy a debt owed by one of Trump’s golf courses. Again, this is illegal. Trump didn’t reimburse the Foundation until 2017 after the AG investigation was publicly announced.
In 2013, Trump caused $25,000 to be donated from the Foundation to a PAC supporting Pam Bondi’s campaign for attorney general. While contribution itself may have been legal, the Foundation did not pay the required tax on the contribution until 2016.
Also in 2013, the Foundation contributed funds to the DC Preservation League which entitled it to an ad in the organization’s fund raising program. However, instead of advertising the Foundation, Trump placed an ad for his DC Trump International Hotel, thereby mixing the for profit and nonprofit. Again, it was only after the investigation started that any remedy was undertaken.
Perhaps the most emblematic incident is the purchase of a portrait of Trump by Trump with Foundation funds. In 2014, at a children’s charity event, Trump bought his own portrait for $10,000 with Foundation funds and after storing it for awhile, displayed in one of his hotels. In November 2016 — after the investigation started — the painting was removed from the hotel and sent to the Foundation.
Finally, in 2015, Trump’s real estate management company Silver Springs pledged $32,000 to a charitable organization in New York. The charitable group’s work stood to benefit one of his residences. Rather than pay that pledge himself, he had the Foundation cover it.
The settlement also requires Trump to pay the $11,525 he used from Foundation money to pay for sports memorabilia at a Susan G. Komen benefit auction.
Read the settlement again and then read Trump’s statement about the settlement:
STATEMENT FROM PRESIDENT DONALD J. TRUMP pic.twitter.com/EktztHfLk6
— Donald J. Trump (@realDonaldTrump) November 8, 2019
Trump v. Facts
Trump’s statement bears little resemblance to the truth. He says “every penny of the $19 million raised by the Trump Foundation went to hundreds of great charitable causes.”
This isn’t true. Pam Bondi’s run for AG isn’t a charitable cause. Using Foundation funds to get an ad for your for-profit business isn’t a charitable cause. Moreover, buying sports collectibles with Foundation money doesn’t seem like an honest description of the activity. Yes, a charity got some money, but they had to give you something in exchange. Giving Foundation funds to a nonprofit that benefits your real estate value doesn’t seem like a particularly generous use of those funds. That’s the definition of self-dealing.
Trump claimed in his Twitter statement that all the AG found was “incredibly effective philanthropy and some small technical violations, such as not keeping board minutes.”
This isn’t true. The settlement makes clear that the Foundation board of directors didn’t meet at all from 1999 through November, 2018. The Board of Directors had no oversight of any kind through that period. The settlement describes just the opposite of “incredibly effective philanthropy.” There were numerous violations and instances of self-dealing which resulted in the various breaches of fiduciary responsibility noted in the settlement.
It is true that the dissolution is presented in the settlement as a mutual agreement, but there is an important section which has not been discussed much in the news accounts about this case. The judge specifies what Trump and any future charity must do if Trump is ever on the board of a charity. Trump cannot serve on a board where a majority of members are family or have business relationships with him. The charitable organization must not engage in related party transactions with any entity owned or controlled by him. If Trump forms a new charitable organizations, he must ensure that annual reports are filed with the state for a period of 5 years. The details of what must be in the reports are spelled out. In short, Trump must comply with the law.
Furthermore, recall Judge Scarpulla’s assessment of Trump’s actions: “A review of the record, including the factual admissions in the Final
Stipulation, establishes that Mr. Trump breached his fiduciary duty to the Foundation and that waste occurred to the Foundation.”
Let me repeat, the judge and AG did not find “incredibly effective philanthropy.”
Finally, Trump’s spin about the $2 million donation to 8 charities is laughable. The court ordered him to pay that sum in damages (“I award damages on the breach of fiduciary duty/waste claim against Mr. Trump in the amount of $2,000,000”.
So even after being caught in numerous violations of law and stipulating to them in public documents, Trump cannot bring himself to tell the truth about it. As noted, in a normal time, this might be article of impeachment number three.