Monday, November 26, 2018

Trump Foundation faces legal troubles

Steve Benen (MSNBC/MaddowBlog) reports that a New York Judge rejects Trump’s argument about his scandal-plagued foundation.

Over the holiday weekend, Donald Trump tried to generate some fresh interest in the Clinton Foundation, as if Hillary Clinton, who left public office nearly six years ago, is still worthy of the political world’s obsession. Of far greater interest is the Republican president’s own foundation.

A New York judge on Friday denied a request from President Donald Trump and his family members to dismiss a lawsuit against them and the Trump Foundation alleging that the charitable foundation violated state and federal laws for “more than a decade.”

In her ruling, Justice Saliann Scarpulla of the New York state Supreme Court shot down an argument from the Trump family’s attorneys that the case should be dismissed because the Supremacy Clause of the U.S. Constitution suggests “a sitting president may not be sued.”

Scarpulla also rejected Trump’s argument that the state court lacked jurisdiction over the president in this case.

I can appreciate why the panoply of Trump scandals can seem overwhelming, but this one really is extraordinary.

Circling back to our previous coverage, the New York attorney general’s office in June accused the Trump Foundation of being little more than a slush fund, which, among other things, made illegal in-kind contributions for Trump’s campaign.

The scope of the legal issues raised by the New York court filing is quite broad. There are, for example, questions surrounding the president and his family allegedly running a fraudulent charitable entity. There are additional questions about violations of federal election law, which appear to have been quite flagrant.

There’s also the fact that the president personally signed federal tax returns – under penalty of perjury – swearing that his foundation wasn’t used for political and/or business purposes, and we now know there’s quite a bit of evidence that suggests it was used for both.

Background on court proceedings

The New Yorker’s Adam Davidson recently reported on the court proceedings that occurred before Friday’s announcement in which “the judge in the case, Saliann Scarpulla, made a series of comments and rulings from the bench that hinted – well, all but screamed - that she believes the Trump family has done some very bad things.”

Following are snippets from Davidson’s report, The Inconvenient Legal Troubles That Lie Ahead for the Trump Foundation.

The case against the Trumps appears damning. Charitable foundations are governed by a crucial compromise: they can operate without paying taxes on the condition that their leadership insures that all money spent is spent in pursuit of the public good. The case brought by Attorney General [Barbara] Underwood shows that the Trump Foundation was neither well-managed nor focussed on what would generally be considered the public good. Its operations were shockingly sloppy; at least one of the organization’s official board members said that he had no idea he was on the board and that the board had never met, to his knowledge. No surprise, then, that the other controls that normally govern nonprofits were absent. As David Fahrenthold, of the Washington Post, exposed in a series of stories in 2016, the Foundation did virtually none of the charitable things it claimed to be doing.

In recent years, the only “contributions” to the charity seem to have been payments from business partners, not from the Trumps or the Trump Organization. The charity’s spending appears to have benefitted the Trumps themselves, not the public welfare. The organization had been operating this way for years, but, according to Underwood, in 2016 the Trump Foundation became an arm of the Trump political campaign, cutting checks to Trump’s political allies in key states just before the election. If true, this would mean that the Trump Foundation evolved from a mere tax-avoidance scheme into an instrument for carrying out potential acts of campaign-finance fraud. The Attorney General made clear that her evidence could support criminal cases against the Trumps, but she has no jurisdiction to bring such charges, since tax and campaign fraud are federal matters. She referred the case to federal officials, though it seems unlikely that the I.R.S. or the Federal Election Commission would choose to prosecute a sitting President or his children.

The Trump Foundation case may have already revealed a potential rift between [Allen] Weisselberg and the family. His deposition in the case is fascinating reading. Weisselberg makes it quite clear just how sloppy an operation the foundation was, with no meetings and no careful accounting. In a compelling exchange, Weisselberg describes how he flew to Iowa with a checkbook to give money to political allies of Trump, then a Presidential candidate, and he makes it clear that he did this because his boss told him to. It is a damning statement, and the first evidence I have seen that Weisselberg, when cornered, may be willing to shift blame to the President. Judge Scarpulla will continue pushing the Trumps to settle. Trump-watchers, though, will likely hope that the family chooses to fight. We will learn much more if Weisselberg and others take the stand.

Adam Davidson reports that “The judge has urged the Trumps to settle. The president has said he won’t.”

Deeper background: A tale of two foundations

A lot has been written about the two foundations and how they differ starting in 2016 and extending to the present. You can learn more about them by going to my web site,, and using the search feature (scroll down the right hand column to the Search this blog gadget). Below are links that you might find useful listed in reverse chronological order.

Citing ‘vast lawbreaking’ New York sues Donald J. Trump Foundation.

The Trump Foundation in the Mind and Mouth of the Master of Mendacity.

The speech Hillary should give about the Clinton Foundation.

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