The New York attorney general has asked a judge to close down the Trump Foundation, accusing the charity of a litany of fraudulent dealings and campaign funding violations, and attempting to bar President Donald Trump from managing a charity for 10 years.
Mr Trump is accused of using charity money to buy a $10,000 painting of himself, to hang at one of his golf clubs, and of resolving a row about Mar-a-Lago with a donation to charity, made with foundation funds. He is also accused of using a foundation fundraiser to drum up political support for his presidential campaign.
US law forbids using a charity to support "private interests" or political campaigns.
Barbara Underwood, the attorney general, submitted the documents before the state supreme court in Manhattan on Thursday, at the end of a two-year investigation into the charity.
She asked that its remaining $1 million in assets be distributed to other charities and that Mr Trump be forced to pay at least $2.8 million in restitution and penalties.
She also sent referral letters to the US tax authority, the Internal Revenue Service (IRS), and the Federal Election Commission for possible further action, adding to Mr Trump’s extensive legal problems.
Mrs Underwood took over last month from Eric Schneiderman, who had opened several investigations into Mr Trump, but was forced to resign amid allegations of sexual misconduct.
“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,” said Mrs Underwood.
“This is not how private foundations should function and my office intends to hold the foundation accountable for its misuse of charitable assets.”
Mr Trump reacted with fury to the filing, and vowed to fight it in court.
"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," he tweeted.
"I won’t settle this case!
"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."
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!…
— Donald J. Trump (@realDonaldTrump) June 14, 2018
….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.
— Donald J. Trump (@realDonaldTrump) June 14, 2018
Mrs Underwood is seeking to bar the president from serving as a director, officer or trustee of another charity for 10 years.
The petition also seeks to prevent Mr Trump’s three eldest children, Donald Jr, Ivanka and Eric, from the boards of charities based in New York, or that operate in New York, for one year.
They sat on the board of the Trump Foundation, but, according to Mrs Underwood’s complaint, failed to scrutinise the charity’s actions.
“The Foundation’s directors failed to meet basic fiduciary duties and abdicated all responsibility for ensuring that the Foundation’s assets were used in compliance with the law,” she wrote, noting that the board had not met since 1999.
The ruling, if passed, would deal a blow to the work of the three siblings, who all have relationships with a variety of charitable organisations.
In the complaint Mrs Underwood accused Mr Trump of using the charity’s funds to curry political favour, settle legal disputes and even buy a $10,000 portrait of himself, to hang at his Trump Doral golf club, in Florida.
The painting was one of several examples of the foundation being used in “at least five self-dealing transactions,” according to the attorney general’s office.
The charity paid $5,000 to put an ad for Trump hotels in the programme for a charity gala, and paid $32,000 to satisfy an obligation of a Trump company that manages a New York estate.
Mrs Underwood said Mr Trump had already repaid amounts spent by the foundation, plus penalty taxes totalling more than $4,000. In the case of the portrait, she said Mr Trump’s golf club had now paid the foundation the “fair rental value” of $182 using the foundation-owned painting as decoration.
The purchase, however, appears to break tax laws, which state that charity funds cannot be used for private interests.
Mr Trump also is accused of using the funds to resolve legal disputes.
In 2007, to settle a disagreement between the City of Palm Beach and Mr Trump’s Mar-a-Lago resort, the foundation paid $100,000 to the Fisher House Foundation, another charity.
In 2012, a man sued the Trump National Golf Club after he made a hole-in-one at a fund-raising golf tournament that had promised to pay $1 million to golfers who aced the 13th hole, as he did. As part of a settlement, the charitable foundation paid $158,000 to a foundation run by the golfer, Martin Greenberg.
And he used the foundation to benefit his campaign, Mrs Underwood alleges.
The foundation was explicitly “prohibited from participating or intervening in any political campaign on behalf of a candidate,” the complaint notes.
“This statutory prohibition is absolute.”
But roughly $2.8 million was raised for the foundation at a 2016 Iowa political fund-raiser for the Trump campaign.
The rally was held when Mr Trump decided to skip a Republican debate and set up his own event to raise money for veterans. After the event, his foundation “ceded control over the charitable funds it raised to senior Trump campaign staff, who dictated the manner in which the foundation would disburse those proceeds, directing the timing, amounts and recipients of the grants,” according to the complaint.
An official at the foundation then emailed Mr Trump’s campaign manager at the time, Corey Lewandowski, telling him “we should start thinking about how you want to distribute the funds collected.”
Mr Lewandowski replied that they should put together a list, and then issue a press release showing how much was distributed to each veterans’ group.
J.J. Leitner, a lawyer specialising in charity legal issues, said that the complaint suggests at a minimum that they seemed not to have followed the proper corporate formalities, which is primarily a state corporate governance issue.
Using charity funds to settle personal or business legal disputes, she said, was an obvious red flag.
"It seems clear that she is also focusing on the federal laws against self-dealing and political activity," she told The Telegraph.
"Self-dealing is more common, and, unfortunately, you see it more frequently because it can be inadvertent.
"But the political activity is more troubling. The rules against using charitable funds for political means are very strict, and clear.
"And it’s ironic, because it’s exactly what he accused the Clinton Foundation of doing."
Mr Trump has been president of the foundation since he founded it in 1987.
In late 2016, amid growing scrutiny of its work – fuelled by a series of reports filed in The Washington Post, which revealed that he had also spent $20,000 of charity funds on a six-foot painting of himself – he promised to shut down the Trump Foundation.
The attorney general, however, ruled he could not close it while the investigation continued.
A spokesperson for the Trump Foundation called the case “politics at its very worst."
"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 reason the Foundation was able to donate more than it took in is because it had little to no expenses. This is unheard of for a charitable foundation."
The spokesperson said the charity 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 prior NYAG, who was recently forced to resign from office in disgrace, made it his stated mission to use this matter to not only advance his own political goals, but also for his own political fundraising.
"The acting NYAG’s recent statement that battling the White House is ‘the most important work [she] have ever done’ shows that such political attacks will continue unabated."
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