New York State Attorney General Barbara D. Underwood has announced a lawsuit against the Donald J. Trump Foundation and its directors, President Donald J. Trump and three of his adult children — Donald Jr., Ivanka, and Eric Trump.
The petition (41 pages, PDF) filed with the Supreme Court of the State of New York alleges a pattern of persistent illegal conduct by the foundation's directors and seeks to obtain restitution of $2.8 million and to dissolve the foundation under court supervision so as to ensure the lawful distribution of its remaining assets to qualified charities. In addition, the lawsuit seeks to ban Donald Trump from serving on the board of a nonprofit that solicits donations or is based in New York State for ten years and to do the same for the other directors for one year. The attorney general's office also sent referral letters to the Internal Revenue Service and the Federal Election Commission identifying possible violations of federal law for further investigation and legal action.
"For more than a decade, the Donald J. Trump Foundation has operated in persistent violation of state and federal law governing New York State charities," the petition states. "This pattern of illegal conduct by the [f]oundation and its board members includes 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."
According to the petition, an investigation begun by the attorney general's office in June 2016 found that "Trump used charitable assets to pay off the legal obligations of entities he controlled, to promote Trump hotels, to purchase personal items, and to support his presidential election campaign." The investigation found that in January 2016 the Trump Foundation had raised more than $2.8 million from the public at a nationally televised fundraiser that then-candidate Trump held instead of participating in the presidential primary debate in Iowa. In violation of state and federal law, senior Trump campaign staff also organized, financed, and directed the fundraiser, then dictated the disbursement of grants — including at least five grants of $100,000 each to Iowa nonprofits in the days immediately before the February 1 Iowa caucuses — the kind of apparent coordination between campaigns and nonprofits prohibited by federal election laws.
The petition also points to at least five self-dealing transactions that benefited Trump or his businesses — some of which the foundation admitted to in its 2015 tax filings and have paid excise taxes on — and notes that the foundation's board has not met since 1999 and has provided no oversight for the foundation's activities, which have been conducted without any grantmaking criteria, investment policy, or conflict of interest policy.
According to Foundation Center data, between 2006 and 2016, the Donald J. Trump Foundation awarded 286 grants totaling $6.6 million to 196 nonprofit organizations.
"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 Underwood. "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."
(Photo credit: Office of the New York State Attorney General)