Donald Trump agreed to shut down his un-charitable foundation. Is his biggest scam—The Trump Organization—the next to fall?
by Matt Ford New Republic Dec 19, 2018
The Donald J. Trump Foundation was an audacious grift, even by the standards of its namesake. Charitable foundations are supposed to operate under a simple premise: They receive certain tax exemptions when it comes to receiving and disbursing their funds, and in turn, those funds will be funneled into good works for society’s benefit. For Trump’s charity, however, those good works largely amounted to crass self-enrichment—a guiding principle throughout the president’s life and political career.
The Washington Post’s David Fahrenthold reported two years ago the Trump Foundation’s most generous expenditure, totaling $264,361, went to renovations for a fountain outside the Trump-owned Plaza Hotel in New York City. Its smallest contribution—just $7—appears to have been used to pay for Donald Trump Jr.’s registration fee for the Boy Scouts of America. In one instance, Trump auctioned off a six-foot-tall painting of himself to charity, then spent $20,000 from the foundation’s funds to purchase it.
New York thinks it can find a better use for the money. Barbara Underwood, the state’s attorney general, announced on Tuesday that the president agreed to shut down the foundation and let state officials disperse its remaining funds to genuine charitable organizations. “This is an important victory for the rule of law, making clear that there is one set of rules for everyone,” Underwood said in a statement announcing the agreement. Her office is still pursuing more than $2 million in restitution from Trump and restrictions on his family’s involvement in non-profit organizations in the state.
An investigation by Underwood’s office uncovered a clear pattern of instances where the Trump family misused charity funds. The foundation cut checks for well-publicized donations during Trump’s presidential campaign, transmogrifying charitable funds into politically beneficial expenditures. It shelled out hundreds of thousands of dollars to settle legal disputes involving Trump himself or his companies. Normal safeguards like an active board of directors, standard accounting practices, and grant-making policies did not exist. The charity itself, investigators said, “is little more than an empty shell.”
“In sum, the Investigation revealed the Foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization,” the attorney general’s office said in a lawsuit this summer. “This resulted in multiple violations of state and federal law because payments were made using Foundation money regardless of the purpose of the payment. Mr. 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.”
Though the Trump Foundation was an impressively brazen scheme, it’s far from the only one bearing the president’s name. Trump agreed to pay $25 million to settle a multi-state class-action lawsuit against Trump University, his now-defunct real-estate seminar program. Court filings showed how the seminars preyed on customers’ financial anxieties so they would fork over thousands of dollars for mundane lessons about buying and selling property. This undercut Trump University’s main selling point: that “students” would be able to draw upon its eponymous founder’s reputation for savvy real-estate deals.
Even this reputation isn’t grounded in anything, though. The underlying basis of Trump’s political career is his public image as a self-made real-estate magnate. Careful scrutiny by journalists and investigators, however, has shown this to be largely mythical. It wasn’t business acumen that helped Trump establish a foothold in New York real estate in the 1980s and 1990s, but a steady infusion of at least $413 million from his father through dubious tax practices. Trump’s inflated reputation is a source of income in and of itself. Many of the overseas hotels bearing his name don’t even belong to him: He simply licenses his image to real-estate developers overseas, giving a branding edge to them and a reliable stream of profit to him.
You’d be hard-pressed to find an aspect of the president’s life that isn’t marked by grifting. The Trump campaign and its allies heard multiple offers of assistance from Kremlin-linked figures while Trump’s personal lawyer tried to secure a hotel deal in Moscow. His inaugural committee later raked in more than $100 million—more than twice the sum of his predecessors—from wealthy donors that largely went unaccounted for.
A ProPublica investigation found that the Trump Organization may have overcharged the committee for use of Trump’s Washington hotel, raising questions about whether any illegal self-enrichment took place. (Federal prosecutors are reportedly investigating the matter.) Foreign governments have also poured money into the Trump Organization’s properties, which may violate a constitutional ban on federal officials receiving foreign profits.
Ironically, some of these schemes likely would have gone unnoticed if Trump had never run for president. Fahrenthold, of the Post, began his Pulitzer Prize–winning investigation into Trump’s charitable donations after then-candidate Trump handed out oversized checks to veterans’ groups in campaign stunts. And the illegal hush-money payments that eventually led former Trump attorney Michael Cohen to start cooperating with the federal prosecutors likely wouldn’t have been made if Trump wasn’t trying to win the presidency. Becoming president has subjected Trump’s hollow empire to a level of scrutiny that he never imagined. The question is whether any of it will remain by the time he leaves, or is forced from, the White House.