Donald Trump, Donald Trump Jr., Eric Trump and Ivanka Trump are in for a world of trouble from the State of New York.
It is the kind of trouble that can’t be pardoned away, could end Trump’s presidency, and could even land them in jail.
This isn’t a “Trump’s a Crook” rant. And it has nothing to do with Russia, the 2016 election, hush money to porn stars, or the swampy business operations of the Trump Organization. To be sure, each of those pose real legal risk to Trump and his family, but I want to focus on something specific: the Trump Foundation.
On its face, the Trump Foundation looks like any other charitable organization established by a wealthy family looking to do some good.
The Foundation is a New York not-for-profit corporation founded in 1987 to receive and maintain a fund “exclusively for charitable, religious, scientific, literary or educational purposes.”
Donald Trump was the Foundation’s founder. He served as its President from 1987 through 2017. Trump’s three eldest children, Don Jr., Eric, and Ivanka served on the Foundation’s Board of Directors from 2006 through 2017.
The Foundation’s charter expressly prohibits the Foundation from using the fund, directly or indirectly, “to inure to the benefit of any member, trustee, director or officer” of the company, or to “any individual.”
The Foundation’s charter also prohibits it from participating in or intervening into “any political campaign on behalf of any candidate for public office.”
Based upon the activities permitted (and prohibited) by its charter, the Foundation enjoys tax-exempt status under the Internal Revenue Service Code.
So far, so good, right? Nothing to see here.
The Trumps have used the Foundation’s supposedly charitable funds to satisfy Trump’s personal obligations and advance his presidential campaign
According to a Verified Petition filed by the Attorney General of the State of New York in a civil lawsuit brought against the Foundation, Trump, Don Jr., Ivanka, and Eric, instead of operating as a bona fide charitable enterprise, Trump and his children used the Foundation to satisfy Trump’s personal obligations, benefit himself, and advance his presidential campaign.
The AG’s lawsuit paints a graphic, ugly picture of how Trump and his three children have made a mockery of their responsibilities as officers and directors of the Foundation. It describes the Foundation as “little more than an empty shell that functions with no oversight from its board of directors.”
The Foundation has not had a single Board meeting since 1999, and the Board “does not oversee the activities of the Foundation in any way.”
In the absence of a functioning Board, Donald Trump ran the Foundation’s business “according to his whim, not the law.”
Don Jr., Eric and Ivanka, the supposed Board members, permitted him to do it. Rather than exercising any of their responsibilities as directors, they allowed the operations of the Foundation to be delegated, lock stock and barrel, to the Trump Organization, the family’s very much for-profit business, over which papa Trump reigns supreme. They permitted the Trump Organization to administer the Foundation’s assets “without supervision or training.”
The final insult took place in 2016, when Don Jr., Eric and Ivanka permitted the Trump Organization, which had no business running the Foundation in the first place, to hand off operational control of the Foundation’s supposedly charitable pursuits to – wait for it – Donald J. Trump for President, Inc., Trump’s presidential Campaign organization.
Given the lack of any Board supervision, and knowing how the Trump family operates, nobody should be surprised that “Mr. Trump was able to use the Foundation’s charitable assets to satisfy the obligations of, or otherwise benefit, himself and other entities in which he had an interest.” According to the AG’s Complaint, Trump used the Foundation’s assets not for charitable purposes, but “to pay off the legal obligations of entities he controlled, to promote Trump hotels, and to support his presidential election campaign.”
The AG’s Complaint sets forth a whole raft of state laws that the Trumps violated in running the Foundation. The relief it seeks includes monetary restitution and fines, an injunction prohibiting Trump from serving as an officer, director, trustee of any New York not-for-profit or charitable organization, an order dissolving the Foundation entirely, and much more.
The New York civil complaint is only the first shoe to drop. Criminal charges are likely to follow
Given this alleged course of blatantly dishonest, self-serving misconduct, one might ask why the Attorney General has made these charges in a civil complaint instead of a criminal indictment.
The answer is that the civil complaint is almost certainly only the first shoe to drop. Criminal charges likely will follow over the coming weeks and months.
The State of New York is already conducting a criminal investigation into the activities of the Foundation. On Wednesday, the New York state tax department sent a subpoena to Michael Cohen seeking information about the Foundation. A tax department spokesman confirmed that the agency was working with both the New York Attorney General and the Manhattan District Attorney, the agencies that would initiate any state criminal actions against the Trump family.
A spokeswoman for the Attorney General left little doubt where this investigation is headed: “We will hold Donald Trump and his associates accountable for violations of state law, and will seek a criminal referral from the appropriate state agency as necessary.”
Whether a sitting President can be indicted for a crime is an open legal question, made even thornier when the indictment would come from a state, not the federal government. New York officials may well decide to put that issue to a test by indicting Trump.
But they don’t have to indict him to expose his wrongdoing. An indictment against the Foundation, Don Jr., Ivanka and Eric, none of whom can make a claim of presidential immunity, would be more than enough, especially if it spells out the full extent of Trump’s personal involvement.
Trump will not be able to use the power of the pardon to stop the New York criminal investigation
If and when New York commences criminal proceedings against the Trump family, Trump will not be able to use his presidential powers to make it go away. He can pardon his whole family if he wants to take the political heat, but only for federal crimes. An indictment brought by the state of New York, in a state court, for violations of state law, would be beyond the reach of a presidential pardon. And while Trump may have the tools he needs to shut down the Mueller investigation, he has absolutely no power to stop the New York Attorney General, the Manhattan District Attorney, or to terminate their investigations.
The walls are closing in on Trump’s presidency. It’s impossible to say whether the final blow will be collusion with Russia, obstruction of justice, tax fraud, violation of campaign laws, corruption in the Trump Organization, paying hush money to porn stars and playmates, or something else.
But if I were Trump, I’d be very wary of what’s brewing in the State of New York.
Setting up a tax-exempt foundation for supposedly charitable purposes, and then using the Foundation’s funds not for charitable purposes, but for personal and political gain is not only illegal, it is disgraceful.
It will not play well. Even in Peoria.
It is just the kind of thing that could force Trump’s cowardly congressional enablers finally to conclude that it is no longer in their political best interests to defend him.
And if that happens, Trump’s presidency will be toast.