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New York Sues Trump, Children for Illegal Activities Through Charitable Foundation

Donald Trump and his family cut the ribbon for the Trump International Hotel in the Old Post Office building in Washington on Oct. 26, 2016. (Photo by Cheriss May/NurPhoto/Sipa USA via AP)

The state of New York filed a lawsuit today against the Trump Foundation and Trump family — President Trump, Donald Trump Jr., Ivanka Trump and Eric Trump — alleging more than a decade’s worth of illegal conduct including unlawful coordination with Trump’s presidential campaign, using the foundation to benefit Trump’s business and personal interests, and violating nonprofit foundation rules.

The filing alleges that when Trump said he would hold a fundraiser for veterans instead of participating in a January 2016 debate, $2.8 million of the $5.6 million raised became “an improper in-kind contribution” to the Trump campaign that “provided Mr. Trump and the Campaign a means to take credit at campaign rallies, press briefings, and on the Internet, for gifts to veterans charities.”

New York Attorney General Barbara D. Underwood is seeking $2.8 million in restitution and additional penalties, and a 10-year ban on each of the Trump family members on acting as a director of a nonprofit organization.

Additionally, Underwood sent letters to the IRS and Federal Election Commission identifying possible violations of law that the agencies may want to take legal action against.

The lawsuit charges that Trump used charitable funds to pay off legal bills in claims against the Mar-a-Lago resort and Trump National Golf Club, purchase items such as a painting of himself now displayed at the Trump National Doral in Miami, and to promote Trump hotels. After the NYAG’s investigation began, the Trump Foundation paid excise taxes on three transactions in question but not on the Mar-A-Lago or Trump National Golf Club transactions.

The Trump Foundation’s board of directors did not meet after 1999 and did not approve the activities or expenditures in question, the attorney general’s office said. “The Investigation found that the Foundation operated without any oversight by a functioning board of directors,” the lawsuit states.

“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,” Underwood said in a statement. “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.”

The lawsuit also calls for the Trump Foundation to work with the attorney general in “the distribution of remaining assets to qualified charities.”

“From 1987 through 2008, Mr. Trump personally donated funds to support the Foundation. Since 2008, however, Mr. Trump has not contributed any personal funds to the Foundation, which instead has been supported by donations from other persons and entities,” says the lawsuit. Trump served as president of the foundation from 1987 through Jan. 23, 2017. The Trump sons have been members of the board since 2006; Ivanka Trump was a member from 2006-2017.

The foundation has no employees and operates out of the Trump Corporation accounting office.

“In the absence of a functioning board, Mr. Trump ran the Foundation according to his whim, rather than the law. Mr. Trump, who was the sole signatory on the Foundation’s bank accounts, approved all grants and other disbursements from the Foundation. Accounting staff for the Trump Organization had responsibility for issuing checks from the Foundation, and issued the checks based solely on Mr. Trump’s approval before presenting the checks to Mr. Trump for signature,” the lawsuit states. “…Because of the lack of oversight and direction, 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.”

In 2016, the foundation was “coopted by Mr. Trump’s presidential campaign,” the attorney general charges, and the Iowa fundraiser in lieu of the debate “was planned, organized, financed, and directed by the Campaign, with administrative assistance from the Foundation.”

“…Mr. Trump was aware of the prohibition on political activities and the requirement of restrictions on related party transactions. Among other things, he repeatedly signed, under penalties of perjury, IRS Forms 990 in which he attested that the Foundation did not engage in transactions with interested parties, and that the Foundation did not carry out political activity.”

The lawsuit also says the foundation issued a check for $25,000 in 2013 to the re-election campaign of Florida Attorney General Pam Bondi, who endorsed Trump during the presidential campaign. On disclosures that year, the foundation said it made the donation to a group in Kansas that shared the name of Bondi’s political committee; the attorney general obtained a thank-you note from a Bondi campaign official for the $25,000. The same-named Kansas group did not receive any money.

Citizens for Responsibility and Ethics in Washington filed a complaint with the IRS in March 2016. The next day, the IRS received a disclosure and reimbursement from Trump.

The lawsuit includes the image of a note from Trump authorizing a $100,000 payout to Fisher House Foundation to settle a 2007 zoning complaint against Mar-a-Lago.

Trump lashed out against the lawsuit on Twitter. “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!,” he tweeted.

“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,” Trump added. “Now he resigned his office in disgrace, and his disciples brought it when we would not settle.”