News & Politics

NY's Democrat AG Orders Trump Foundation to Stop Fundraising

NY's Democrat AG Orders Trump Foundation to Stop Fundraising
New York Attorney General Eric Schneiderman speaks during Law Day at the Court of Appeals, Monday, May 2, 2016, in Albany, N.Y. (AP Photo/Mike Groll)

On Friday, New York’s attorney general ordered the Donald J. Trump Foundation to stop fundraising in the state because it is not properly registered to do so, Politico reported.

The office of Attorney General Eric Schneiderman issued the “Notice of Violation,” dated Friday but released to the public on Monday, which instructed the organization to “immediately cease soliciting contributions or engaging in any other fundraising activity in New York.”

According to the letter, the foundation lacked the proper registration for groups which raise more than $25,000 in the state. The organization has 15 days to file the appropriate paperwork under state law.

Trump spokeswoman Hope Hicks raised concerns that Schneiderman, as a Democrat, might have presented the issue for political reasons. “While we remain very concerned about the political motives behind AG Schneiderman’s investigation, the Trump Foundation nevertheless intends to cooperate fully with the investigation,” Hicks said.

“Because this is an ongoing legal matter, the Trump Foundation will not comment further at this time,” she added.

The foundation has received scrutiny during the campaign, following reports that it sent an illegal $250,000 donation to a Florida political group, and spent funds on unusual items, such as portraits of Donald Trump.

Under the laws of New York State, where the Donald J. Trump foundation is based, any charity which solicits more than $25,000 a year from the public must obtain a special kind of registration beforehand. As The Washington Post‘s David A. Fahrenthold explained, charities as large as Trump’s must also submit to a rigorous annual audit which would examine whether the charity spent any money for the personal benefit of its officers.

Tax filings from each of the past 10 years show the foundation raised more than $25,000 from outsiders. The foundation received more than $2.3 million from companies which owed money to Trump or one of his businesses, but which were instructed to pay the foundation instead, Fahrenthold reported. The Trump Foundation also set up a website earlier this year to collect small-dollar donations which it promised to send to veterans. The website boasted that the foundation took in $1.67 million from that campaign.

Of Trump, Pace University law school Professor James J. Fishman said, “He’s a billionaire who acts like a thousandaire.” The foundation appeared to make errors, Fishman told the Post, such as the lack of proper registration, which are more common among small family foundations.

“You wouldn’t expect somebody who’s supposed to be sophisticated, and brags about his business prowess, would run his foundation like this,” Fishman explained. Originally established in 1987 to give away the proceeds from the sale of Trump’s book The Art of the Deal, the foundation had only one donor, Trump himself. He gave a total of $5.4 million between 1987 and 2006.

During that period, the foundation was only required to have the least-demanding kind of certification, the “EPTL,” governed by Estates, Powers, and Trusts Law. Starting in the early 2000s, the foundation started to take donations from other people. In 2005, Norwegian Cruise Lines named Trump’s wife, Melania, the “Godmother” of a new ship. As part of the agreement with Melania Trump, Norwegian said, it gave $100,000 to the Trump Foundation.

After 2008, tax records show Trump stopped giving to the foundation altogether. But New York state law stipulates that charities which solicit donations from other in the state must register under a different law.

Next Page: Trump’s not the only candidate with foundation issues.

While Schneiderman’s order may be based on a legitimate violation of New York law, the timing does seem suspicious, coming just over one month before the election.

Furthermore, while the Trump Foundation’s problems are serious, they pale in comparison to the pay-for-play aspects of the Clinton Foundation. That foundation received donations from foreign actors who had business before the State Department during Hillary Clinton’s tenure as secretary of State.

One of the most notorious cases involved Uranium One, a Canadian company which controlled stakes in uranium mining, and which was taken over by the Russian atomic energy agency, Rosatom. Key figures in that case donated to the Clinton Foundation, sparking allegations of pay-to-play.

Clinton Foundation tax returns revealed that only $5.2 million of its funds actually went to charitable grants (5.7 percent), compared to the $34.8 million spent on salaries, compensation, and employee benefits (38.1 percent) in 2014. Another 50.4 million was marked “other expenses.” A well-run charity spends only about 25 percent on administrative costs.

No matter who wins in November, Americans can look forward to more philanthropy scandals. Just don’t be surprised if the media tries to underscore Trump’s foundation issues while overlooking those of his Democratic opponent.