A New York judge has ruled that President Trump must pay $2 million in damages to settle claims that the Trump Foundation misused funds. The money will go to a group of charities, and the foundation is in the process of dissolving.
Donald Trump on Thursday admitted to ‘personally misusing’ funds in his charity as part of settlement in a civil lawsuit and has agreed to personally pay $2 million to a group of nonprofit organizations.
He also agreed to restrictions on his involvement in other charity groups and admitted he and his foundation engaged in ‘illegal political coordination with the Trump campaign’ during the 2016 election.
‘Chiefly, Mr. Trump admits to personally misusing funds at the Trump Foundation, and agrees to restrictions on future charitable service and ongoing reporting to the Office of the Attorney General in the event he creates a new charity,’ the New York Attorney General’s office said in a statement on the case.
The president also admitted ‘that he used Foundation funds to settle legal obligations of companies he controlled, and that the Foundation paid for a portrait of Mr. Trump that cost $10,000.’
In 2014, Trump bought a four-foot-tall portrait of himself at a fundraising auction and paid for it with funds from his charity.
The case is tied to a televised fundraiser for veterans held by Trump in Iowa when he was running for president in January 2016. Trump had said the funds raised would be distributed to charities. But according to court documents, the Trump Foundation improperly used $2.82 million it received from that fundraiser.
According to the judgment, that money “was used for Mr. Trump’s political campaign and disbursed by Mr. Trump’s campaign staff, rather than by the Foundation,” which is unlawful. However, Justice Saliann Scarpulla says the funds did eventually reach charity organizations supporting veterans.
“The Trump Foundation has shut down, funds that were illegally misused are being restored, the president will be subject to ongoing supervision by my office, and the Trump children had to undergo compulsory training to ensure this type of illegal activity never takes place again,” New York Attorney General Letitia James, whose office filed the case, said in a statement. “The court’s decision, together with the settlements we negotiated, are a major victory in our efforts to protect charitable assets and hold accountable those who would abuse charities for personal gain.”
The Trump Foundation also agreed last month to distribute its $1.7 million in remaining assets to the same charities that will receive the $2 million in damages ordered on Thursday. According to the judgment, those charities are Army Emergency Relief, Children’s Aid Society, Citymeals-on-Wheels, Give an Hour, Martha’s Table, United Negro College Fund, United Way of National Capital Area, and U.S. Holocaust Memorial Museum.
The Trump Foundation agreed to dissolve last December in the face of an investigation from then-New York Attorney General Barbara Underwood. She accused the foundation of a broad pattern of illegal activity, including improper political activities and “repeated and willful self-dealing transactions.”
The final outstanding issue, according to the judgment, was the amount that Trump would pay in damages over the Iowa fundraiser. James had sought the entire $2.82 million, but the judge determined that $2 million was sufficient because the money raised eventually reached veterans’ charities.
This case was prompted by David Fahrenthold’s reporting in The Washington Post about the foundation, which won the Pulitzer Prize in 2017.
The White House did not immediately comment on the judgment. Alan S. Futerfas, a lawyer for the Trump Organization, said last December that “the Foundation has been seeking to dissolve and distribute its remaining assets to worthwhile charitable causes since Donald J. Trump’s victory in the 2016 Presidential election.”
Three of Trump’s children – Donald Trump Jr., Ivanka Trump and Eric Trump – were also named in the lawsuit.
Citizens for Responsibility and Ethics in Washington has been scrutinizing the Trump Foundation for years. “Today’s settlement of the suit brought by the New York Attorney General’s Office is a fitting and poetic end to this scandal,” CREW Executive Director Noah Bookbinder said in a statement.
The state attorney general’s office said Donald Trump Jr. reimbursed the foundation for the painting.
‘As separate piece of the settlement Donald Trump Jr. reimbursed the Foundation for the cost of the portrait.’
President Trump also repaid $11,525 spent on sports paraphernalia and champagne purchased at a charity gala as part of the settlement.
Additionally, his three eldest children – Don Jr., Ivanka and Eric, all of whom sat on the board of the Donald J. Trump Foundation – agreed to undergo mandatory ‘training on the duties of officers and directors of charities so that they cannot allow the illegal activity they oversaw at the Trump Foundation to take place again,’ the attorney general’s office said.
A New York judge ordered Trump to pay $2 million as part of the settlement of a case brought by the attorney general’s office last year.
That money, along with $1.78 million in assets currently held by the Trump Foundation will be equally distributed to eight charities: Army Emergency Relief, the Children’s Aid Society, Citymeals-on-Wheels, Give an Hour, Martha’s Table, United Negro College Fund, United Way of National Capital Area, and the U.S. Holocaust Memorial Museum.
The lawsuit alleged that President Trump and his three eldest children – Don Jr., Ivanka and Eric – used the Donald J. Trump Foundation for political and personal gain. The four were accused of violating federal and state campaign finance laws and abusing the foundation’s tax-exempt status.
Thursday’s ruling appears to bring the lawsuit to an end.
‘Mr. Trump’s fiduciary duty breaches included allowing his campaign to orchestrate the Fundraiser, allowing his campaign, instead of the Foundation, to direct distribution of the Funds, and using the Fundraiser and distribution of the Funds to further Mr. Trump’s political campaign,’ Manhattan Supreme Court Justice Saliann Scarpulla wrote in the ruling.
The money must be paid by Trump himself for breaching his fiduciary duty to properly oversee his foundation, Scarpulla ordered.
‘I direct Mr. Trump to pay the $2,000,000, which would have gone to the Foundation if it were still in existence, on a pro rata basis to the Approved Recipients,’ the judge wrote.
Scarpulla also declined to impose punitive damages on Trump, which would have added millions to the settlement, because, she ruled, he had taken the necessary steps to ensure the alleged illegal activity would not occur again.
The foundation was dissolved in December as part of negotiations with the New York Attorney General’s office.
Trump had vowed to fight the civil lawsuit. He tweeted last year: ‘I won’t settle this case!’
The suit was filed in June 2018 by then-New York Attorney General Barbara Underwood in June of last year.
Underwood was promoted to the job after then New York Attorney General Eric Schneiderman resigned following allegations that he had physically abused some of his romantic partners.
Underwood was a career staffer, not an elected official, and she did not seek election for a full term.
Letitia ‘Tish’ James was elected to the position and said she intended to aggressively investigate Trump’s businesses and finances.
‘No one is above the law — not a businessman, not a candidate for office, and not even the President of the United States,’ she said in a statement after Thursday’s ruling.
As the state attorney general, Underwood had sought $2.8 million in restitution plus additional financial penalties. And she wanted the court to ban the Trumps from serving on the boards of other New York charities for a period of one year.
Donald Trump Jr., Ivanka Trump and Eric Trump were named in the lawsuit because they were official board members of the Donald J. Trump Foundation for years.
There were reports on how Trump used charity’s funds pay off legal settlements for his private business, to purchase art that decorated one of his clubs and to make a prohibited political donation.
The suit was filled with scathing charges against the president and his management of his self-named non-profit. It includes allegations of violations of campaign finance laws and illegal coordination with Trump’s presidential campaign.
Prosecutors charged Trump with repeatedly misusing the nonprofit to pay off his businesses’ creditors, to decorate one of his golf clubs and to stage a multimillion dollar giveaway at his 2016 campaign events.
In her June filing, Underwood charged the nonprofit was essentially one of Trump’s personal checkbooks — a pool of funds that his clerks knew to use whenever Trump wanted to pay money to a nonprofit.
Legally, Trump isn’t allowed to buy things for himself using the charity’s money, even if he was buying them from nonprofits.
The suit also listed some of the questionable expenses made by the charity, including a $10,000 on a portrait of Trump that was hung at one of his golf clubs.
And twice Trump used the charity’s money to settle legal claims against his businesses.
In 2007, he settled a dispute with the town of Palm Beach, Florida, over code violations at his Mar-a-Lago estate. The town agreed to waive outstanding fines if Mar-a-Lago gave $100,000 to the charity Fisher House.
But the donation came from the foundation and not the estate, prosecutors charged after Trump wrote a note requesting the move.
In 2012, a Trump golf club agreed to pay $158,000 to settle a lawsuit with a man who was denied a $1 million hole-in-one prize during a tournament at the club. The Trump Foundation paid the money instead of the club.
In March, after the attorney general’s investigation was underway, Trump repaid his foundation all $258,000, plus more than $12,000 in interest, the suit notes.
Underwood said Trump had already repaid amounts spent by the foundation, plus penalty taxes totaling more than $4,000.
In the case of the portrait, she said Trump’s golf club paid the foundation the ‘fair rental value’ of using the foundation-owned painting as decoration. The value: $182.
IRS rules also prohibit tax-exempt foundations from aiding political campaigns.
But Underwood cited two instances where Trump’s foundation had seemed to do so.
In August 2013, Trump donated $25,000 from his foundation to a Florida political group aiding the reelection of state Attorney General Pam Bondi. Around that time, Bondi’s office was considering whether to join an ongoing lawsuit by then-New York AG Schneiderman, alleging Trump had defrauded students at his now-defunct ‘Trump University.’
The Trump Foundation omitted any mention of Bondi’s political group from its annual report to the IRS and instead said the $25,000 donation had gone to a nonprofit in Kansas with a similar-sounding name.
Underwood said Trump’s staff blamed confusion among accounting clerks for spending the foundation’s money, instead of Trump’s own. As for the incorrect IRS filing, Underwood wrote, ‘the Foundation has no credible explanation for the false reporting of grant recipients.’
Trump repaid the $25,000 and paid a penalty tax of $2,500 for an improper political gift after it came to light in a Washington Post investigative series on the Donald J. Trump Foundation during the 2016 campaign.
However, Underwood charges that the campaign Trump’s foundation helped most was his own.
In January 2016, Trump skipped a debate among Republican presidential candidates because he was feuding with debate host Fox News. Instead, he held a televised fundraiser for veterans — bringing in millions from wealthy friends and small-dollar donors, much of which went to his foundation.
Underwood charged ‘the Foundation ceded control over the charitable funds it raised to senior Trump Campaign staff.’
She cited emails in which Corey Lewandowski, then-campaign manager, directed which veterans’ charities should receive money.
The Trump Foundation has been in legal limbo since after the election, when the president wanted to dissolve it amid growing controversy about its practices. But the foundation could not legally dissolve while it was under investigation, the New York attorney general ruled.
New York has jurisdiction over the Trump Foundation because the charity is based at Trump Tower in Manhattan and registered in New York State.
Trump had been president of the foundation since he founded it in 1987 until it was shuttered in December.