For many people weary of President Trump’s lies, bullying, and corruption, it came as good news Thursday that the New York Attorney General is suing Trump, the Trump Foundation, and all three of Trump’s oldest children. The lawsuit alleges extensive financial mismanagement at the Trump Foundation, where money that was supposed to be used solely for charitable purposes was diverted by Trump to pay legal settlements relating to his golf course, to fund his political campaign, to promote his hotels, and to make personal purchases, including Trump buying a $10,000 painting of himself. The lawsuit follows a two year investigation and seeks close $3 million in restitution and penalties, as well as the dissolution of the Trump Foundation, but that is not where the problems for President Trump related to this suit end.
By allegedly self-dealing and misusing charitable money in this way, Trump avoided paying taxes he was required to pay. That is why New York Attorney General Barbara Underwood has also referred the case to the Internal Revenue Service (IRS) for investigation into the tax evasion angle. Also, Trump’s alleged funneling of money into his campaign from the Trump Foundation would violate campaign finance laws. That is why the diligent New York Attorney General has also referred the case to the Federal Election Commission (FEC) for investigation. These are very serious, potentially criminal cases.
President Trump’s response to the lawsuit has been a false argument that since, as he claims, the charitable aspect of the Trump Foundation has given out more than it has taken in, supplemented by Trump himself, it is not possible for Trump to have done anything wrong in the handling of the funds. That simply is not true. Every transaction conducted at a charity must follow a strict set of rules, particularly since it benefits from tax protection, even if the charity operates at a loss.
According to NBC News:
The petition alleges the foundation was “little more than a checkbook” for payments to not-for-profits. Trump allegedly used charitable assets to pay off the legal obligations of other entities he controlled, to promote Trump hotels (which are obviously not charitable organizations), to purchase personal items, and to support his presidential election campaign. The petition charges a number of specific instances, such as misusing foundation funds to settle legal disputes for his golf club, and to purchase a $10,000 portrait of himself…If this (Trump’s argument that the charity gave out more than it took in) is the president’s legal defense, it will fail. It’s a position that fundamentally misunderstands the laws governing charities. Even if a charitable foundation gives out more money than it takes in, it can still violate the law if the organization is not run properly. This is especially so if the money given out doesn’t go to what the law considers an actional charity. Charities get tax and other benefits, which can be easily abused for personal gain, even when the charity runs at a net loss.
Much of the strong evidence in the case comes not from witnesses, but directly from the records of the Trump Foundation. It will be difficult for Trump’s lawyers to argue against that money trail. The allegations in the suit are that Trump, the Trump Foundation, and Donald Jr., Ivanka, and Eric Trump violated both state and federal law in their dealings with the Trump Foundation. While this lawsuit is more civil than criminal in nature, that could actually be of benefit against Trump, because while there is some question as to whether a sitting president can be arrested or indicted while in office, precedent has established that a sitting president is subject to civil suit while in office, especially regarding alleged violations that occurred before he became president, as is the case here.
Also, the depositions the four Trumps will likely have to give in this case could provide information relevant to criminal cases for tax evasion and violations of federal election law. Assuming the investigations by the IRS and FEC into this matter go forward upon the referral by the New York Attorney General, that is the biggest long-term threat to President Trump, as they could lead to another large scale federal investigation into Trump, his three oldest children and his associates.