Trump's Claim of Bias by N.Y. AG Rejected in Foundation Suit

(Bloomberg) -- President Donald Trump’s claim that a New York lawsuit against his personal charitable foundation was motivated by political bias of the state attorney general’s office was rejected by a judge.

New York State Supreme Court Justice Saliann Scarpulla on Friday denied a request from Trump and his foundation to dismiss the suit in which the president and his three eldest children are accused of engaging in a decade-long pattern of self-dealing and using the nonprofit’s funds for political purposes.

The lawsuit is one of the most serious legal challenges facing Trump and his family. Unless an appeals court blocks the attorney general, the process of uncovering evidence will allow the state’s lawyers to reach deep into the Trump family’s financial dealings, where some of the president’s critics believe there will be evidence of yearslong improprieties.

Scarpulla said it isn’t the job of the court to determine the motivation of a government agency at this point in the case, and that the lawsuit was filed after Eric Schneiderman, the former attorney general who resigned in an abuse scandal, left office. Trump frequently clashed with Schneiderman, who was a key figure in the resistance to Trump’s agenda.

"There is no basis for finding that animus and bias were the sole motivating factors for initiating the investigation and pursuing this proceeding," the judge said in the ruling.

The foundation remains confident it will ultimately prevail, the charity’s lawyer, Alan Futerfas, said in an email.

“The decision means only that the case goes forward,” Futerfas said. “As we have maintained throughout, all of the money raised by the foundation went to charitable causes to assist those most in need.”

The foundation’s lawyers argued at a hearing in October that a half-dozen transactions at the center of the lawsuit, including $10,000 the charity spent at an auction to buy a six-foot oil portrait of Trump, were innocent because the money wound up going to charity anyway.

Attorney General Barbara Underwood claims in the lawsuit that the nonprofit was little more than Trump’s "checkbook," and that legitimate donations were overshadowed by rampant violations of state charity law and the use of donated funds for business purposes. She’s seeking to dissolve the charity and to ban the president from serving on a New York not-for-profit for 10 years.

Among the other violations cited was the foundation’s involvement in a January 2016 Trump Campaign fundraiser in Iowa. The attorney general alleges the foundation illegally participated in a political campaign by allowing senior campaign staff to dictate how $2.8 million raised at the event was spent, "all for the purpose of influencing the 2016 presidential election."

The judge on Friday also rejected Trump’s claim of presidential immunity from the suit, citing former President Bill Clinton’s lawsuit with Paula Jones. But Scarpulla said she’d toss out the claim against the president himself if an appeals court rules in an unrelated case that he can’t be sued in state court.

A lawsuit against the family’s for-profit business, the Trump Organization, was also filed in October by individuals who claim the Trumps have been ripping off aspiring business owners for years.

The case is People of the State of New York v. Trump, 451130/2018, Supreme Court of the State of New York, County of New York (Manhattan).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider

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