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The Trump Foundation Gets Put to Sleep

The Trump Foundation Gets Put to Sleep

(Bloomberg Opinion) -- The Trump Foundation, a tiny New York outfit masquerading as a philanthropy but operating, essentially, as a personal piggy bank for the president of the United States, is no more.

Barbara Underwood, the New York state attorney general, announced on Tuesday that her office and the foundation signed a stipulation agreeing to dissolve Donald Trump’s long-standing but chronically underfunded gesture toward charitable giving. Trump launched his foundation in 1988 as a vehicle, he claimed, for distributing profits from his bestseller “The Art of the Deal” to needy causes, but the foundation was housed at his company, the Trump Organization, and had no dedicated staff or office space.

“Our petition detailed a shocking pattern of illegality involving the Trump Foundation — including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more,” Underwood noted. “This amounted to the Trump Foundation functioning as little more than a checkbook to serve Mr. Trump’s business and political interests.”

While the Trump Foundation evaporates, Underwood’s office said, the attorney general’s lawsuit against the organization will proceed. The lawsuit seeks millions in restitution and penalties and a bar on Trump and his three eldest children — Donald Jr., Ivanka and Eric, who all served on the foundation’s board — from serving on the boards of other New York charities.

Under the terms of the stipulation, the Trump Foundation’s dissolution requires judicial supervision, and its remaining charitable assets — about $1.7 million — have to be distributed to “reputable organizations” that the attorney general’s office approves. It expects to receive a list of those organizations within 30 days. The attorney general said the stipulation doesn’t prevent third parties that may still feel aggrieved or defrauded by the Trump Foundation from seeking redress.

Trump had given about $5.5 million to his foundation through 2015; his last gift was $35,000 in 2008. Outside donors, many of which did business with the president, have given the foundation about $9.3 million. The biggest donors to the foundation were Vince and Linda McMahon, co-founders of World Wrestling Entertainment, who kicked in $5 million. After becoming president, Trump appointed Linda McMahon to run the Small Business Administration. The Trumps have said that the foundation  has donated more money than it received -- about $19 million – but a full of accounting of where all that money went may stretch the definition of “charitable.”

Underwood’s lawsuit is a stark reminder of how flagrantly illicit the Trump Foundation has been. It alleges “a pattern of persistent illegal conduct, occurring over more than a decade, that includes extensive unlawful political coordination with the Trump presidential campaign, repeated and willful self-dealing transactions to benefit Mr. Trump’s personal and business interests, and violations of basic legal obligations for non-profit foundations.”

Underwood has referred her case to the Internal Revenue Service and the Federal Election Commission in case either of those agencies are interested in identifying whether the Trump Foundation violated any federal laws.

As my Bloomberg Opinion colleague Francis Wilkinson has observed, the Trump Foundation’s single largest gift — $264,631 — was allotted toward renovating a fountain outside the Plaza Hotel in Manhattan. Trump owned the hotel. Underwood’s lawsuit also points out that Trump used foundation money to pay off legal obligations, promote his hotels and other businesses, and purchase goodies for himself. That list included a $100,000 payment to settle legal claims against Trump’s Mar-a-Lago resort; a $158,000 payment to settle claims against the Trump National Golf Club from a 2008 lawsuit involving that course’s hole-in-one tournament; and a $10,000 payment at a charity auction to purchase a painting of Trump that was displayed at the Trump National Doral in Miami. (A reminder here of the seminal reporting from the Washington Post’s David Fahrenthold that helped expose much of this, as well as earlier work — dating back to 2011 — from The Smoking Gun’s William Bastone.)

At Trump’s direction, Underwood’s lawsuit also alleges, the Trump Foundation illegally provided “extensive support” to Trump’s 2016 presidential campaign — notably five $100,000 grants prior to the Iowa nominating caucuses.

The suit says that Underwood’s office discovered that the Trump Foundation raised more than $2.8 million that it used for the 2016 election, including donations Trump raised at a nationally televised event featuring military veterans that he held on Jan. 28, 2016, as an alternative to his participation in a presidential primary debate held in Iowa. “In violation of state and federal law, senior Trump campaign staff, including Campaign Manager Corey Lewandowski, dictated the timing, amounts, and recipients of grants by the Foundation to non-profits, as evidenced by communications between Campaign staff and Foundation representatives,” the attorney general’s office pointed out.

The lawsuit also notes that Trump himself — while the architect of much of the wrongdoing at his foundation — was not solely at fault for the wrongdoing Underwood alleges occurred there. The suit points out that the foundation’s directors — Donald Jr., Ivanka, Eric and the Trump Organization’s chief financial officer, Allen Weisselberg — “breached their fiduciary duties” during their tenures there. (Weisselberg, who is cooperating with a federal investigation into some of Trump and the Trump Organization’s other activities, has told state investigators in New York that he wasn’t aware that the Trump family had added him to the foundation’s board.) The foundation’s board, Underwood has detailed, hasn’t met since 1999.

The president has spent much of his first term disparaging law enforcement and attempting to undermine the rule of law as he squares off with more than a dozen investigations targeting the Trump Organization, the Trump Foundation, the Trump family, the Trump campaign, the Trump transition, the Trump inauguration and the Trump White House.

Perhaps that’s why Underwood went out of her way to highlight why it was important that the Trump Foundation was put to sleep.

“This is an important victory for the rule of law, making clear that there is one set of rules for everyone,” she said Tuesday. “We’ll continue to move our suit forward to ensure that the Trump Foundation and its directors are held to account for their clear and repeated violations of state and federal law.”

To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Timothy L. O’Brien is the executive editor of Bloomberg Opinion. He has been an editor and writer for the New York Times, the Wall Street Journal, HuffPost and Talk magazine. His books include “TrumpNation: The Art of Being The Donald.”

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