New York AG files suit seeking to dissolve Trump Foundation for alleged 'pattern of illegal conduct

Barbara D. Underwood, the new attorney general for the state of New York, has filed a lawsuit seeking the dissolution of the Donald J. Trump Foundation for an alleged "pattern of illegal conduct," including "improper political activity, repeated and willful self-dealing transactions," and other offenses.

The lawsuit also seeks to bar President Donald Trump and his children Eric, Ivanka, and Donald Jr. from serving on the board of any future New York nonprofit.

A full copy of the petition, which was filed in New York Supreme Court on Thursday, can be found here. It should be noted that unlike in most states, the New York Supreme Court is actually a lower court, and not the highest appellate court in the state.

What does the lawsuit allege?

The most serious allegations in the lawsuit fall into two basic categories: First, that the charity was used for impermissible political purposes, and second, that funds donated to the charity were used to pay debts incurred by either the Trump family or Trump-associated businesses.

If true, these allegations would represent clear violations of IRS regulations pertaining to charitable organizations, as well as possible criminal violations of both federal and New York state law.

Among other things, the petition alleges:

• Then-candidate Trump's political committee "extensively directed and coordinated" a January 28, 2016 fundraiser in Des Moines, Iowa that was held in the Foundation's name in violation of state and federal law. This fundraiser, which was televised in part, was held to benefit veterans when Trump decided to back out of a Fox News debate over the network's alleged unfair treatment of him in prior primary debates. The petition alleges that the fundraiser was "planned, organized, and directed" by a political campaign, an impermissible entanglement of a charity with a political entity. The petition further alleges that, after collecting the funds from the fundraiser, the political campaign (including Corey Lewandowski) was allowed to make direct the "timing, amounts and recipients" of the funds collected from the fundraiser. The petition quotes a number of emails allegedly unearthed during the course of their investigating that purported to show that Lewandowski and other campaign operatives did, in fact, exercise some level of control over the disbursement of charitable funds.
• The petition also alleges (and includes photographs for proof) that the Foundation was impermissibly used for Trump's political benefit during the campaign. Page 16 of the petition includes a photograph of Trump presenting an enlarged Trump Foundation check to the organization Support Siouxland Soldiers at one of his campaign events. The petition references numerous other campaign rallies where this took place, including some where Trump Foundation members were unaware that the campaign had promised to disburse funds to a given group, and where no actual check had been disbursed by the foundation at that time.
• The petition also included references to press releases from the Trump campaign, which were posted on the campaign's website, where the "Trump campaign" specifically claimed credit for disbursing $5.5 million-$6 million to veterans' groups.
• The petition alleges that foundation funds were used to settle a number of personal or business debts held by either Donald Trump, his family members, or his companies. If true, this would represent clear violations of both federal and state law. The petition alleges the following specific instances where this occurred:

  • A September 2007 payment of $100,000 from the Foundation to the Fisher House Foundation, which was allegedly used to settle legal claims brought against Mar-a-Lago by the City of Palm Beach;
  • A November 2013 payment of $158,000 from the Foundation to the Martin B. Greenberg Foundation, which was allegedly used to settle legal claims against Trump National Golf Course brought by Mr. Greenberg;
  • A November 2013 payment of $55,000 to the DC preservation league, which was used to secure promotional space for Trump International Hotels;
  • A March 2014 payment of $10,000 to the Unicorn Children's Foundation to pay for a portrait of Trump that was ultimately hung at one of Trump's golf courses; and
  • A December 2015 payment of $32,000 to the North American Land Trust, which was allegedly used to fund the management of a conservation easement on Trump Organization properties.

For at least one of the transactions (the Palm Beach transaction), the petition includes a handwritten note that was purportedly written by Trump, which states, "Allen W, DJT Foundation. $100,000 Fisher House (settlement of flag issue in Palm Beach)," an apparent personal instruction from Trump to use Foundation funds to satisfy a debt incurred by Mar-a-Lago.

Image source: Petition filed against Trump Foundation, 6.14.18

According to CNN, the New York Attorney General's Office has also referred the results of its  investigation to the IRS and the Federal Election Commission for possible further action and investigation.

President Trump responded to the allegations in defiant fashion on Twitter Thursday morning.