Donald Trump's Foundation has been been ended in a New York courtroom. The Court's official word salad is served below:

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
THE PEOPLE OF THE STATE OF NEW YORK,
by BARBARA D. UNDERWOOD, Attorney
General of the State of New York,
Petitioner,
-againstDONALD
J. TRUMP, DONALD J. TRUMP JR.,
IVANKA TRUMP, ERIC F. TRUMP, and THE
DONALD J. TRUMP FOUNDATION,
Respondents.
EXECUTION VERSION
Index No. 451130/2018
SO-ORDERED STIPULATION
CONCERNING THE
DISSOLUTION OF THE
DONALD J. TRUMP
FOUNDATION
This Stipulation Concerning the Dissolution of The Donald J. Trump Foundation (the
"Stipulation") is entered into by and between Petitioner The People of the State of New York by
Barbara D. Underwood, Attorney General of the State of New York ("Petitioner," or "Attorney
General") and Respondent The Donald J. Trump Foundation ("the Foundation"), by its attorney,
Alan S. Futerfas. The Attorney General and the Foundation are referred to collectively herein as
the "Parties."
WHEREAS, the Attorney General commenced the above-captioned special proceeding
against the Foundation by the filing of a verified petition (the "Verified Petition") on June 14,
2018 (the "Special Proceeding");
WHEREAS, in the Fourth, Fifth, and Sixth Causes of Action in the Verified Petition, the
Attorney General has asserted claims for the dissolution (the "Dissolution Causes of Action") of the
Foundation pursuant to sections 112(a), 1101(2) and l 102(a)(2) of Article 11 of the New York
Not-For-Profit Corporation Law ( "N-PCL"), and pursuant to section 1109 of the N-PCL, in an action
brought by the Attorney General, the " interest of the public is of paramount importance";
ooo 11 2os-J Page l of 3
EXECUTION VERSJON
WHEREAS, in consideration of the Respondents' agreement to not contest the Dissolution
Causes of Action, the Attorney General will permit Respondents to designate, subject to the Attorney
General 's approval, not-for-profit organizations to receive distributions from the assets remaining after
the Foundation is dissolved;
WHEREAS, the Parties have now concluded good faith negotiations and have reached a
resC?lution of Paragraph G of the Petition's Prayer for Relief and desire to implement such
agreement in accordance with the terms and conditions of this Stipulation, which the Parties
respectfully request be so-ordered by the Court;
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and
between the Parties that the Dissolution Causes of Action are resolved as follows:
I. That the Parties agree that the Foundation should be dissolved and agree to the
entry of an order pursuant to Section 1109 of N-PCL dissolving the Foundation, annulling its
Certificate of Incorporation, and terminating the corporate existence of the Foundation.
2. The dissolution process shall proceed under judicial supervision in accordance
with Article 11 of N-PCL.
3. That, within thirty (30) days of when this Stipulation is so ordered by the Court,
the Parties shall jointly submit to the Court a list of not-for-profit organizations to receive
distributions, in equal amounts, from the assets remaining upon the issuance of a final Order of
Dissolution.
4. The Parties agree that the Attorney General may object to the distribution of
funds to any organization designated pursuant to Paragraph 3 hereof if information is revealed
after this Stipulation is so-ordered, but before a final order of dissolution is entered, that
negatively affects the suitability of such organizations to receive distributions of charitable
assets in this matter, such determination to be made solely by the Attorney General.
000 11 205-3 Page 2 of 3
EXECUTION VERSION
5. Pursuant to N-PCL § 1111, the Foundation will maintain all of its assets as of the
execution of this Stipulation.
6. This Stipulation in no way limits or affects any of the other claims in the Verified
Petition.
7. This Stipulation in no way limits or affects the rights or remedies of any third party.
8·. By their signatures below, the undersigned counsel represent that they are duly
authorized by their clients to sign this Stipulation.
9. This Stipulation may be executed in multiple counterparts, each of which shall be
deemed a duplicate original. Facsimile signatures shall be deemed originals.
IN WITNESS WHEREOF, this Stipulation is executed by counsel for the Parties hereto
on December 11, 2018.
BARBARA D. UNDERWOOD
Attorney General of the State of New York
Co-~hief Charities Bureau
Enforcement Section
28 Liberty Street
New York, New York 10005
(212) 416-8401 '
Attorney for Petitioners
SO ORDERED: ——
Justice Saliann Scarpulla
00011205-3 Page 3of3
LAWOFFI~
Attorney for The Donald J. Trump
Foundation
ERFAS
"Investigation"
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
THE PEOPLE OF THE STATE OF NEW YORK, by
BARBARA D. UNDERWOOD, Attorney General of the
State of New York,
Index No.
Petitioner,
-againstVERIFIED
DONALD J. TRUMP, DONALD J. TRUMP JR., PETITION
IVANKA TRUMP, ERIC F. TRUMP, and THE DONALD
J. TRUMP FOUNDATION,
Respondents.
Petitioner,
the People of the State of New York, by Barbara D. Underwood, Attorney
General of the State of New York, as and for her Petition, respectfully alleges:
PRELIMINARY STATEMENT
1. For more than a decade,
the Donald J.
Trump Foundation has operated in
persistent violation of state and federal law governing New York State charities. This pattern of
illegal conduct
by the Foundation and its board members includes improper and extensive
political activity, repeated and willful
self-dealing transactions, and failure to follow basic
fiduciary obligations or to implement even
elementary corporate formalities required
by law.
The
Attorney General therefore brings this special
proceeding to dissolve the Foundation for its
persistently illegal
conduct, enjoin its board members from future service as a director of
any
not-for-profit authorized
by New York
law,
to obtain restitution and penalties, and to direct the
Foundation to cooperate with the
Attorney General in the lawful distribution of its
remaining
assets to qualified charitable entities.
2. In June 2016,
the
Attorney General began an investigation (the
"Investigation") of
the Donald J.
Trump Foundation (the
"Foundation")
"Foundation"
pursuant to the New York Not-for Profit
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Corporation Law ("N-PCL"),
the New York Estates, Powers and Trusts Law ("EPTL"),
the New
York Executive Law, and other applicable law governing New York State charities. The
Investigation found that the Foundation operated without
any oversight
by a
functioning board of
directors. Decisions
concerning the administration of the charitable assets entrusted to the care
of the Foundation were made without adequate consideration or oversight, and resulted in the
misuse of charitable assets for the benefit of Donald J.
Trump ("Mr.
("
Trump")
Trump"
and his personal,
political and/or business interests. In sum,
the Investigation revealed that the Foundation was
little more than a checkbook for payments to not-for-profits from Mr.
Trump or the
Trump
Organization. This resulted in multiple violations of state and federal law because payments
were made
using Foundation money
regardless of the purpose of the payment. Mr.
Trump used
charitable assets to
pay off the legal obligations of entities he controlled,
to promote
Trump
hotels,
to purchase personal
items, and to support his presidential election campaign.
3. As set forth below,
the Foundation and its directors and officers violated multiple
sections of the N-PCL,
the EPTL, and the Executive Law, including provisions that prohibit
foundations from making false statements in filings with the
Attorney General, engaging in selfdealing,
wasting charitable assets, or
violating the Internal Revenue Code by, among other
things, making expenditures to influence the outcome of an election. The Foundation's directors
failed to meet basic
fiduciary duties and abdicated all
responsibility
for
ensuring that the
Foundation's assets were used in compliance with the law. The violations that resulted were
significant and not
only
ran afoul of the applicable provisions of the N-PCL,
the EPTL, and the
Executive Law, but also resulted in the Foundation
failing to
comply with the terms of its own
certificate of incorporation.
4. As a result of these persistent violations of law by the Respondents,
the
Attomey
General brings this special
proceeding to dissolve the Foundation pursuant to Article 11 of the
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Respondents"
N-PCL and New York Civil Practice Law and Rules
("CPLR") Article 4. In addition, pursuant
to the N-PCL, EPTL, Executive Law and CPLR Article 4,
the
Attorney General seeks an order
(i) directing Mr. Trump, Donald J. Trump, Jr.,
Ivanka Trump, and Eric
Trump (together,
the
"Individual Respondents")
to make restitution and
pay all penalties
resulting from the breach of
fiduciary duties and their misuse of charitable assets for the benefit of Mr.
Trump and his
interests; (ii) enjoining Mr.
Trump from future service as an officer, director or
trustee, or in
any
other
capacity as a
fiduciary of
any not-for-profit or charitable organization incorporated or
authorized to conduct business in the State of New York, or which solicits charitable donations
in the State of New York for a period of ten years, and
enjoining the
remaining Individual
Respondents from future service as an officer, director or
trustee, or in
any other
capacity as a
fiduciary of
any not-for-profit or charitable organization incorporated or authorized to conduct
business in the State of New York, or which solicits charitable donations in the State of New
York for a period of one year, subject to suspension in the event the
remaining Individual
Respondents undergo adequate
training on the
fiduciary duties of directors of not-for-profit
corporations; (iii) directing Mr.
Trump to
pay an amount
up to double the amount of benefits
improperly obtained through related
party
transactions entered into after
July 1, 2014; (iv)
declaring that the Foundation has conducted its business in a
persistently illegal manner and has
abused its powers
contrary to the public
policy of this state; (v) directing the Foundation to
cooperate with the
Attorney General in the distribution of
remaining assets to qualified charities;
(vi) restraining the Foundation, except
by permission of the court,
from exercising any corporate
powers; (vii) dissolving the Foundation; and
(viii) granting such other and further relief as the
Court may deem just and proper.
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THE PARTIES
5. The
Attorney General is responsible for
overseeing the activities of New York
not-for-profit corporations and the conduct of their officers and directors,
in accordance with the
N-PCL,
the EPTL, and the New York Executive Law.
6. Respondent Foundation is a private New York not-for-profit corporation
incorporated in New York in 1987. Its principal place of business is in New York at 725 Fifth
Avenue, New York, New York. The Foundation is recognized as tax-exempt under Section
501(c)(3) of the Intemal Revenue Code and is classified as a private foundation under Section
509(a) of the Internal Revenue Code. In its most recent IRS Form 990 Return of Organization
Exempt from Income Tax, reporting as of December 31, 2016,
the Foundation reported
approximately $1 million in assets.
7. The Foundation's stated mission is to "receive and maintain a fund . . . to
[be]
use[d]
. . .
exclusively for charitable, religious, scientific, literary or educational purposes either
directly or
by
contributions to organizations that
qualify as exempt organizations under section
501(c)(3) of the Internal Revenue
Code."
(Certificate of
Incorporation, dated
February 2, 1987,
at Section
Second.)
In accordance with the N-PCL and the Internal Revenue Code,
the
Foundation's certificate of incorporation provides that "[n]o part of the
property . . . of the
corporation shall be diverted in
any manner
directly or
indirectly or otherwise inure to the benefit
of
any member, trustee, director or officer of the corporation or
any private
individual."
(Id. at
Section
Sixth.) The certificate of incorporation further provides that "[n]o part of the activities
of the corporation shall be . . .
participating or
intervening in
(including the publication or
distribution of
statements) any political campaign on behalf of
any candidate for public
office."
(Id. at Section
Seventh.) Mr.
Trump signed the certificate of
incorporation, affirming, under
penalties of perjury,
that the statements contained in it were true. (Id. at
6.)
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"Board"
8. Respondent Mr.
Trump is the founder of the Foundation, and served as its
president from 1987 through
January 23, 2017. From 1987 through 2008, Mr.
Trump personally
donated funds to support the Foundation. Since 2008, however, Mr.
Trump has not contributed
any personal funds to the Foundation, which instead has been supported
by donations from other
persons and entities.
9. Respondent Donald
Trump Jr.
is, and has been since 2006, a member of the
Foundation's board of directors (the "Board"). Respondent Eric
Trump is, and has been since
2006, a member of the Board. Respondent Ivanka
Trump served as a member of the Board from
2006 to
January 23, 2017.
JURISDICTION AND APPLICABLE LAW
10. The
Attomey General brings this special
proceeding on behalf of the People of
the State of New York under the EPTL,
the N-PCL, and the Executive Law.
11. Pursuant to EPTL
§ 8.1-4(m),
the
Attorney General may institute appropriate
proceedings to secure the proper administration of
property held for charitable purposes.
12. Pursuant to N-PCL
§ 112(a),
the
Attorney General is authorized to
bring an action
or special proceeding:
"(1) To annul the corporate existence or dissolve a
[not-for-profit]
corporation that has acted beyond its
capacity or power . . .
(5) To dissolve a corporation under
article 11 (Judicial dissolution);
. . .
(7) To enforce
any right given under this chapter to
members, a director or an officer of a charitable corporation. The attorney-general shall have the
same status as such members, director or officer;
. . . and
(10) To enjoin, void or rescind
any
related
party transaction, seek damages and other appropriate remedies,
in law or equity,
in
addition to
any actions pursuant to section 715 (Related
party transactions) of this
chapter."
13. Pursuant to N-PCL
§ 515(a), a charitable corporation "shall not … distribute
any
part of its
income"
to the directors or officers of the corporation.
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14. Pursuant to EPTL
§ 8-1.8(a)(2), a private foundation "shall not engage in
any act
of
self-dealing which would result in the taxation of
any amount involved with respect to
any
such act of
self-dealing under section 4941 of the [Internal Revenue Code (the
"Code")],"
and
pursuant to EPTL
§ 8-1.8(a)(5), a private foundation "shall not make
any taxable expenditure
which would result in the
liability of the [private
foundation]
for
any tax imposed on
any
such
taxable expenditures under section 4945 of the [Internal Revenue
Code]."
Section 4941 imposes
an excise tax on acts of self-dealing, and section 4945 of the Code imposes an excise tax on
any
amount paid to influence the outcome of a specific public election. Under section 406 of the NPCL,
a New York private foundation must include provisions in its certificate of incorporation
expressly prohibiting the conduct penalized under sections 4945 and 4941 of the Code.
15. Under Executive Law section 175(2),
the
Attorney General is authorized to
bring a
special
proceeding against a charitable organization or
any other persons
acting for it or in its
behalf,
in relevant part,
"for an order
awarding restitution and damages and costs … and to seek
other relief which the court may deem proper whenever the
Attorney General shall have reason
to believe that the charitable organization or other person… has violated [Article 7-A]",
including by, pursuant to section 175(d), making "a material false statement in an application,
registration or statement required to be filed pursuant to this
article."
16. Pursuant to N-PCL
§ 706(d),
the
Attorney General may bring an action to remove
a director for cause and the court may bar a director from future service on the board.
17. Pursuant to N-PCL
§ 715(f) and EPTL
§ 8-1.9(c)(4),
the
Attorney General may
bring an action to seek an order
requiring a person to account for profits from an improper
related
party transaction, pay the not-for-profit corporation for the value of the use of
any of its
assets in such a transaction,
return assets lost to the corporation as a result of such a transaction,
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and pay,
in the case of willful and intentional conduct, an amount
up to double the amount of
any
benefit
improperly obtained.
18. Pursuant to N-PCL
§ 717, directors and officers of a not-for-profit corporation are
required to act in good faith and with that degree of diligence, care and skill that an
ordinarily
prudent person in their position would exercise under similar circumstances. In addition, section
717 requires directors and officers of a not-for-profit corporation to act with undivided
loyalty
toward the corporation. The directors must meet at least
annually for a report of the
corporation's assets and liabilities, revenue, and disbursements, pursuant to N-PCL
§§ 519,
603(b).
19. Pursuant to N-PCL
§ 719, directors who vote or concur in the "distribution of the
corporation's cash or
property to members, directors or officers, other than a distribution
permitted under section
515"
are
jointly and
severally
liable to the corporation for the
injury
suffered as a result of their actions.
20. Pursuant to N-PCL
§ 720(a),
the
Attorney General is authorized to
bring an action
to require the directors and officers of a New York not-for-profit corporation to
pay
restitution
resulting from the violation of duties in the management of corporate assets committed to their
charge and to set aside an unlawful conveyance, assignment or transfer of corporate assets,
where the transferee knew of its unlawfulness.
21. Pursuant to N-PCL
§ 1101(a),
the
Attorney General is authorized to
bring an
action to dissolve a corporation that has "exceeded the
authority conferred upon it
by law, or has
. . . carried on, conducted or transacted its business in a
persistently fraudulent or illegal manner,
or
by the abuse of its powers
contrary to public
policy of the state has become liable to be
dissolved."
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22. Pursuant to N-PCL
§ 112(a)(7) and
§ 1102(a)(2)(D),
the
Attorney General is
authorized to petition for judicial dissolution of a corporation where the "directors … in control
of the corporation have looted or wasted the corporate assets, have perpetuated the corporation
solely for their personal benefit or have otherwise acted in an illegal, oppressive or fraudulent
manner."
23. Pursuant to N-PCL
§ 1113,
the
Attorney General is authorized to seek an
injunction
pending a dissolution
proceeding to,
in relevant part, "(1) restrain[]
the corporation
and its directors and officers from conducting any unauthorized activities and from exercising
any corporate powers, except
by permission of the court[, and] (2) restrain[]
the corporation and
its directors and officers from collecting or
receiving any debt or other
property of the
corporation, and from paying out or otherwise
transferring or
delivering any property of the
corporation, except
by permission of the
court."
24. Venue is
properly
set in New York County pursuant to N-PCL
§ 1110 and
CPLR § 503 because the Foundation is located in New York County.
FACTUALBACKGROUND
25. The
Attorney General's Investigation found that the Foundation is little more than
an
empty shell that functions with no oversight
by its board of directors. The Foundation, which
does not have
any employees, delegated its operations to the
accounting office of the
Trump
Corporation, Inc., a management
company owned
by Mr.
Trump and located at 725 Fifth
Avenue. The
Trump Corporation supplies back office services to the several hundred
Trump
business entities that make
up the
Trump Organization. The
accounting staff's responsibilities
for the Foundation are the same as its responsibilities for the businesses in the
Trump
Organization.
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Insufficient Board Oversight and Lack of Internal Controls
26. The Foundation's Board existed in name only. Board members failed to exercise
their
fiduciary duty to provide oversight and control of the organization for at least nineteen
years,
from 1999 through the present. The Board has not met since 1999 and does not oversee
the activities of the Foundation in
any way. The Board has not set
policy or determined the
direction, operations or acts of the Foundation. It has not promulgated, and the Foundation does
not have, any written criteria for the consideration, approval, or monitoring of grants, or
protocols for
assuring compliance with the organization's
governing documents and charitable
mission. In fact,
the Board has played no role in
approving the grants that the Foundation has
made and failed to obtain annual reports
concerning the activities and operations of the
Foundation, as required
by N-PCL
§ 519.
27. In the absence of a
functioning board, Mr.
Trump ran the Foundation
according to
his whim,
rather than the law. Mr. Trump, who was the sole
signatory on the Foundation's bank
accounts, approved all grants and other disbursements from the Foundation. Accounting staff for
the
Trump Organization had
responsibility for
issuing checks from the Foundation, and issued
the checks based
solely on Mr. Trump's approval before
presenting the checks to Mr.
Trump for
signature.
28. The Board of the
Trump Foundation permitted the
Trump Organization
accounting staff to administer the Foundation's charitable assets without supervision or
training
and to issue Foundation checks without
confirming that the Board had approved the
disbursement. The Board also failed to institute
any procedures to ensure that the Foundation
was the proper source of funds for a particular check request.
Jeffrey McConney, controller and
vice president of the
Trump Organization, whose responsibilities included
supervising the
issuance of checks for the Foundation, does not recall ever
receiving instructions from Mr.
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Trump or
any of the directors on the Board on the proper protocol for
issuing the Foundation's
checks.
29. The Foundation also failed to adopt a conflict of interest policy, even though New
York law since
July 2014 requires the Foundation to adopt such a policy. See N-PCL
§ 715-A;
EPTL
§ 8-1.9(d).
30. The lack of adequate procedures at the Foundation was
particularly problematic
because various entities throughout the
Trump Organization issued requests for payment to the
accounting staff and these requests were not always accompanied
by an instruction as to which
entity in the
Trump Organization should make a payment. In such circumstances,
the sole
criteria that the
accounting staff used to determine whether to issue a check from the Foundation,
rather than another
entity in the
Trump Organization or Mr.
Trump personally, was the taxexempt
status of the intended recipient; no one made
any inquiry into the purpose of the
payment.
31. As described more
fully below, because of the lack of oversight and direction, Mr.
Trump was able to use the Foundation's charitable assets to
satisfy the obligations of, or
otherwise benefit, himself and other entities in which he had an interest.
32. The Foundation also did not have an investment policy, even though New York
law required it to have such a
policy by no later than 2010. See NPCL
§ 552(f). The Board did
not discuss how to invest the Foundation's assets, but rather
simply left the decision to Mr.
McConney and Allen Weisselberg, executive vice president and chief financial officer of the
Trump Organization and the treasurer of the Foundation. Although in recent years the average
monthly value of the Foundation's assets was over $1 million,
the Foundation kept its funds in a
money market account, earning negligible interest.
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2016 Political Activity/ Related
Party Transaction
33. In 2016,
the Board
knowingly permitted the Foundation to be coopted
by Mr.
Trump's presidential
campaign, and
thereby
violated its certificate of incorporation and state and
federal law by engaging in political
activity and prohibited related
party transactions. Donald J.
Trump for President,
Inc. (the "Campaign"),
"Campaign"
Mr. Trump's political
committee, extensively
directed and coordinated the Foundation's activities in connection with a
nationally televised
charity
fundraiser for the Foundation in Des Moines,
Iowa on
January 28, 2016 (the "Iowa
Fundraiser"
Fundraiser"), and the disbursements of the proceeds from the event.
34. Candidate
Trump decided to conduct the Iowa Fundraiser in lieu of
participating
in a televised debate of the Republican presidential candidates. The events took place less than
one week before the
February 1, 2016 Iowa caucuses.
35. In a
filing submitted to the Attomey General's Charities Bureau, signed
by Mr.
Trump as President of the Foundation and dated October 20, 2016,
the Foundation asserted that
it "held [the Iowa
Fundraiser]
to raise funds for
veterans'
organizations . . . [and that
it] created a
website to allow donors to make charitable contributions
online."
(2016 Form CHAR410-A, Part
G, Line
3(c).) This statement was false because,
in reality,
the Fundraiser was a
Trump
Campaign event in which the Foundation participated.
36. The Investigation revealed that the Iowa Fundraiser was planned, organized,
financed, and directed
by the Campaign, with administrative assistance from the Foundation.
The event was billed as the "Donald J.
Trump Special Event for
Veterans,"
and the website
through which the public could get tickets for the event listed a Campaign staffer
–
the Iowa
Deputy State Director for Donald J.
Trump for President,
Inc.
–
as the event
"Organizer."
Brad
Parscale, a Campaign consultant who
eventually became the Campaign's digital media director
(and is now the campaign manager for Mr. Trump's re-election campaign), created the event
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organization."
website for the Foundation. Mr. Weisselberg assigned Mr. McConney,
the
Trump
Organization's controller and one of two
Trump Organization employees who
regularly
performed tasks for the Foundation,
to work with Mr. Parscale on the project. The website that
Mr. Parscale and Mr. McConney set
up for the Iowa Fundraiser, DonaldTrumpForVets.com,
featured the name of the Foundation at the
top of the home page and informed visitors that "the
Donald J.
Trump Foundation is a
501(c)(3) nonprofit
organization."
Hope Hicks,
then the
Campaign's Communication Director, participated in making arrangements for speakers at the
event.
37. On the
day of the Iowa Fundraiser, January 28, 2016, Mr. Weisselberg and Mr.
McConney flew to Des Moines, Iowa,
to be present
r with the Foundation's checkbook at the
Fundraiser in case Foundation grants were to be disbursed that night. Mr. McConney understood
that he was
attending the Fundraiser on behalf of the Foundation. Ivanka Trump, Donald
Trump
Jr. and Eric
Trump all attended the fundraiser.
38. At the televised
fundraising event,
the podium was decorated with a sign that
borrowed the
Trump Campaign's themes and slogans. The DonaldTrumpForVets.com website
address was displayed on a blue placard with a red border and star pattern that was identical to
the design of Campaign signs and billboards, with Mr. Trump's name in capital letters and the
Campaign's trademarked slogan, Make America Great Again. A photo of the Iowa Fundraiser
published
by ABC News is pasted in below:
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DonaldTrumpforVets.com
TRUMP
Des Moines, lowa
MAKE AMERICA GREAT AGAINT
(https://aben.ws/2wIXKqw (published
by ABC News.))
39. The Fundraiser, which solicited donations from members of the public, including
New York
residents, reaped
approximately $5.6 million in tax free donations. Of that
total,
$2.823 million was contributed to the Foundation. The remainder was donated
directly by
private donors to veterans
charity groups, without
going through the Foundation.
40.
Following the Iowa Fundraiser,
the Foundation ceded control over the charitable
funds it raised to senior
Trump Campaign staff, who dictated the manner in which the
Foundation would disburse those proceeds, directing the timing, amounts and recipients of the
grants.
41. For example,
in an email on
January 29, 2016, Mr. Weisselberg wrote to
Corey
Lewandowski,
then Mr. Trump's campaign manager,
to
say "we should start
thinking about how
you want to distribute the funds collected for the
Vets."
Mr. Lewandowski
replied, "I think we
should get the total collected and then put out a press release that we distributed the $$ to each of
the
groups."
Mr. Weisselberg then asked Mr. Lewandowski how much would be given to each
group, and Mr. Lewandowski replied that "[n]ot all will be given equal
amounts."
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42. A few minutes after this exchange, Mr. Lewandowski directed the Foundation to
make grants in Iowa right before the
February 1, 2016 Iowa caucuses,
the first
nominating
contest of the 2016 presidential election cycle. Mr. Lewandowski, emailed Mr. Weisselberg to
ask,
"Is there
any way we can make some disbursements [from the proceeds of the
fundraiser]
this week while in Iowa? Specifically on
Saturday."
43. Mr. Lewandowski also emailed Mr. McConney that same day, attaching a Word
document
listing the veterans organizations
purportedly approved
by Mr.
Trump to receive
grants from the Foundation. Metadata from the Word document file shows that it was created
by
Lisa Maciejowski Gambuzza, a member of the Campaign staff and that Stuart
Jolly, one of the
Campaign's political directors, edited the list and sent it on to Mr. Lewandowski. When a
problem arose with making a grant before the Iowa caucuses to one of the charities that had been
originally selected,
the Campaign
quickly secured a replacement Iowa veterans
charity to appear
at a campaign
rally and receive a grant from the proceeds of the Iowa Fundraiser.
44. Mr. Weisselberg's
testimony at an examination
during the Investigation confirms
that he used the Foundation's charitable assets to
satisfy the Campaign's requirements:
Q: So Mr. Lewandowski wanted some checks when he was in Iowa?
A: Based on what I'm reading here, yes.
[Referring to his email exchange with Corey
Lewandowski]
Q:
They were in Iowa
campaigning for the
primary that was
going to be held on
February 1st; correct?
A: I don't know. I had
nothing to do with the political side of anything. I just
wanted to get checks prepared. Whenever
they wanted them,
I wanted to be
ready to have those checks for
them, whatever date it may have been. It
didn't matter what
day of the week it was.
45. Other email exchanges show the extensive coordination between the Campaign
and the Foundation. On
January 28, 2018, when the first donation came in to the website, Mr.
McConney immediately notified Mr. Lewandowski, Ms. Hicks and other campaign staffers,
congratulating Mr. Parscale on his work. On
February 16, 2016, Mr. McConney, on behalf of
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the Foundation, wrote to Mr. Lewandowski
seeking the Campaign's direction on
distributing
Fundraiser proceeds still in the Foundation's account, and on maintaining the website: "Do you
have a list of which veterans charities you want these funds sent to and how much for each
charity?? . . . Lastly, how much longer do you want to
keep the TrumpForVets website
up and
running?"
46. The Investigation obtained additional evidence that the Campaign played the lead
role in
determining the disposition of the Fundraiser proceeds. For example, Campbell Burr,
assistant to the Campaign manager, sent a series of emails to Mr. McConney and Mr.
Lewandowski, among others, with subject headings such as "Vet
Donations"
and "Updated Vet
Donations
List."
Ms. Burr addressed the recipients as
"Team"
and provided "an updated list of
checks that have been sent to the veterans
groups"
In that email, she also noted that several of
the donations on the list were
"going out
today,"
reflecting the control held
by the Campaign
staff over the disbursements. Mr. Weisselberg admitted in
testimony that he understood that Ms.
Burr was
assisting Mr. Lewandowski in making "sure these funds got to where
they had to get
to."
47. On March 22, Mr. Lewandowski wrote to Mr. Weisselberg and Mr. McConney,
asking that a check for $100,000 be sent to the Marine Corps Law Enforcement Foundation,
noting that the media had been
asking whether the Foundation had donated to that group. Mr.
Weisselberg assured Mr. Lewandowski that he would draw a check promptly, and a check was in
fact sent that day.
48. On May 24, Ms. Burr sent an email to Campaign staff, Mr. McConney, and Mr.
Weisselberg, again
referring to the
group as
"Team,"
attaching a Word document with a new list
of recipient organizations. Metadata from the file shows that Jo Ann
Poly Calvo, a member of
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bN
EETE
E)auua!
y201!E
0.. I.IT
NEAKE
ANEERECAA
GREAT AGA ' GAIN! !
the Campaign staff, edited the final draft. That same day,
the Foundation issued grants to all but
one of the organizations listed in Ms. Burr's email.
49. The Investigation further revealed that the Foundation permitted the Campaign to
exhibit and award enlarged presentation copies of supposed Foundation checks to grant
recipients at campaign rallies for the political benefit of Mr.
Trump and to support the Campaign.
Mr.
Trump held several campaign rallies in Iowa in the days
leading to and
including the date of
the Iowa caucuses, February 1, 2016.
During those campaign appearances, Mr. Trump,
personally distributed the presentation copies of Foundation checks to Iowa veterans groups.
50. The enlarged copies of checks he used for the presentations reflected his dual role.
The Foundation's name and address were printed on the enlarged presentation checks, along with
the
Trump Campaign slogan, "Make America Great
Again!,"
Mr. Trump's name in large letters,
with a smaller reference to the DonaldTrumpForVets.com website, and Mr. Trump's signature.
A copy of Mr.
Trump giving out one of the enlarged checks is pasted in below:
ntin</ T|
(https://bit.ly/1RKtlWf (AP
photo).)
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51. On
January 30, 2016,
two days before the Iowa Caucuses, at a campaign event in
Davenport, Iowa,
the Campaign staged the disbursement of a presentation check for $100,000 to
the
Puppy Jake Foundation, a veterans charity. Video of the event shows Mr.
Trump presenting
an enlarged
copy of the check to the recipient foundation and
receiving a round of applause from
the audience for
doing so. In
giving out the check at this campaign event, Mr.
Trump referred to
it as "our first
disbursement."
52. The pattern repeated itself the next day, January 31, 2016, when, at a campaign
rally
in Council Bluffs, Iowa, Mr.
Trump gave out an enlarged presentation
copy of a supposed
$100,000 check to Partners for Patriots, a veterans
charity located in Iowa.
(https://cs.pn/2GmS410.) At the rally, Jerry Falwell, Jr.,
in
endorsing Mr. Trump's candidacy,
touted Mr. Trump, stating,
"I mean, how often do you see a presidential candidate
giving money
away instead of
taking it. I think that is wonderful. Mr. Falwell went on,
"we have got a
group
here
today that is
going to receive the second disbursement of that six million dollars that was
raised the other night. If that
group would come on the stage now,
it's called Partners for
Patriots."
After
handing over the presentation check, Mr.
Trump emphasized his own role in
distributing the proceeds from the fundraiser, stating: "So with a hundred thousand you can do a
lot,
right? . . . This is such an honor,
it is so
great."
At the time that he gave out that
copy to
Partners for Patriots, no check had been issued and,
in fact,
the Foundation was unaware that the
Campaign had selected Partners for Patriots to receive the funds. The actual payment was
subsequently requested
by the Campaign and was issued
by the Foundation on
February 10,
2016.
53. That same day, Mr.
Trump presented another grant at a campaign
rally in Sioux
City,
Iowa. At the Sioux City rally, Mr.
Trump disbursed a Foundation grant of $100,000 to
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Support Siouxland Soldiers, again
presenting an enlarged promotional version of a Foundation
check emblazoned with his campaign slogan. (See photograph in
¶ 50, supra.)
54. On
February 1, 2016,
the
day of the Iowa caucuses, Mr.
Trump awarded another
enlarged presentation
copy of a $100,000 check to the Mulberry Street Veterans Shelter at a
campaign
rally in Cedar Rapids,
Iowa.1
Video news footage
showing the Fed Ex envelope in
which the check was delivered confirms that the check was sent
by Mr. Lewandowski from his
address at the Campaign, not
by the Foundation. During the rally, Mr.
Trump himself
directly
drew a connection between his Campaign activities and the distribution of checks
by the
Foundation and the impact that the Iowa Fundraiser and the distribution of proceeds from it had
on his political
polling numbers, stating:
In lieu of the [Republican presidential
primary] debate,
I said let's have a
rally
for the veterans. . . . At that
rally, we raised in one hour six million dollars. . . .
So what we did, we raised this money, and we are
giving it out, and we just
gave out a check for a hundred thousand dollars a little while ago, and we are
giving out another check, and
they
can
bring it
up and we are
going to deliver it
right here. . . . We have so many of these checks.
They are all over the place.
We are
giving them out. This was in lieu, and, by the way,
the poll numbers
just came down from New Hampshire,
I went through the roof. I think
they
respect the fact that
I,
that we stand
up for our rights . . . . So, congratulations to
Mulberry Street.
(https://bit.ly/2GhzaN2.) That same day, Mr.
Trump also presented a $100,000 check to
Americans For Independent
Living (also known as Americans for Equal
Living) at a campaign
rally
in Waterloo,
Iowa.2
Iowa.
55. After the Iowa caucuses, Mr.
Trump continued to use the Foundation's
disbursements to veterans groups to advance his political goals. On May 31, 2016, after press
1
The actual check was issued on
January 29, 2016 (but was not delivered until later in February because the
representatives from the organization could not attend the rally). The actual check was written to Central Iowa Shelter
Services, which is the official name of the shelter.
2
The presentation
copy of the check shows Americans for Independent Living as the payee, but the actual check was
made out to Americans for Equal
Living and was dated
February 2, 2016.
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reports
concerning the Foundation's failure to disburse all of the charitable funds it had received
during the Iowa Fundraiser,
the charitable
giving of the Foundation again became the centerpiece
to a Campaign political event at which Mr.
Trump promoted his
candidacy by announcing the
grants the Foundation made to veterans groups from the proceeds of the Iowa Fundraiser
3
As at
the Iowa events,
the Campaign's slogan was
prominently displayed in connection with the
announcement of the Foundation's charitable giving. Mr.
Trump reminded the press corps that
he had raised millions of dollars for veterans at the Iowa event and again took credit
personally
for
giving out the funds, stating, after
reading out the names of each
charity receiving a donation
from the proceeds of the Iowa Fundraiser, "nobody gave this kind of money
–
so I gave
$5,600,000."
(https://bit.ly/2ImPa64.) Mr.
Trump also challenged the press to compare his
efforts to those of his political opponent: "When I raise money for the veterans, and it's a
massive amount of money,
find out how much Hillary Clinton's given to the veterans.
Nothing."
At the press
conference, Mr.
Trump invited a veteran, Al Baldasaro (a Republican member of the
New Hampshire state legislature who worked on the
Trump campaign
during the primary),
to
address the reporters. During his
speech, Mr. Baldasaro applauded Mr. Trump's
fundraising
efforts for the veterans charities, and repeated his endorsement of Mr. Trump's candidacy.
56. On or about the same day,
the Campaign posted on its website a chart
identifying
the recipients of the charitable, tax-free, grants given from the proceeds of the Fundraiser in Iowa
five months earlier, and uploaded a news report under the headline, "Lewandowski:
Trump
Campaign Gave Between $5.5 –
$6 Million to Veterans
Groups."
3
One of the organizations
receiving a grant in May 2016 from the Foundation was The Mission Continues, an
organization founded
by the then Republican Governor of Missouri, Eric Greitens. According to news reports,
Greitens stepped down from the organization in 2014, but his campaign for governor received donor lists from The
Mission Continues in 2015. The Missouri Attorney General announced in April 2018 that Greitens wrongfully
procured and used the charity's donor list. https://cnn.it/2JH3ROu.
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57. All of the grants issued
by the Foundation from the proceeds of the Iowa
Fundraiser
–
which did not include
any funds donated
by Mr.
Trump
personally4
personally
–
were selected
by
the Campaign. The Foundation's Board knew of the role played
by the Campaign in the Iowa
Fundraiser and the distribution of proceeds from it, but nevertheless:
(a)
failed to meet to discuss
the Foundation's involvement in the Fundraiser or
any of the campaign events at which the
proceeds from it were disbursed; and
(b)
failed to approve the grants that were made from the
proceeds. The
only board member
giving approval was Mr. Trump, who was its president and
the candidate whose Campaign benefitted from the manner in which the grants were disbursed
58. The Foundation's disbursements of funds from the Iowa Fundraiser were relatedparty
transactions. As detailed above,
the Foundation ceded control over the grants to the
Campaign, making an improper in-kind contribution of no less than $2.823 million (the amount
donated to the
Foundation)
to the Campaign that provided Mr.
Trump and the Campaign a means
to take credit at campaign rallies, press briefings, and on the Internet,
for gifts to veterans
charities. The Foundation's grants made Mr.
Trump and the Campaign look charitable and
increased the candidate's profile to Republican
primary voters and
among important constituent
groups.
59. Mr.
Trump had a financial interest in the Campaign and benefitted from the
Foundation's in-kind contributions to the Campaign. Mr.
Trump exercised control over the
Campaign, which existed
exclusively for the purpose of
electing him to office. Mr.
Trump
repeatedly touted that he was
self-funding his campaign, including on Twitter on the
day before
the Iowa Fundraiser. According to campaign finance disclosures filed in December 2016, Mr.
Trump invested $66 million of his own money, composed of both loans and contributions,
in the
4
Mr. Trump did
eventually contribute to veterans groups as he promised in connection with the Iowa Fundraiser, but
he did not do so through the Foundation.
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"they'
they'
we'
Campaign before the end of 2016, giving him a substantial financial interest in the Campaign and
its transactions with the Foundation. As of the end of
January 2016, when the Iowa Fundraiser
took place, Mr.
Trump had contributed
only $250,000 to the Campaign, but had loaned it
approximately $17.5 million.
60. Mr. Trump's wrongful use of the Foundation to benefit his Campaign was willful
and knowing. Mr.
Trump was aware of the prohibition on political activities and the requirement
of restrictions on related
party transactions. Among other
things, he
repeatedly signed, under
penalties of perjury,
IRS Forms 990 in which he attested that the Foundation did not engage in
transactions with interested parties, and that the Foundation did not
carry out political activity.
Mr.
Trump also signed, again under
penalty of perjury,
the Foundation's Certificate of
Incorporation,
in which he certified that the Foundation would not use its assets for the benefit of
its directors or officers and that it would not intervene in
"any political campaign on behalf of
any
candidate."
In addition,
in
February 2016, while on the campaign trail, Mr.
Trump spoke out
against the prohibition on charities
participating in political
campaigns.5
campaigns. Mr.
Trump was again
alerted to the prohibition on political
activity no later than March 22, 2016,
the date that the
initial public
reporting of the Foundation's unlawful donation to the political committee for
Florida
Attorney General Pam Bondi. The
very next day,
the Foundation filed an IRS Form
4720, signed
by Mr. Trump, disclosing the "And Justice for
All"
transaction detailed below, and
Mr.
Trump paid federal excise tax for making an impermissible political expenditure and
reimbursed the Foundation for that expenditure. Despite his knowledge of the prohibition on
5
At a Trump event in South Carolina in
February 2016, Mr.
Trump said, re willing to take your tax exemption
and tax status away from you if you talk. That happened during Lyndon Johnson's reign and I would put that back so
fast . . . . I have so many ministers endorsing me . . . and re all afraid to get too involved because
they don't want
to lose their tax exemption . . . . but re going to get rid of that. . . . [T]hey're afraid to get involved
politically . . . .
[and] so I think it's
very important . . . that we knock out that tax-exempt horrowshow that has taken a lot of their
power
away."
https://bit.ly/2xp743a.
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political
activity and on
using the Foundation's assets for his own benefit, Mr.
Trump
nevertheless used the Foundation to intervene in the election to assist him in his
candidacy for
president and to benefit the Campaign (in which he had a substantial financial interest).
The "And Justice for
All"
Transaction
61. On September 9, 2013,
the Foundation issued a check in the amount of $25,000 to
"And Justice for
All,"
a political organization located at 610 S. Boulevard, Tampa, Florida,
established under Section 527 of the Internal Revenue Code to support the re-election of Pam
Bondi to the position of Florida
Attomey General. Private foundations such as the Foundation
are prohibited under the Code from making political contributions.
62. The Foundation represented on its 2013 IRS tax return that it did not contribute to
a Section 527 political organization and did not participate in
any political campaign. In its list
of specific contributions on the 2013 tax return,
the Foundation did not disclose its contribution
to And Just for All in Tampa, Florida.
Instead,
it listed a $25,000 contribution to a Kansas-based
Section
501(c)(3) organization with a similar name, Justice for All. Contrary to this disclosure,
the Foundation never made a contribution to the Kansas-based Justice for All.
63. On August 28, 2013, Deborah Aleksander, a Bondi campaign fundraiser with an
@pambondi.com email address, emailed Rhona Graff, Mr. Trump's executive assistant,
to thank
Mr.
Trump for his commitment of $25,000 to an
"ECO"
named And Justice for All, and to
provide the organization's federal tax identification number. ECO is a Florida Division of
Elections abbreviation for
"electioneering communications
organization."
64. Mr.
Trump initialed a printed
copy of the email to indicate his approval for the
payment. Ms. Graff gave this printed
copy to a
Trump Organization accounts payable clerk,
Deborah Tarasoff. Ms. Tarasoff, who maintained that she assumed And Justice for All was a
charitable organization,
testified that she looked in an IRS publication of tax-exempt
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organizations she kept in her office, and found an organization with the same name, which the
IRS showed as located in Salt Lake City, Utah. She cut the Foundation check, dated September
9, 2013, and sent it to Mr. Trump's office for signature. Ms. Tarasoff testified that she did not
take
any steps to confirm that the Utah organization was the intended recipient of the payment.
Ms. Tarasoff and Mr. McConney maintain
they do not know who mailed the check.
65. Given Ms. Aleksander's email to Ms. Graff, Mr.
Trump knew or should have
known that the Foundation was making a political contribution because he was aware the
contribution was to support Ms. Bondi's re-election campaign and he
personally signed the
Foundation check.
66. In
disclosing grant recipients to the IRS,
the Foundation did not list on its Form
990-PF either the actual unlawful recipient of the $25,000 check or the Utah-based
group
assumed
by Ms. Tarasoff to be the recipient, but, rather, a third unrelated
group with a similar
name, Justice for All, which the form presented as located at 113 N. Martinson St., Wichita,
Kansas, 67203. The Foundation did not make a donation to Justice for All.
67. The Foundation has no credible explanation for the false
reporting of grant
recipients to the IRS and the State of New York. Mr. McConney testified that the IRS Form
990-PF was prepared
by the Foundation's accountants, Weisermazars LLP, and that the
accountants relied on the information in the Foundation's general ledger and bank statements.
But the general ledger and bank statements do not show a disbursement to Justice for All at 113
N. Martinson St., Wichita, Kansas.
They show the disbursement to And Justice for All, with no
address given.
68. Neither Mr. McConney nor Mr. Weisselberg could not explain
why Weisermazars
LLP entered an organization and address not supplied
by the Foundation. Mr. McConney said
he might have had a conversation with the
accounting firm about
it, but did not know the reason
23
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Transaction"
the mistake happened. Asked how the error occurred, Mr. Weisselberg said he wished he could
recall the answer but could not.
69. Although the Foundation asserts that its $25,000 contribution to Ms. Bondi's
campaign was an inadvertent mistake
by the
Trump Organization's
accounting staff it was, at a
minimum, a result of the Foundation's lack of adequate controls and inadequate supervision of
and
training of staff
performing services.
70. Section 4955 of the Code imposes an excise tax on political expenditures
by
Section
501(c)(3) organizations. Under Section 6652 of the Code, a tax-exempt organization
that, without reasonable cause,
fails to include
any of the information required on a Form 990 tax
return, or fails to provide the correct
information,
is liable for civil penalties.
71. On March 22, 2016,
the Washington Post reported that a government watchdog
group, Citizens for
Responsibility and Ethics in Washington ("CREW"), had the
day before filed
a complaint with the IRS about the "And Justice for
All"
contribution and the inaccurate IRS
filing. The
following day, March 23, 2016,
the Foundation filed an IRS Form 4720, signed
by
Mr., Trump, disclosing the transaction, and Mr.
Trump paid the federal excise tax, $2,500, by
personal check. Mr.
Trump also reimbursed $25,000 to the Foundation.
Additional Self-Dealing/Related
Party Transactions
72. In addition to the Iowa Fundraiser, which
directly benefitted Mr.
Trump and his
presidential
campaign,
the Foundation entered into the
following prohibited
self-dealing
transactions that
directly benefitted Mr.
Trump or entities that he controlled:
A. On September 11, 2007,
the Foundation made a $100,000 payment to the Fisher
House Foundation, a charitable organization,
to settle legal claims against Mar-ALago,
LLC, LC ("Mar-A-Lago") by the City of Palm Beach (the "Mar-A-Lago
Transaction");
24
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Transaction"
Transaction"
B. On
February 14, 2012,
the Foundation made a $158,000 payment to the Martin B.
Greenberg Foundation, a charitable organization,
to settle legal claims against The
Trump National Golf Club and other defendants
by Martin B. Greenberg (the
"Trump National Transaction");
C. On November 5, 2013,
the Foundation made a $5,000 payment to the DC
Preservation League, a charitable organization,
for promotional space
featuring
Trump International Hotels in
charity event programs (the
"Trump Hotels
Transaction");
D. On March 20, 2014,
the Foundation made a $10,000 payment to the Unicorn
Children's Foundation, a charitable organization,
for a
painting of Mr.
Trump
purchased at an auction for that charity,
(the
"Trump Painting Transaction");
Transaction"
and
E. On December 14, 2015,
the Foundation made a $32,000 payment to the North
American Land Trust, a charitable organization that preserves natural
resources,
in connection with a pledge
by Seven Springs, LLC to fund the management of a
conservation easement (the "Seven Springs Transaction").
Transaction"
73. The Foundation's Board failed to review or approve
any of the above
transactions.
2007 Mar-A-Lago Transaction
74. Mar-A-Lago is a private club in Palm Beach, Florida, of which Mr.
Trump is the
99.99% owner,
located in a district zoned residential. In August 2006,
the Town of Palm Beach
issued a citation to Mar-A-Lago for violation of several ordinances related to the height and
location of flagpoles on residential properties, as well as for failure to seek a
building permit or
certificate of appropriateness for
installing the flagpole.
25
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Lt&M
ToVioed4e
(s~
P,f'I – ..i>l,:-
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yppr.: Q~ if'
75. Mar-A-Lago sued the town, arguing that the ordinances were unconstitutional.
On April 17, 2007,
the parties settled the lawsuit under terms that required Mr.
Trump to
contribute $100,000 to charities agreed to
by the parties. The parties
subsequently agreed that
the contribution should be made to the Fisher House Foundation.
76. Mr.
Trump personally directed his
accounting staff to draw the $100,000 payment
from the assets of the Foundation, not his personal accounts or the accounts of Mar-A-Lago in
the
following handwritten note he sent:
DONALD J.TRIJMP
S
'~©ee
DATE
MAILED
The
Trump Organization
accounting staff followed Mr. Trump's instruction to use the
Foundation's account to
satisfy the settlement obligation, even though the Foundation was not
involved in the lawsuit in
any way.
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Foundation"
77. The Investigation found that
by directing the Foundation to make payment to
Fisher House, Mr.
Trump caused the Foundation used its charitable assets to benefit another
organization that he controlled, which constituted improper self-dealing. After the OAG
commenced the Investigation, on March 17, 2017, Mr.
Trump reimbursed the Foundation
$100,000, plus interest in the amount of $8,763.41,
for this transaction.
2012
Trump National Transaction
78. In 2012, Martin B. Greenberg sued the
Trump National Golf Club, Alonzo
Mourning Charities Inc.
("AMC"), Florida Team Golf and Celebrity
International ("Florida
("
Golf"
Team Golf"), and Hole in One International, an insurer. The
Trump National Golf Club is 99%
owned
by DJT Holdings, LLC, which is, directly and indirectly, owned
by Mr. Trump.
Promotors of a
fundraising golf
tournament, held at the
Trump National Golf Club to benefit
AMC, promised golfers a chance to win $1 million
by shooting a hole in one at the thirteenth
hole. Mr. Greenberg shot a hole in one at the thirteenth hole, but, according to his complaint,
the
insurer determined that Mr. Greenberg's shot was not made from a minimum distance of 150
yards and declined to
pay the claim.
79. The parties settled the lawsuit on
February 13, 2012 for $775,000 (the "Settlement
Amount"
Amount"). The settlement consisted of two concurrent agreements: one
among Mr. Greenberg,
the
Trump National Golf Club, AMC and Florida Team Golf (the "Settlement Agreement"),
Agreement"
and
the other between AMC and the
Trump National Golf Club (the "AMC-TNGC Agreement").
Agreement"
Under the Settlement Agreement, AMC and Florida Team Golf agreed to
pay the full Settlement
Amount to the Martin B. Greenberg Charitable Foundation (the
"Greenberg Foundation").
Under the AMC-TNGC Agreement,
the
Trump National Golf Club agreed to
pay $158,000
toward the Settlement Amount, which the golf club would
pay directly to the Greenberg
Foundation.
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80. The Foundation, not the
Trump National Golf Club or Mr. Trump, paid $158,000
to the Greenberg Foundation. The
Trump Organization raised the $158,000 payment through an
auction for the benefit of the
Trump Foundation of a lifetime membership in Mr. Trump's golf
clubs. The auction was held through a
charity auction website. The contract between the auction
website and the Foundation, dated December 1, 2011 and signed
by then-attorney for Mr.
Trump
Michael Cohen on behalf of the Foundation,
identified the Foundation as the
beneficiary of the
auction. The auction webpage announced, "Proceeds from this item benefit the Donald J.
Trump
Foundation."
This statement was false because Mr.
Trump intended that the proceeds would be
used to
satisfy the
Trump National Golf Club's obligations under the AMC-TNGC Agreement.
81. An individual made a winning bid on December 19, 2011. After
deducting a 15%
service fee,
the auction website delivered $157,250 to the
Trump Foundation on
January 9, 2012,
and on
February 14, 2012,
the
Trump Foundation paid $158,000 to the Greenberg Foundation,
per Mr. Trump's directions.
82. The Investigation concluded that the Foundation
improperly used the funds it
received from the auction, which were advertised as
being used to support the Foundation,
to
satisfy the obligations of the
Trump National Golf Club, an organization controlled
by Mr.
Trump, and, as a result, constituted improper self-dealing.
83. After the commencement of the Investigation, on March 17, 2017,
the
Trump
National Golf Club contributed $158,000 plus interest in the amount of $3,593.08,
to the
Foundation to reimburse it for its expenditure.
2013
Trump Hotels Transaction
84. In 2013,
the Foundation paid $5,000 to the DC Preservation League ("DCPL"), a
Section
501(c)(3) organization that advocates historic preservation in Washington, D.C. The
payment entitled the Foundation to a half-page ad in the 2014 commemorative program for
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DCPL's annual gala. The Foundation did not use the space in the program to advertise itself.
Rather the
Trump Organization used the space to promote The
Trump Hotel Collection. A copy
of the ad from the program promoting Trump Hotels and
providing a phone number for
reservations, without
any mention of the Foundation,
is pasted below.
UVE THE LIFE.
T R U M P
H O T E L
C OL L L CT1ONª
Forreservations.call 85528.6700 or visit TrumpHoteiCoBectiortcom.
NEWYORKICENTRALPA 5CHO CHiCACO LA5VEGA5 KlF TC NTC ANAHA MIAMP DORAL
(D.C. Preservation League, Commemorative Program (Feb. 11, 2014)
(produced
by DC
Preservation League as part of this
Investigation).)
85. The Investigation concluded that the $5,000 payment was made for the benefit of
Trump International Hotel Management LLC, an organization controlled
by the directors of the
Foundation and constituted improper self-dealing.
86. After the commencement of the Investigation, on December 9, 2016, Trump
International Hotel Management LLC contributed $5,084.62 to the Foundation to reimburse it
for the contribution to DCPL plus interest. On December 19, 2016,
the Foundation filed IRS
Form 4720 with the IRS
reporting the transaction and The
Trump International Hotel
Management LLC paid excise taxes and interest in the total amount of $502.33, $505.12, and
$506.88 due, respectively,
for each of 2013, 2014 and 2015.
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(" Springs"
2014
Trump Painting Transaction
87. On March 20, 2014, Mr.
Trump caused the Foundation to
pay $10,000 for the
winning bid on a
painting of Mr.
Trump at a
charity auction for the Unicorn Children's
Children'
Foundation, a Section
501(c)(3) organization. The
Trump Organization used the
painting as
at
Trump National Doral Miami, an
entity owned
by Trump Endeavor 12 LLC, which is
owned
by Mr. Trump. The Investigation concluded that the payment of $10,000 was used to
benefit an organization controlled
by the director of the Foundation and constituted improper
self-dealing.
88. After the commencement of the Investigation, on November 17, 2016, Trump
Endeavor 12 LLC returned the
painting to the Foundation and paid $182.82 to compensate the
Foundation for the fair rental value of the
painting plus interest, as determined
by an outside
appraisal report for the applicable period. On December 19, 2016,
the Foundation filed IRS
Form 4720 with the IRS and
Trump Endeavor 12 LLC paid
outstanding excise taxes and interest
in the amount of $8.49 and $18.49, due, respectively,
for each of 2014 and 2015.
2015 Seven Springs Transaction
89. In 2015,
the Foundation paid $32,000 to the North American Land Trust
("NALT")
to
satisfy a $32,000 pledge
by Seven Springs LLC ("Seven Springs"). NALT is a
land preservation organization that preserves natural resources. Seven Springs, which is owned
by DJT Holdings LLC, an
entity owned
by Mr. Trump, holds a
property of over 200 acres in
Westchester
County used for recreation
by the
Trump family. Seven Springs had donated a 156-
acre easement to NALT and the $32,000 gift was to
satisfy a pledge
by Seven Springs to the
fund NALT maintains for managing the easements it acquires. As the Foundation admitted in a
tax
filing,
the contribution should have been made
by Seven Springs, not the Foundation.
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90. After the commencement of the Investigation, on November 17, 2016, Seven
Springs LLC corrected the transaction
by reimbursing $32,000 to the Foundation, and, on
December 9, 2016, paying $288.38 to the Foundation as the applicable interest on the amount
contributed. In addition, on December 19, 2016, Seven Springs LLC filed IRS Form 4720 and
paid excise taxes of $3,213.19.
FIRST CAUSE OF ACTION
Breach of
Fiduciary Duties and Waste – N-PCL
§§ 717 4 720
(Against the Individual Respondents)
91. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
92. The Individual Respondents were each directors of the Foundation, and as such,
owed
fiduciary duties to the Foundation pursuant to N-PCL
§ 717.
93. The Individual Respondents failed to discharge their duties as directors with the
degree of
care, skill, prudence, diligence, and undivided
loyalty required of them in that, among
other
things, they (a)
failed to hold at least one annual board meeting or to conduct a review the
Foundation's assets, liabilities,
revenues and disbursements as required
by law; (b)
failed to
provide oversight of the Foundation or control its activities; (c)
failed to institute and maintain
internal
controls; (d)
failed to provide management or supervision of
Trump Organization
accounting staff assigned to the Foundation and permitted the
Trump Organization
accounting
staff to disburse charitable assets entrusted to the Foundation without
obtaining Foundation
approval; (e) caused and/or allowed the Foundation to misuse charitable assets for the benefit of
Mr.
Trump and his personal and/or business interests; and
(f)
in violation of the Foundation's
certificate of incorporation and applicable provisions of the Code, caused and/or allowed the
Foundation to participate and intervene on behalf of Mr.
Trump in his
candidacy for public office
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in 2016 and to influence the outcome of the election, and separately, on behalf of Pamela Bondi
in her political campaign for Florida
Attorney General in 2013.
94. Due to the
foregoing acts and omissions,
the Individual Respondents breached the
fiduciary duties
they owed to the Foundation, and are thus liable under N-PCL
§§ 720(a)(1)(A)
and
(a)(1)(B)
to account for their conduct in the neglect and violation of their duties in the
management and disposition of corporate assets,
to
pay damages
resulting from loss and waste of
corporate assets, and should be enjoined from serving as an officer, director or
trustee, or in
any
similar
capacity, of
any not-for-profit charitable organization incorporated or authorized to
conduct business or solicit charitable donations in the State of New York.
SECOND CAUSE OF ACTION
Failure to
Properly Administer Charitable Assets and Waste – EPTL
§ 8-1.4 & 8-1.8
(Against Individual Respondents)
95. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
96. As directors of the Foundation, each of the Individual Respondents was a trustee
of charitable assets under EPTL
§ 8-1.4, and, as such, was responsible for the proper
administration of charitable assets. The Individual Respondents failed to
properly administer the
Foundation's charitable assets in that, among other
things, they (a)
failed to discharge their
fiduciary duties to the Foundation with the degree of
care, loyalty, and obedience that was
required of
them; (b) diverted charitable assets for improper or
unnecessary purposes
by causing
and/or
permitting the Foundation to wrongfully distribute charitable assets for the benefit of Mr.
Trump and his interests; and
(c) caused and/or permitted the Foundation to engage in political
activity
to influence the outcome of specific elections in violation of the Foundation's certificate
of incorporation and EPTL
§ 8-1.8(a)(5).
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97. Due to the
foregoing acts and omissions the Individual Respondents should each
be ordered to account for his or her conduct in the waste of assets and/or negligent failure to act,
to
pay damages
resulting from such waste, and be enjoined from serving as an officer, director or
trustee, or in
any other
capacity as a
fiduciary of
any not-for-profit or charitable organization
incorporated or authorized to conduct business in the State of New York, or which solicits
charitable donations in the State of New York.
THIRD CAUSE OF ACTION
Wrongful
Related-Party Transactions – N-PCL
§ 715(f) and EPTL
§ 8-1.9(c)
(Against Respondent Mr.
Trump)
98. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
99. Respondent Mr.
Trump caused the Foundation to enter into transactions in which
he had a financial interest without
obtaining authorization from the Board for those transactions
or a determination
by the Board that the transactions were fair, reasonable and in the
Foundation's best interest at the time of the transactions. Those transactions included payments
to the Fisher House Foundation,
the Martin B. Greenberg Foundation,
the DC Preservation
League,
the Unicorn Children's Foundation, and the North American Land Trust. Mr. Trump's
conduct was willful and intentional with respect to these transactions in that as president and
ultimate decision-maker of the Foundation and owner of entities on whose behalf the Foundation
made payments he
fully understood and intended the financial benefits he and his businesses
would derive from the transactions.
100. The
related-party transactions also included in-kind contributions of $2.8 million
by the Foundation to the
Trump Campaign. With respect to these transactions, Mr. Trump's
conduct was willful and intentional in that as president and ultimate decision-maker of the
Foundation, and presidential candidate whose election the Foundation's in-kind contributions
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sought to influence, he was
fully aware of and intended the benefits he would derive from the
Foundation's in-kind contributions. Mr.
Trump had a financial interest in the Campaign, which
he controlled, publicly asserted that he would self-fund the Campaign and, as of the time of the
Iowa Fundraiser, had loaned $17.5 million.
101.
By the
foregoing acts and omissions, Respondent Mr.
Trump is liable under
N-PCL
§ 715(f) and EPTL
§ 8-1.9(c), both in effect since
July 1, 2014,
to account for profits
from related
party transactions not
already accounted for;
to the extent not
already paid, pay the
Foundation the value of charitable assets used in such transactions; return assets lost to the
Foundation as a result of the transactions,
to the extent not
already returned; pay the Foundation
an amount
up to double the value of the amount of each benefit
improperly bestowed
by a
transaction
occurring after
July 1, 2014; and should be enjoined from serving as an officer,
director or
trustee, or in
any similar capacity, of
any not-for-profit charitable organization
incorporated or authorized to conduct business or solicit charitable donations in the State of New
York.
FOURTH CAUSE OF ACTION
Dissolution of the Foundation – N-PCL
§§ 112(a), 1101(a)(2)
(Against the Foundation and Respondent Donald J.
Trump)
102. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
103. Under N-PCL
§ 112(a),
the
Attorney General may bring an action to dissolve a
corporation that has acted beyond its
capacity or power.
104. Under N-PCL
§ 1101(2),
the
Attorney General may bring an action for the
dissolution of a charitable corporation when "the corporation has exceeded the
authority
conferred upon it
by law, or . . . has carried on, conducted or transacted its business in a
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persistently fraudulent or illegal manner, or
by the abuse of its powers
contrary to public
policy
of the state has become liable to be
dissolved."
105. N-PCL
§ 202(a)
requires New York non-for-profit corporations to act within the
limitations present in their certificates of incorporation.
106. Under Section
501(c)(3) of the Code,
the Foundation is prohibited from
participating or
intervening in
any political campaign on behalf of a candidate. This
statutory
prohibition is absolute. Penalties for violation of this law include excise taxes, pursuant to
section 4945 of the Code,
for
any expenditure paid or incurred
by a private foundation to
influence the outcome of
any specific public election.
107. Sections 406 of the N-PCL and 8-1.8 of the EPTL prohibit private foundations
from incurring penalties under section 4945 of the Code for expenditures to influence an
election. These same provisions prohibit
incurring penalties under section 4941 of the Code for
acts of self-dealing. Under section 406 of the N-PCL, New York private foundations must
include provisions in their certificates of incorporation
expressly prohibiting the conduct
penalized under sections 4945 and 4941 of the Code. Accordingly,
the Foundation's certificate
of incorporation prohibits the Foundation from participating in
"any political campaign on behalf
of
any
candidate for public
office,"
or
allowing any
corporate
property to be diverted "in
any
manner
directly or
indirectly or otherwise inure to the benefit of
any member, trustee, director or
officer of the corporation or
any private
individual."
108. The Foundation exceeded the
authority conferred to it in its certificate of
incorporation and acted in a
persistently
illegal manner
by repeatedly intervening in Mr. Trump's
campaign for president in 2016 by, among other
things, making expenditures
during the first five
months of 2016 that were intended to influence his election for president.
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109. N-PCL
§ 102(5) bars a not-for-profit corporation from permitting its assets,
income or profit to inure to the benefit of an officer or director of the corporation. Section
515
(a) of the N-PCL prohibits the distribution of
any part of the income of a not-for-profit
corporation to the directors or officers of the corporation. The Foundation violated these
provisions
by distributing its assets for the benefit of the president of the corporation.
110. N-PCL
§ 519 requires the directors of a New York non-for-profit corporation to
hold an annual meeting of the board of directors to receive and review a report of the
corporation's assets and liabilities, revenue, and disbursements. The directors of the Foundation
failed to
comply with this requirement for at least eighteen years,
from 1999 through 2017.
111. Under N-PCL
§ 552(f), a New York not-for-profit corporation must adopt a
written
policy setting forth guidelines on investments and delegation of management and
investment functions. The Foundation failed to adopt a written investment
policy and, as a
result, violated N-PCL
§ 552(f).
112. N-PCL
§ 715-a requires a New York not-for-profit corporation to adopt a conflict
of interest
policy to ensure that its directors and officers act in the corporation's best interest.
The Foundation did not adopt such a
policy and, accordingly,
the Foundation violated N-PCL
§ 715-a.
113. Sections 172 and 175 of the Executive Law prohibit the material false statements
in
any application,
registration required to be filed with the
Attorney General pursuant to Article
7-A of the Executive Law. The Foundation filed with the
Attorney General's Charities Bureau a
Form CHAR410-A, Amended Registration Statement for Charitable Organizations, signed
by
Mr. Trump, which
falsely stated that the Iowa Fundraiser was a Foundation event. This
statement was false because it failed to disclose the material fact that the Iowa Fundraiser was in
fact planned, organized,
financed and directed
by the
Trump Campaign.
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114. Section 172 of Article 7-A of the Executive Law requires charitable organizations
that solicit donations in New York State to register with the Charities Bureau of the New York
State
Attorney General's Office. The
Trump Foundation engaged in
fundraising activities in
New York State in connection with the auction on Charitybuzz.com and in connection with Iowa
Fundraiser,
in violation of the Executive Law, did not register with the Charities Bureau until
October 20, 2016, following a Notice of Violation from the Charities Bureau.
115. As a result of the foregoing,
the Foundation has acted beyond its
capacity by
persistently disregarding the limitations in its certificate of incorporation and the law, and it has
conducted its business in a
persistently illegal manner and abused its powers
contrary
to the
public
policy of the State of New York
by operating without
any oversight or control
by a board
of directors.
116. Accordingly,
the Foundation should be dissolved pursuant to N-PCL
§ 1101(a)(2)
and its
remaining assets and future assets,
if any, applied to charitable uses consistent with the
mission set forth in the Foundation's certificate of
incorporation, pursuant to N-PCL
§§ 1115(a)
and 1008(a)(15).
117. Simultaneous with the
filing of this Petition for Dissolution,
the
Attorney General
has notified the Internal Revenue Service and the Federal Election Commission
concerning
potential violations of the Code and federal election law that may
subject the Foundation and its
directors and officers to substantial penalties or fines. Pursuant to N-PCL
§§ 1115(a) and
1007(c)
distributions of corporate assets upon dissolution should be deferred until the complaints to the
Internal Revenue Service and Federal Election Commission have been resolved and it is
determined if
any penalties or fines will be imposed on the Foundation.
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FIFTH CAUSE OF ACTION
Dissolution of the Foundation – N-PCL
§§ 112(a), 1102(a)(2)
(Against the
Foundation)
118. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
119. N-PCL
§ 112(a)(7) authorizes the
Attorney General to maintain an action or
special
proceeding to enforce rights granted
by statute to a director or officer of a charitable
corporation. N-PCL
§ 1102(a)(2) empowers directors and officers to petition the court for
judicial dissolution in cases where directors have wasted assets or acted illegally.
120. Dissolution pursuant to N-PCL
§ 1102(a)(2)(D)
is appropriate for the reasons set
forth in paragraphs 1 –
114 and for the further reason that the directors of the Foundation wasted
corporate assets and otherwise behaved in an illegal manner.
SIXTH CAUSE OF ACTION
Injunction
Pending Resolution – N-PCL
§ 1113
(Against the
Foundation)
121. The
Attorney General repeats and re-alleges the
preceding paragraphs, as though
fully set forth herein.
122. N-PCL
§ 1113 authorizes the
Attorney General to seek an injunction
pending a
dissolution
proceeding to,
in relevant part, "(1) restrain[]
the corporation and its directors and
officers from conducting any unauthorized activities and from exercising any corporate powers,
except
by permission of the court[, and] (2) restrain[]
the corporation and its directors and
officers from collecting or
receiving any debt or other
property of the corporation, and from
paying out or otherwise
transferring or
delivering any property of the corporation, except
by
permission of the
court."
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123. Such an injunction is appropriate for the reasons set forth above, including,
without
limitation,
that the Individual Respondents breached their duties of care and
loyalty to
the Foundation, willfully ignored the legal requirements applicable to not-for-profit
organizations and caused the Foundation to violate state and federal law. There are no directors
remaining who have demonstrated an
understanding and respect for not-for-profit law and
fiduciary duties. Court supervision is
necessary to ensure that charitable assets are
appropriately
marshalled and distributed.
PRAYER FOR RELIEF
Plaintiff requests judgment against Respondents as follows:
A.
Enjoining Mr.
Trump from serving as an officer, director,
trustee or equivalent
position of
any not-for-profit or charitable organization incorporated or authorized to conduct
business or solicit charitable donations in the State of New York for a period of ten years; and
enjoining the
remaining directors from serving as officers, directors,
trustees or equivalent
positions of
any not-for-profit or charitable organization incorporated or authorized to conduct
business or solicit charitable donations in the State of New York for a period of one year, subject
to suspension in the event the
remaining directors undergo sufficient
training on the
fiduciary
duties of directors of not-for-profit
corporations;
B. Directing Mr.
Trump to
pay an amount
up to double the amount of benefits
improperly obtained through
self-dealing transactions after
July 1, 2014;
C. Directing each Individual Respondent to account for his or her conduct in the
failure to perform his or her duties in the management of corporate assets,
to make full restitution
for waste and misuse of charitable assets, and to
pay damages
resulting from the breach of
fiduciary duties;
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~0'=
D. Declaring that the Foundation has exceeded the
authority conferred upon it
by
law, and has carried on, or
conducted, or transacted its business in a
persistently fraudulent or
illegal manner and has abused its powers
contrary to the public
policy of this
state;
E. Directing the Foundation to cooperate with the
Attorney General in the
distribution of
any remaining assets to qualified charitable entities;
F.
Restraining the Foundation and its officers and directors, except
by permission of
the court,
from (i) conducting any unauthorized activities and from exercising any corporate
powers; (ii) collecting or
receiving any debt or other
property of the corporation; or
(iii)
from
paying out or otherwise
transferring or
delivering any property of the corporation;
G. Dissolving the Foundation, annulling the Certificate of Incorporation of the
Foundation, and
terminating the corporate existence of the Foundation; and
H. Granting such other and further relief as is just and proper.
Dated: New York, New York
June 13, 2018
BARBARA D. UNDERWOOD
Attorney General of the State of New York
ttorney for Peti ·oners
By: 01-4 46
Jam s Sheehan
Cha ties Bureau Chief
28
berty Street
New York, New York 10005
Tel.
(212) 416-8401
MATTHEW COLANGELO, Executive Deputy Attorney General
LAURA WOOD, Senior Advisor and Special Counsel
YAEL FUCHS, Co-Chief of
the Enforcement Section
STEVEN SHIFFMAN, Assistant
Attorney General
PEGGY FARBER, Assistant
Attorney General
Of Counsel
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General"
VERIFICATION
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
STEVEN SHIFFMAN, being duly sworn, deposes and says:
I am an Assistant
Attomey General in the office of the Barbara D. Underwood,
Attorney General of the State of New York (the
"Attorney General"). I am duly authorized to
make this verification.
I have read the
foregoing petition and am acquainted with the facts alleged therein
based upon the
Attorney General's investigation of the transactions upon which the petition is
based,
the annual filings and other reports made
by The Donald J.
Trump Foundation with the
Charities Bureau of the
Attorney General's office, and the investigative materials contained in
the files of the
Attorney General's office. To my knowledge based on such acquaintance with
the facts,
the petition is true.
The reason this verification is not made
by petitioner is that petitioner is a
body politic
and the
Attorney General is its
duly authorized representative. ,
Steven S ff
Assistant
ttorney General
NOTARY PUBLIC
EMn.Y STEfW
NOTARY PUGUC, State of New Yoek
No. 02ST5056697
QuaRAed In Kings County
Sworn t b ore me this Commission Expiree Memh m 2D
13th d
y of
June, 2018
41