New York Court Orders Trump to Pay $2 Million for Misusing Charitable Foundation

Details

On November 7, 2019, New York Supreme Court Justice Saliann Scarpulla ordered Donald Trump to pay $2 million in damages for misusing funds from his charitable foundation, the Donald J. Trump Foundation. The ruling resolved a lawsuit filed by the New York Attorney General's office alleging a pattern of illegal self-dealing and improper coordination with Trump's 2016 presidential campaign.

Background

The Donald J. Trump Foundation was established in 1987 as a private charitable organization. The New York Attorney General's office began investigating the foundation in 2016 after reporting by The Washington Post raised questions about the foundation's use of funds.

On June 14, 2018, then-Acting Attorney General Barbara Underwood filed a civil lawsuit against the foundation, Trump personally, and his three eldest children—Donald Trump Jr., Ivanka Trump, and Eric Trump—who served as board members. The lawsuit alleged "a shocking pattern of illegality" involving repeated self-dealing, improper coordination with the Trump campaign, and a failure of the board to exercise any oversight.

Findings

The court found that Trump had used charitable assets to serve his personal and business interests, including:

• Campaign coordination: In January 2016, Trump skipped a Republican primary debate and instead hosted a televised fundraiser for veterans, raising $5.6 million through the foundation. The Attorney General's office found that Trump's presidential campaign staff directed the distribution of those charitable funds, with disbursements made in amounts and to locations chosen to maximize political benefit in the Iowa caucuses rather than based on charitable need.

• Self-dealing transactions: Foundation funds were used to settle legal obligations of Trump's for-profit businesses, including $100,000 to settle claims related to Mar-a-Lago and $158,000 to resolve a legal dispute involving Trump's golf course in New York. In another instance, Trump spent $10,000 in foundation money to purchase a portrait of himself at a charity auction.

• Governance failures: The foundation's board—consisting of Trump and his three eldest children—had not held a formal meeting since 1999 and failed to approve any of these transactions as required by law.

Resolution

Justice Scarpulla's November 2019 order required Trump to pay $2 million in damages, which were distributed to eight charities: Army Emergency Relief, the Children's Aid Society, Citymeals on Wheels, Give an Hour, Martha's Table, the United Negro College Fund, the United Way of the National Capital Area, and the U.S. Holocaust Memorial Museum.

The foundation had already agreed to dissolve in December 2018 under judicial supervision, distributing its remaining approximately $1.8 million in assets to approved charities.

As part of the resolution, Trump was required to agree to a series of restrictions if he served on the board of any future New York charity, including mandatory training and oversight. Donald Trump Jr., Ivanka Trump, and Eric Trump were each required to complete mandatory training on the duties of officers and directors of charitable organizations.

Trump's Response

Trump maintained on social media that despite the court's finding, "all the money went to charity." Attorney General Letitia James, who continued the case after taking office in January 2019, responded: "The president himself admitted to personally misusing funds at the Trump Foundation. ... Not only has the Trump Foundation shut down for its misconduct, but the president has been forced to pay $2 million."

Legal Significance

The case was notable as a rare instance in which a sitting president was found by a court to have personally violated the law. While it was a civil rather than criminal matter, the court's finding that Trump misused charitable funds for personal and political purposes established a legal record of financial misconduct involving a charitable organization.