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DC Attorney General Sues Trump Inaugural Committee for Booking at Trump's Hotel and Misusing Charitable Funds

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DC Attorney General Sues Trump Inaugural Committee for Booking at Trump's Hotel and Misusing Charitable Funds

2020-01-23 16:04:081 Oct 2018 01:53 AM EST

By Laura Tucker, Staff writer; Image: Trump International Hotel (Image source: Ted Eytan via Wikimedia Commons)

It's another week, and Donald Trump is finding himself more legal trouble to be involved in. It just doesn't seem to stop. Not only is he going through the impeachment hearing right now, but the Washington D.C. attorney general is suing the Trump Inaugural Committee and his business for a booking at the Trump International Hotel that went unused and for misusing charity funds.

D.C. Attorney General Karl. A. Racine filed the lawsuit on Wednesday. It alleges that the committee violated its nonprofit status by spending more than $1 to book the hotel ballroom and that staff knew the amount was overpriced and then barely used it. 

Before Trump's inauguration in January 2017, the committee booked his hotel's ballroom for $175,000 a day, plus more than $300,000 in food and beverage costs. This is despite the event planner for the committee objecting to the plan.

While the committee was forced to organize these events, Racine believes instead it "abandoned this purpose and violated District law when it wasted approximately $1 million of charitable funds in overpayment for the use of event space at the Trump hotel." 

"These charges were unreasonable and improperly served to enrich" the Trump family business, according to the lawsuit. It further spells out that the president and daughter Ivanka Trump were probably aware of the charges, based on subpoenaed documents from the committee and business.

The law in D.C. requires that nonprofits not operate for the purpose of generating profits for private individuals. Racine asks in the lawsuit for an order from D.C. Superior Court ordering the money to be returned and given to charities that promote civic engagement. 

A Presidential Inaugural Committee spokesman said in an email, "The facts will show that the PIC operated in compliance with the law, and this suit is without merit. ... Despite the PIC's cooperation with his office's investigation, the DC AG did not coordinate with the PIC's legal counsel to interview a single former PIC employee or staff member nor discussed with counsel any particular concerns about the PIC's full compliance with the law. In fact, the PIC has received no outreach from the DC AG since last summer."

The committee's chairman, Thomas J. Barrack Jr., responded to previous spending inquiries by saying the inauguration and more than 20 relative events "were executed in elegance and seamless excellence without incident or interruption, befitting the legacy and tradition that has preceded us." 

The Trump Organization issued a statement on Wednesday that refers to the lawsuit as "an attempt to regulate what discounts it believes the hotel should have provided" and "a clear PR stunt."

"The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this magnitude and were reflective of the fact that hotel had just recently opened, possessed superior facilities, and was centrally located on Pennsylvania Avenue," continued the statement. 

An email from Ivanka Trump to hotel executives was also released that said the company should charge a "fair market value."

Of specific interest in the attorney general's lawsuit is a $1 million deal between the committee and Trump Organization for the ballroom during the four days around the inauguration. Racine alleges this deal was made knowing it would be a waste of the nonprofit's resources to benefit the Trump family. 

The documents in the legal filing show discussions between Trump's company and the inaugural committee. It ended with the $1 million deal that Racine says violates the law and the organization's mission to "further the common good and welfare" of American citizens "by supporting the activities surrounding the 2017 presidential inauguration."

In November 2016 hotel management emailed the inaugural committee to explain an eight-day package of meeting rooms, food, and drinks would total $3.6 million.  

The deputy chairman of the committee, the convicted Rick Gates, emailed Ivanka Trump to say the cost quoted "seems quite high compared to other properties" and said he was concerned it would bring negative publicity. She responded that she had instructed the general manager at the hotel to speak with Gates.

Hotel management agreed to $175,000 per day for meeting space and to charge separately for food and beverage. Melania Trump's friend, Stephanie Winston Wolkoff, who'd produced the Met gala and New York's Fashion Week, was alarmed. She wrote that other properties had been offered to the committee at little or no cost. She warned that the two planned events at the hotel were for the Trump family, stating, "When this is audited, it will become public knowledge." 

Meeting space, according to Wolkoff, should cost a maximum of $85,000 a day, and she felt even that was pricey. Her task list shows a meeting scheduled with Trump on December 16, 2016, where she noted: "cost of ALL EVENTS at Trump Hotel" with regard to the meeting.

She has her own problems, though, as she picked up criticism for directing $26 million to her company, though all but $1.62 million was reportedly sent to subcontractors. 

The committee also received free meeting space from the Fairmont Hotel near Georgetown after booking a large block of rooms with an agreement to spend at least $46,000 on food and drinks, according to documents. There were also two meeting rooms at no cost from the W Hotel near the White House after an agreement to a block of guest rooms and spending at least $75,000 on food and drinks.

How many guest rooms were booked at the Trump hotel is unclear, as there is a disagreement. Racine's staff believes the committee booked up to 80 percent of the rooms the week of the inauguration.  

Trump Organization attorney Alan Garten said the committee paid for 5 or 6 percent of the hotel's rooms at most. "Not only was there never any room block, but in the end, the PIC was only responsible for a nominal number of rooms," he said.

The committee raised $107 million, more than double any other president. Trump went against the practices of recent inaugural committees and did not put any limits on corporate or individual donors, leading to more than 45 individuals and companies donating at least $1 million each. 

The ballroom was actually double-booked, as they had earlier booked the Presidential Inaugural Prayer Breakfast group for the morning of the inauguration. This was a $5,000 booking. Committee staff wanted a $70,000 deduction since the room would not be available the entire day but still ended up paying the full price.

Gates discussed canceling a Friday night event that he thought would host 1,250 people with hotel management. "There will be an after party at the [Trump hotel] following the inaugural balls on Friday. DJT is not expected to attend but was more for you, Don, and Eric," he wrote to Ivanka Trump. Racine sees this as a misuse of charitable funds to benefit the family. 

Racine also filed a lawsuit along with Maryland Attorney General Brian Frosh regarding Trump's business practices with foreign governments, alleging they violate the Constitution's emoluments clause.

Additionally, federal prosecutors in New York are pursuing a criminal investigation related to donations and spending by the committee and have issued subpoenas. Trump and his three oldest children were in trouble after using charitable funds for his benefit. He agreed to shut down the organization. 

The hotel lease is on the block as well. Initial bids were due Thursday.

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