Trump Pays Legal Settlements for Businesses with Foundation Money—Experts Call Self-Dealing

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Trump Tower / Maria Eklind

September 20, 2016; Washington Post

It is not uncommon for parties to agree on or a court to order a payment to charity to settle a lawsuit, but when the money to pay those settlements comes from a private foundation full of other folks’ money, it may be wandering into the realm of serious self-dealing.

David Farenthold of the Washington Post says that Donald Trump spent more than a quarter-million dollars from the foundation that carried his name to satisfy the requirements of legal settlements against his businesses.

In one case, Trump’s Mar-a-Lago Club was fined $120,000 for ignoring Palm Beach’s regulations on limits to the height of a flagpole. Palm Beach agreed to waive the fines if Mar-a-Lago made a $100,000 donation to a veterans’ charity. But the money to pay the settlement was, in the end, drawn from the Trump Foundation.

In the other case in New York, a lawsuit was settled by making a $158,000 donation to the plaintiff’s chosen charity. Again, records both from Trump and the recipient foundation found that that money also came from the Trump Foundation.

“I represent 700 nonprofits a year, and I’ve never encountered anything so brazen,” said Jeffrey Tenenbaum of the Venable LLP law firm. “If he’s using other people’s money—run through his foundation—to satisfy his personal obligations, then that’s about as blatant an example of self-dealing [as] I’ve seen in awhile.”

Rosemary E. Fei, an attorney who advises nonprofit groups, said about the two incidents, “Yes, Trump pledged as part of the settlement to make a payment to a charity, and yes, the foundation is writing a check to a charity. But the obligation was Trump’s. And you can’t have a charitable foundation paying off Trump’s personal obligations. That would be classic self-dealing.”

Trump’s campaign issued a statement that begins with an attack on the Clinton Foundation and then accuses the Washington Post of getting its facts wrong—in both cases, we suppose, hoping that they can keep true believers close by ringing the old familiar bells. The statement also once again touted Trump’s body of charity work, which remains largely unsupported.

There was not, and could not be, any intent or motive for the Trump Foundation to make improper payments. All contributions are reported to the IRS, and all Foundation donations are publicly disclosed. Mr. Trump is generous both with his money and with his time. He has provided millions of dollars to fund his Foundation and a multitude of other charitable causes.

Nonprofits and philanthropy as a whole do not need the American public to start assuming such ethical and legal violations are par for the course and that this is somehow just a targeting of one foundation for political reasons. Trump’s use of “his” charity is an affront, and we will be interested to see where it all goes. —Ruth McCambridge