Is NY’s Atty. General Underwood Just Picking on the Trump Foundation?

[Public domain], via Wikimedia Commons

June 15, 2018; NYN Media

The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money than it took in, $19,200,000. I won’t settle this case!…

— Donald J. Trump (@realDonaldTrump) June 14, 2018

Zach Williams, a staff reporter for New York Nonprofit Media, writes that on the face of it, it’s a bit absurd for Trump or his supporters to complain that he is being badgered by an attorney general’s office with a political bone to pick. The bone—or bones, of course—are from the picked-over carcass of a family foundation that was for years ridden with abuse of charity standards and law.

Williams points out that the office has been anything but lax in pursuing other cases that are similar in many respects to the one brought against the Donald J. Trump Foundation. In fact, that office is known for its activism on behalf of the state and its nonprofit stakeholders. Below are six cases cited by Williams (as he wrote them) to support his contention that the Trump Foundation suit is actually very much business as usual for that office.

Richenthal Foundation (about $11 million in assets)

[New York State Attorney General Barbara Underwood] announced a settlement on May 21 that resolved an investigation into how David Richenthal reportedly took about $500,000 from the foundation his father founded. The allegations were similar to those that now face Trump, who is also accused of using funds without the approval of his board—comprised primarily of his children. In the case of Richenthal this was done “without oversight or intervention.” In the case of Trump, the lack of oversight was in part because the board had not met in nearly two decades, according to Underwood’s lawsuit. Richenthal was also accused of having the foundation make a $250,000 grant to settle a legal matter involving a former romantic partner. Trump faces similar charges for using his foundation funds to pay for unrelated legal expenses on several occasions.

Yisroel Schulman, former president of the New York Legal Assistance Group (about $15 million in assets)

Schulman reached a settlement with then-Attorney General Eric Schneiderman late last year over allegations that he diverted funds from NYLAG to other charities he controlled in order to raise his community profile. This is similar to how Underwood says that Trump Campaign officials reportedly directed the disbursements of funds to Iowa veterans’ charities to appear more generous as the 2016 Republican Iowa Caucus approached.

National Children’s Leukemia Foundation (defunct)

This Brooklyn-based organization was closed after settling with the Attorney General’s office in 2015. Former officers including its founder and leader Zvi Shor, its president Yehuda Gutwein, the founder’s son, Shlomo Shor, and its auditor, Shlomo Donn were also banned from serving as fiduciaries of any New York nonprofit. The nonprofit presented itself as a legitimate charity to donors but did not in fact operate the programs and facilities that it claimed, including a cancer research center and bone marrow registry. Trump is accused of misrepresenting the aims of his foundation by, among other things, using foundation money to purchase a portrait of himself.

Victor E. Perley Fund (about $1.8 million in assets)

An alleged breakdown in governance resulted in the board of the Perley Fund looking the other way as the foundation’s leader, Richard A. Basini, purchased a $1 million Southampton home as a private residence. A $1.025 million settlement in 2015 mandated that all of the board members be replaced with trustees approved by the attorney general’s office. The accusation that they failed to exercise reasonable care in overseeing the organization and its finances are similar to those faced by Trump’s board.

The National Arts Club (about $4.6 million in assets)

Aldon James and his brother John James mixed family and nonprofit business similar to the way the Trumps allegedly have. The James case involved accusations of fiduciary neglect, wasted assets and false statements—all allegations currently facing the Trumps. In the case of Aldon James that meant using club funds to go shopping. In the case of the Trumps, it involved using foundation funds to pay personal legal expenses and among other things, holding what was ostensibly a foundation fundraiser that was in reality a campaign event. The James brothers settled their case in 2013 for $950,000 and are permanently barred from running nonprofits in New York.

Lower Esopus River Watch (defunct)

Some of the allegations against President Trump also resemble those Schneiderman brought against Frederick Fritschler in 2013. The former chairman of the Ulster County Environmental Management Council used his position to direct donations to the Lower Esopus River Watch, where Fritschler once served as director. He then used some of those funds to pay for personal living expenses such as vacations, entertainment and meals at high-end restaurants. Fritschler chose to fight the allegations but found himself ultimately on the losing end of a $540,000 judgement, which resulted in the demise of the nonprofit, according to an April 10, 2013 press release. “Abuse of your official position for private gain is unacceptable no matter who you are,” Schneiderman said in the press release.

Recent cases in other states also indicate suits like this one aren’t abnormal.

The suit brought by Underwood against the Trump Foundation is 41 dense pages long and can be accessed here. It cites many individual instances where its stewardship of charitable dollars allegedly betrayed the public’s trust and is well worth reading.

Williams points out that there are around 100,000 nonprofits in New York, with combined assets of $400 billion. The overwhelming majority of these nonprofits steward their revenues appropriately. These nonprofits benefit from state prosecutions that weed out those nonprofits who abuse their trust relationship for personal or political gain. After all, fundraising depends not only on the credibility of an individual group, but of the sector as a whole. So, while the Donald J. Trump Foundation is not the only nonprofit to be held to account by the attorney general, its activities would certainly appear to make it deserving of the state action taken.—Ruth McCambridge