Alphonso David

July 19, 2018; Los Angeles Times

New York state governor Andrew Cuomo has raised the stakes in the investigations against the Donald J. Trump Foundation by letting it be known that he would be supportive of a criminal inquiry.

Leaving aside all the politics, this case is worth watching. Private foundations are 501c3s and are held to a high standard. Regulations on them are stringent, from conflict-of-interest statements from board of directors and staff to documenting through filings every dollar received and every dollar spent (as opposed to 501c4s, which do not have to reveal donors.) The strict regulations and goals for foundations are an asset when investigating a case like this. Everything done in the name of a foundation should be seen; transparency is mandatory, so the movement of funds is hard to hide.

New York’s tax department has been reviewing the foundation’s records for more than a month. Last month, New York State Attorney General Barbara Underwood filed a civil lawsuit against the Trump Foundation, charging “persistent violation” for over ten years. It accuses the board, which consists of the president and his three oldest children along with a New York accountant, of running a sham charity. One of the allegations lists $2.8 million in foundation monies spent on Trump’s presidential campaign, on hotel bills, and on personal items. This is doubly important—not just because the dollars were not spent on charitable causes, but because foundations must not campaign for candidates at all. Criminal and civil cases running simultaneously could result in a delay, due to a stay for the civil lawsuit.

At this time, Governor Cuomo hasn’t yet issued a referral to the attorney general to start a criminal investigation. Underwood hasn’t asked for one, although the governor’s counsel, Alphonso David, has said the governor is willing to do so should she so request. Meanwhile, actions that appeared to violate federal laws have been already been referred to the IRS and the Federal Elections Commission.

“As our lawsuit against the Trump Foundation illustrates, we intend to hold the foundation and its directors accountable for all violations of state law,” said Underwood senior policy adviser Amy Spitalnick. “We continue to evaluate the evidence to determine what additional actions may be warranted and will seek a criminal referral from the appropriate state agency as necessary.”

Cuomo administration officials said the state’s tax department has the authority to investigate whether anyone has violated state laws criminally and, on average, refers 10 such cases a month for prosecution. Mostly, the referrals go to local district attorneys, though sometimes they can go to the attorney general’s office. On completion, any finding by the tax department would be referred to the appropriate law enforcement agency, which could then lead to a presentation to a state grand jury. The lawsuit could result in restitution of the $2.8 million with additional penalties.—Marian Conway