DC sues Trump inaugural committee, alleging abuse of funds

 

WASHINGTON (AP) — The District of Columbia is suing President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in the nation's capital, accusing them of throwing parties for the Trump family with nonprofit funds, and overpaying for event space at the hotel.

The district's attorney general, Karl Racine, said the inaugural committee had been “blatantly and unlawfully abusing nonprofit funds to enrich the Trump family.” The lawsuit, announced Wednesday, alleges that the committee abused nonprofit funds and coordinated with the Trump family to “grossly overpay for event space” in the hotel.

The committee has maintained that its finances were independently audited, and that all money was spent in accordance with the law.

It was the latest allegation that Trump and his family have used public and nonprofit funds spent at Trump-owned properties to enrich themselves — part of the peril of Trump not fully withdrawing from his businesses while he is president. Trump has maintained ownership but turned the reins over to his adult sons, who have bristled at the charge that they are profiting off their father's presidency.

The suit alleges the committee coordinated with the hotel’s management and members of Trump’s family to arrange the events and that committee staffers knew they were paying prices that were “grossly above market rate" but didn't consider less expensive alternatives.

The committee raised an unprecedented $107 million to host events celebrating Trump’s inauguration in January 2017. But the committee's spending has drawn mounting scrutiny.

“District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies,” Racine said. “In this case, we are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business.”

21 PHOTOS
Scenes from Inauguration Day in Washington, D.C.
See Gallery
Scenes from Inauguration Day in Washington, D.C.
guests fill hte West Front of the US Caaptol in Washington, DC, on January 20, 2017, before the swearing-in ceremony of US President-elect Donald Trump. / AFP / Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)
U.S. First Lady Michelle Obama, left, wipes the shoulder of U.S. President Barack Obama while standing outside of the White House ahead of the 58th presidential inauguration in Washington, D.C., U.S., on Friday, Jan. 20, 2017. Trump is the first president since the dawn of national polling in the late 1930s to enter office with the approval of fewer than half of Americans -- in his case only 40 percent. Photographer: TKTK/Pool via Bloomberg
WASHINGTON, DC - JANUARY 20: (L-R) Tiffany Trump, Donald Trump, Jr., Ivanka Trump, Vanessa Trump and Jared Kushner arrive on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Drew Angerer/Getty Images)
WASHINGTON, DC - JANUARY 20: The presidential motorcade drives down Pennsylvania Ave towards the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Joe Raedle/Getty Images)
WASHINGTON, DC - JANUARY 20: Former Democratic presidential nominee Hillary Clinton arrives on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Chip Somodevilla/Getty Images)
WASHINGTON, DC - JANUARY 20: Former President George W. Bush and Laura Bush wave as they arrive on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Alex Wong/Getty Images)
WASHINGTON, DC - JANUARY 20: Former President Jimmy Carter and wife Rosalynn Carter arrive on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Joe Raedle/Getty Images)
US Chief Justice John Roberts (C-front) arrives with US justice William Rehnquist (L) on the platform of the US Capitol in Washington, DC, on January 20, 2017, before the swearing-in ceremony of US President-elect Donald Trump. / AFP / Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
WASHINGTON, DC - JANUARY 20: Former U.S. Preident George W. Bush and former first landy Laura Bush arrive at the swearing in ceremony at the United States Capitol January 20, 2017 in Washington, DC. Donald J. Trump will become the 45th President of the United States today. (Photo by Doug Mills - Pool/Getty Images)
US President Barack Obama and Vice President Joe Biden arrive for the Presidential Inauguration of Donald Trump at the US Capitol in Washington, DC, on January 20, 2017. / AFP / POOL / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
WASHINGTON, DC - JANUARY 20: President Elect Donald Trump arrives on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Alex Wong/Getty Images)
WASHINGTON, DC - JANUARY 20: President Elect Donald Trump arrives on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Scott Olson/Getty Images)
US President elect Donald Trump (R) and Vice President elect Mike Pence seat during the swearing-in ceremony on in front of the Capitol in Washington on January 20, 2017. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
WASHINGTON, DC - JANUARY 20: U.S. Vice President Mike Pence takes the oath of office from Supreme Court Justice Clarence Thomas as his wife Karen Pence looks on, on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Drew Angerer/Getty Images)
WASHINGTON, DC - JANUARY 20: President Elect Donald Trump shakes hands with Vice President Mike Pence on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Alex Wong/Getty Images)
US President elect Donald Trump (C) salutes his daughter Ivanka and other family members during the swearing-in ceremony on in front of the Capitol in Washington on January 20, 2017. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
US President-elect Donald Trump is sworn in as President on January 20, 2017 at the US Capitol in Washington, DC. / AFP / Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)
WASHINGTON, DC - JANUARY 20: U.S. President Donald Trump delivers his inaugural address on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC. In today's inauguration ceremony Donald J. Trump becomes the 45th president of the United States. (Photo by Drew Angerer/Getty Images)
Attendees listen as U.S. President Donald Trump speaks during the 58th presidential inauguration in Washington, D.C., U.S., on Friday, Jan. 20, 2017. Donald Trump will become the 45th president of the United States today, in a celebration of American unity for a country that is anything but unified. Photographer: Daniel Acker/Bloomberg via Getty Images
Attendees stand during the 58th presidential inauguration in Washington, D.C., U.S., on Friday, Jan. 20, 2017. Donald Trump will become the 45th president of the United States today, in a celebration of American unity for a country that is anything but unified. Photographer: Daniel Acker/Bloomberg via Getty Images
US President Donald Trump and First Lady Melania Trump(L) wait with former President Barack Obama(2nd-R) and Michelle obama before their departure from the US Capitol after Trump's inauguration ceremonies at the US Capitol in Washington, DC, on January 20, 2017. / AFP / Robyn BECK (Photo credit should read ROBYN BECK/AFP/Getty Images)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Prosecutors found that Rick Gates, a former Trump campaign aide who flipped on the president during the special counsel's Russia investigation, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms. One of the event’s planners raised concerns about pricing with Trump, Gates and Ivanka Trump, according to the lawsuit. Ivanka Trump is the president's daughter and a senior White House adviser.

Those concerns included a written warning that the price proposal was at least twice the market rate. But Gates went through with it anyway, at a cost of $1.03 million, the suit says.

In one instance, Gates contacted Ivanka Trump and told her that he was “a bit worried about the optics” of the committee paying such a high fee, Racine said.

Stephanie Winston Wolkoff, a former adviser to first lady Melania Trump who played a leading role organizing the inaugural parties, had also told Trump, when he was president-elect, and Ivanka Trump that she was uneasy with the offer, Racine said. Winston Wolkoff later followed up with an email to Gates and Ivanka Trump warning that the hotel’s proposal was at least twice the market rate, Racine said.

Prosecutors say the committee could have hosted inaugural events at other venues either for free or for reduced costs but didn’t consider those options.

Gates pleaded guilty to charges tied to his lucrative political consulting work in Ukraine and was sentenced last month to 45 days in prison, a punishment that a judge said reflected the extensive cooperation Gates had provided to the Justice Department. Racine's office said investigators did not directly speak with Gates in as they pursued the suit.

A lawyer who represented Gates for the criminal proceedings didn’t immediately return a message seeking comment. The White House didn’t immediately return a message nor did the Trump Organization.

The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organization that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organizations were nonprofits, but the breakfast paid $5,000 for the ballroom. The committee, however, paid $175,000, the suit claims.

Prosecutors say the committee also used nonprofit funds to throw a private party on Jan. 17, 2017, the night off the inauguration, for Trump’s family — a $300,000 affair. The reception was for three of Trump's children — Donald, Jr., Ivanka and Eric.

“There will be an after party at the OPO (Trump Hotel) following the inaugural balls on Friday. DJT is not expected to attend but was more for you, Don and Eric,” Gates wrote in an email to Ivanka Trump, according to the suit. DJT is a reference to Donald J. Trump.

Event staff within the inaugural committee recognized this would not be a proper use of committee funds and had tried to cancel this event, according to the suit, but Gates and the Trump family went ahead anyway.

Racine said his office focused on the inaugural committee and the companies that profited because investigators believe that's the best option for them to possibly recover the funds.

Racine had been sending subpoenas for months related to the investigation. The inaugural committee was also being investigated by New York and state authorities in New Jersey, who are looking into, among other things, whether foreigners illegally contributed to the inaugural events.

___

Associated Press writer Eric Tucker contributed to this report.

Read Full Story