Latest on the Trump Foundation scandal: foundation lacked certification to solicit money

David Farenthold of the Washington Post has the latest installment into his investigative reporting into the Trump Foundation. Trump Foundation lacks the certification required for charities that solicit money:

scandalDonald Trump’s charitable foundation — which has been sustained for years by donors outside the Trump family — has never obtained the certification that New York requires before charities can solicit money from the public, according to the state attorney general’s office.

Under the laws in New York, where the Donald J. Trump Foundation is based, any charity that solicits more than $25,000 a year from the public must obtain a special kind of registration beforehand. Charities as large as Trump’s must also submit to a rigorous annual audit that asks — among other things — whether the charity spent any money for the personal benefit of its officers.

If New York Attorney General Eric Schneiderman (D) finds that Trump’s foundation raised money in violation of the law, he could order the charity to stop raising money immediately. With a court’s permission, Schneiderman could also force Trump to return money that his foundation has already raised.

The Trump campaign did not respond to a request for comment Thursday.

Schneiderman’s office declined to comment on whether it was investigating the lack of registration for the Trump Foundation. Schneiderman had previously launched an investigation of the foundation in the wake of reports by The Washington Post that Trump used his charity’s money to make a political gift, to buy paintings of himself and to settle legal disputes involving his for-profit businesses.

Tax filings show that in each of the past 10 years for which there are records, the Trump Foundation raised more than $25,000 from outsiders. Tax records alone do not reveal whether the donations amounted to solicitations under New York law, but in several cases there is strong evidence that they did.

For instance, the foundation has received more than $2.3 million from companies that owed money to Trump or one of his businesses — but that were instructed to pay the foundation instead, according to people familiar with those transactions.

In the most obvious example of a public solicitation, the Trump Foundation set up a website early this year to collect small-dollar donations that it promised to pass along to veterans. In all, the website said, the Trump Foundation took in $1.67 million through that site.

But, as of this week, the Trump Foundation had not obtained the state registration required to ask for donations, according to a spokesman for Schneiderman.

Experts on charity law said they were surprised that Trump’s foundation — given its connections to a wealthy man and his complex corporation — did not register to solicit funds.

“He’s a billionaire who acts like a thousandaire,” said James J. Fishman, a professor at Pace University’s law school in White Plains, N.Y. He said Trump’s foundation seemed to have made errors, including the lack of proper registration, that were more common among very small family foundations.

“You wouldn’t expect somebody who’s supposed to be sophisticated, and brags about his business prowess, would run his foundation like this,” Fishman said.

* * *

For many years, Trump was the foundation’s sole donor: He gave a total of $5.4 million between 1987 and 2006.

Under state law, the foundation during that period was required to have only the ­least-demanding kind of certification, referred to as “EPTL,” because it is governed by the Estates, Powers and Trusts Law.

Under that registration, the Trump Foundation filed annual reports with the Internal Revenue Service and the state. But the state did not require an independent audit to ensure that the charity was handling its funds properly.

But starting in the early 2000s, Trump’s foundation began to change. It began to take in donations from other people.

At first, it happened a little bit at a time. In 2004, for instance, an autograph seeker sent $25 to Trump Tower, along with a book he wanted Trump to sign. The book came back signed. The money was deposited in the Trump Foundation.

Then, the gifts began to get larger.

In 2005, Trump’s wife, Melania, was named “Godmother” of a new ship launched by Norwegian Cruise Lines. As part of its agreement with Melania Trump, the cruise lines said, it gave $100,000 to the Trump Foundation. The Trump campaign has not responded to requests for comment on the gift.

In the meantime, Trump himself drastically reduced his gifts. After 2008, tax records show he stopped giving altogether. Since then, according to tax records, the Trump Foundation has received all of its incoming money — more than $4.3 million — from other donors.

Under state law, charities that solicit donations from others in New York must register under a different law, called “7A” for its article heading.

In that law, the definitions of “solicit” and “in New York” are both broad. Solicit means “to directly or indirectly make a request for a contribution, whether express or implied, through any medium.” The requirement covers any solicitation that happened in New York or involved a donor who was in New York when somebody called them and asked.

“The only thing it wouldn’t cover is somebody giving money without being asked,” said Pamela Mann, a former head of the New York State charities bureau, who is now in private practice at Carter Ledyard & Milburn. “The law says that soliciting from the public in New York, without being registered to do so, is an illegal act.”

The Trump Foundation has received more than $25,000 from people other than Trump in all of the past 10 years shown in tax records. In some cases, the donors have declined to comment, so it is not clear whether the donations were actually solicited and, if so, whether the solicitation happened in New York.

But, in several cases, The Post’s reporting has indicated that the Trump Foundation or Trump himself did help bring in the money.

* * *

[T]his year, Trump skipped a Republican primary debate in Iowa and instead held a televised fundraiser for veterans’ causes. As part of that effort, he set up a website, donaldtrumpforvets.com, which took donations via credit card — and sent them to the Donald J. Trump Foundation.

“Over 1,670,000 raised online,” said the thank-you message from the Trump Foundation, after The Post made a $10 donation in March.

The most important consequence of not registering under the more rigorous “7A” level was that the Trump Foundation was not required by the state to submit to an annual audit by outside accountants. In such an audit, charity-law experts said, the accountants might have checked the Trump Foundation’s books — comparing its records with its outgoing checks, and asking whether the foundation had engaged in any transactions that benefited Trump or his busi­nesses.

In recent years, The Post has reported, Trump’s foundation does appear to have violated tax laws in several instances.

In 2013, it gave a donation to a political group supporting Florida Attorney General Pam Bondi (R) — despite a ban on nonprofit groups making political gifts. The Trump Foundation then filed an incorrect tax filing, which omitted any mention of that gift, and said incorrectly that the money had gone to a charity in Kansas. Trump paid a $2,500 penalty tax for that political gift this year.

In two other instances, Trump’s foundation has made payments which appeared to help settle legal disputes involving Trump’s for-profit businesses. In 2007, Trump’s foundation paid $100,000 to settle a lawsuit involving his Mar-a-Lago Club in Florida. And in 2012, the foundation paid $158,000 to the charity of a New York man named Martin Greenberg on the day that Greenberg settled a lawsuit against one of Trump’s golf courses.

Those two cases are under investigation by Schneiderman. Just this week, his office requested that a Florida attorney provide a copy of the foundation check that Trump had sent to settle the Mar-a-Lago case.

Trump’s son Eric has his own foundation, also headquartered in New York, which raises money from the public through an annual golf tournament.

Unlike his father’s charity, however, the Eric Trump Foundation has registered to solicit funds in the state and files an annual audit report. The two Trump foundations share an accountant, Donald Bender of the firm WeiserMazars. A spokeswoman for the firm declined to comment on Thursday.

The Washington Post editorializes today, Donald Trump’s foundation of fakery:

[T]here is nothing funny about the sleazy ways Mr. Trump has abused and exploited the very notion of charity, and possibly federal tax laws in the process.

Trump-BarnumMr. Trump’s namesake foundation has come under increasing scrutiny, due largely to the investigative work of The Post’s David A. Fahrenthold. The Post discovered that Mr. Trump, despite claims of giving away millions of dollars of his own money, has not donated to the foundation since 2008, and that the foundation appears to have violated laws against “self-dealing,” which prohibit nonprofit leaders from using charity money to benefit themselves. In addition to the purchase of the $10,000 portrait (and another painting of Mr. Trump for $20,000 whose current whereabouts are unknown), it appears that $258,000 in foundation funds were used to settle lawsuits involving Mr. Trump’s business ventures. Not to be overlooked is Mr. Trump’s payment to the IRS of a $2,500 penalty after it was revealed the foundation had violated tax laws by giving a political contribution to a campaign group connected to Florida’s attorney general.

The latest revelations center on the foundation receiving money from companies that owed money to Mr. Trump or one of his businesses but that were instructed instead to make donations to the foundation. Mr. Fahrenthold detailed cases involving $2.3 million that raise questions about whether the money should have been taxed as income and whether that income was properly reported.

The Trump campaign at first denied the transactions had occurred. After being confronted with The Post’s reporting, it said Mr. Trump paid taxes on one of the donations, a $400,000 gift from Comedy Central, which owed Mr. Trump for an appearance at a roast. It refused to offer proof of a tax payment or even to discuss the nearly $1.9 million in payments to the foundation from a high-end ticket broker who bought goods and services from Mr. Trump or his businesses. The donations from 2011 to 2014 accounted for 58 percent of all funds contributed to the foundation during those four years, according to Fortune.com.

Mr. Trump has refused to release his tax returns, something unprecedented for modern major-party presidential nominees, so who knows whether, as Mr. Trump’s advisers claimed, “all applicable rules and regulations” were followed. Mr. Trump, asked in a television interview over the weekend if he was confident that the foundation has followed all charitable rules and laws, could muster only a “Well, I hope so. I mean, my lawyers do it.” The Trump Foundation has no paid staff and, as Mr. Fahrenthold reported, the last time it reported spending any money on legal fees was in 2010, when it spent a grand total of $53.

The Trump campaign has sought to counter questions about the foundation by attacking The Post. . .

[Just as Richard Nixon attacked Woodward and Bernstein and The Washington Post during Watergate.]

Nonetheless, at least one message comes through: Mr. Trump has plenty to hide.

4 responses to “Latest on the Trump Foundation scandal: foundation lacked certification to solicit money

  1. For Sure Not Tom

    Using charities for your own personal use is a Conservative mainstay.

    Remember Sean Hannity’s Freedom Concerts?

  2. I AM CONFIDENT THAT TRUMP HAS BEEN PRACTICING THIS TYPE OF FRAUD FOR YEARS. ONE THING THAT IS TROUBLING, IS HIS NAME BEING MENTIONED OVER 3500 TIMES IN THE PANAMA PAPERS. I BELIEVE HE IS HIDING $$$ IN FOREIGN COUNTRIES TO AVOID PAYING TAXES. THIS WOULD BE A FELONY AND A FEDERAL OFFENSE. HE NEEDS TO NOT GET A SLAP ON THE WRIST. HE NEEDS JAIL TIME WHICH IS WHAT THE REST OF US WOULD BE FACED WITH

    • It would be nice to see BOTH these Presidential candidates get the justice they deserve. Whether we elect Hillary or Trump, we are going to have a crook sitting in the White House, and neither one of them will ever see the justice they so richly deserve. For those with the means and the connections the law really IS different.

  3. It sounds like even if his Charity is guilty of everything you cited, the penalties are not all that harsh. And trying to prove Trump knew about it and had the intention of subverting tax law, I suspect the seemingly politically motivated investigations will prove to be a waste of time. That will be especially true if Trump loses the election and it is highly unlikely Trump will win. I mean even if Trump managed to win the popular vote, I can’t see any way that the electoral college will vote for him.