AG Racine Announces Lawsuit Against Presidential Inaugural Committee & Trump Entities Will Go To Trial in September 2022

Earlier this Week, Judge Issued an Order Saying the Lawsuit to Hold Nonprofit Accountable for Unlawfully Enriching Trump Family & Misusing $1.1 Million in Charitable Funds Will Move Forward Against All Original Defendants 

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced the District of Columbia’s lawsuit against Donald Trump’s 58th Presidential Inaugural Committee (PIC), the Trump International Hotel, and the Trump Organization for misusing $1.1 million of nonprofit funds will go to trial in September 2022.

The Office of the Attorney General (OAG), which enforces local nonprofit laws, filed suit against the PIC in 2020 for illegally enriching the Trump family. In its suit, OAG alleges that the PIC misused charitable funds to dramatically overpay the Trump Hotel for event space, throw a private party for the Trump children, and pay a private debt owed by the Trump Organization. According to a scheduling order issued by the court this morning, the trial will begin on September 26, 2022.

“No one is above the law, and we’re now going to trial to hold Donald Trump’s Presidential Inaugural Committee accountable for illegally using nonprofit funds to enrich the Trump family,” said AG Racine. “My office is committed to standing up against corruption and abuses of public trust. That’s why we investigate, and, when the facts reveal flagrant violations of law, we sue. We look forward to proving our case in court. Cheaters should never prosper.”

Earlier this week, the DC Superior Court issued an order stating the District’s lawsuit will move forward against all the original defendants, adding the Trump Organization in New York back into the lawsuit against the Presidential Inaugural Committee. The District originally filed suit against the 58th Presidential Inaugural Committee, the Trump Hotel DC, and the Trump Organization in New York—and it will be going to trial against all three entities.

The 58th Presidential Inaugural Committee (PIC) is a tax-exempt organization registered to do business in the District of Columbia. The PIC was the primary entity that planned and organized official activities around the 2017 Presidential Inauguration of Donald J. Trump. The Trump Organization LLC is a New York-based corporation founded and run by the Trump family, with real estate interests that include the Trump Hotel in the District. President Trump and his family are the primary beneficiaries of the Trump Organization’s profits.

Under the District’s Nonprofit Corporation Act (NCA), the Attorney General has the authority to police nonprofit activities and ensure that nonprofit entities operating in D.C. spend their funds for the specific public purpose provided in their articles of incorporation. A nonprofit’s funds are a form of a public trust and cannot be spent to benefit a private individual or company—especially an individual who has influence over the organization.

An OAG investigation revealed that the PIC acted contrary to the nonprofit’s charitable purpose. Specifically, OAG’s lawsuit alleges that the PIC violated District law by:

  • Abusing nonprofit funds to enrich the Trump family: The PIC grossly misused its nonprofit funds to make an unfair and unjustified payment of more than $1 million to the Trump Hotel. The PIC paid vastly inflated prices even after senior Committee staff and members of the Trump family were warned that the charges were unreasonable. The PIC’s payment flowed directly to the Trump family, flouting the PIC’s bylaws prohibiting the use of its funds for private enrichment.
  • Using nonprofit funds to throw a private party for President Trump’s family: The PIC paid approximately $300,000 to use event space in the Trump Hotel for a private reception for the President’s children—Donald, Jr., Ivanka, and Eric—on the evening of January 20, 2017. Event staff within the PIC recognized this would not be a proper use of PIC funds and had tried to cancel this event, but Gates and the Trump family went forward with the event anyway.
  • Paying a private debt owed by the Trump Organization: During discovery, OAG uncovered evidence that the PIC additionally misused nonprofit funds to benefit the Trump family by paying a $50,000 debt owed by the Trump organization. The Trump Organization reserved rooms at the Loews Madison hotel during the week of the inaugural for Trump’s family and friends, then failed to pay the hotel bill. When the unpaid hotel bill was sent to collections, and though the PIC was not a party to the initial contract, it paid over $49,000 on behalf of the Trump Organization.

A copy of the District’s 2020 legal complaint against the PIC is available here

A copy of the District’s 2021 motion for additional discovery is available here.

OAG is asking the court to impose a constructive trust over the amount improperly paid to the Trump Hotel. The court can then direct this money to suitable nonprofit entities dedicated to promoting civic engagement.

OAG’s Nonprofit Enforcement Work
Under AG Racine, OAG has invested resources to expand its capacity to enforce District laws governing nonprofits. OAG has litigated and resolved actions against several charter schools and the president of a nonprofit that owned an affordable housing building for mismanagement of nonprofit funds. The office has sued several organizations for misuse of charitable funds, including a local fraternitya nonprofit related to the U.S. pavilion at the 2020 World’s Fair in Dubai, and the NRA Foundation. Additionally, OAG has obtained an order that District nonprofit Howard Theatre Restoration, Inc. dissolve for failing to function in support of the District’s historic Howard Theatre, investigated the closure of Providence Hospital to ensure nonprofit assets were not improperly removed from the District, and intervened to resolve a board dispute at an internet freedom organization.

If you suspect that a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400.