Written by Eric Lipton
It was a month before Donald Trump’s inauguration, and one of his aides had a delicate question: Wasn’t there going to be a backlash when it became known that the inauguration had spent donors’ money at Trump’s hotel in Washington, even though other places would cost much less or even be free?
“These are events in P.E.’s honor at his hotel, and one of them is with and for family and close friends,” Stephanie Winston Wolkoff, then an event planner for Trump, wrote in an email to a colleague in December 2016, referring to Trump as the president-elect and saying she raised the issue to “express my concern.”
As Trump’s presidency comes to a close, expenditures like those are receiving renewed legal scrutiny in the form of a civil case being pursued by the attorney general for the District of Columbia.
At the heart of the case is a question — whether Trump and his family have profited from his public role, sometimes at the expense of taxpayers, competitors and donors — that has been a persistent theme of his tenure in the White House.
More than 200 companies, special-interest groups and foreign governments patronized Trump’s properties during his presidency while reaping benefits from him and his administration. Sixty of them spent $12 million at his properties during the first two years he was in office.
The Trump family business has received millions of dollars in payments by the Secret Service, the State Department and the U.S. military to Trump properties around the country and the world. The president has visited his properties on at least 417 days since taking office, at times with world leaders. And he and his affiliated political committees spent more than $6.5 million in campaign funds at his hotels and other businesses since 2017, including a $1 million final burst in the weeks before the election last month.
In the lawsuit moving forward, Attorney General Karl A. Racine of the District of Columbia is arguing that Trump’s inaugural committee illegally overpaid his family business by as much as $1.1 million for events held at the Trump International Hotel in the city in January 2017. Ivanka Trump was deposed in the case last week.
The lawsuit asks the court to order the inauguration to recover the $1 million paid to the Trump hotel and to redirect it to a “proper public purpose” such as “another nonprofit entity dedicated to promoting civic engagement of the citizens of the United States.”
Questions about spending, influence and lobbying around the 2017 inaugural have also drawn scrutiny from federal prosecutors from two different offices in New York, with charges filed against at least one donor.
But for all the attention focused on the issue, Trump is set to leave office without a clear resolution of what limits there should be on a president’s ability to profit from his public role.
Lawsuits brought by nonprofit groups and attorneys general in Washington and Maryland claiming that Trump had violated the so-called emoluments clause of the Constitution were never resolved during his term and now face potential dismissal once he is out of power.
“It is more than just frustrating,” said Laurence H. Tribe, a constitutional law professor at Harvard University, who has been involved in the emoluments litigation. “The most serious questions about the abuse of presidential power and the use of the presidency as a center of personal gain and profit remain unresolved. The wheels of justice clearly ground more slowly than some would have hoped.”
The issue played out especially visibly at the Trump International Hotel in Washington, which opened in late October 2016, two weeks before Trump was elected.
The hotel became a focal point for lobbyists, White House aides, Republicans in Congress and hundreds of others who sought a way to impress Trump, even though tax records obtained by The New York Times show that the property continued to lose money through at least 2018.
The Trump family had tried to sell its lease at the hotel last year before reversing course when the coronavirus pandemic hit. With revenue sure to have declined this year, Trump will have to decide whether to put the property back up for sale after he leaves office, or perhaps hope its value will increase if he runs again.
“Fifty percent of the people still will not go into the hotel,” said William W. Moyer, a hotel broker, noting that many potential customers who were not supporters of Trump avoided the property. “And the other 50% wanted to go there. You are not going to turn on or off people’s loyalties like a light switch.”
The case Racine is pursuing is moving ahead after he spent several years collecting evidence about the arrangements between the presidential inaugural committee and the hotel.
Trump’s inauguration was unlike any other in U.S. history: He raised more than $107 million, twice the previous record, as corporate donors poured tens of millions of dollars into the inaugural committee. Spending also took place at a record rate.
At the Trump hotel, the inaugural committee and guests attending the inauguration were already planning to fill most of the 263 rooms, which Racine argued meant that ballroom space would typically be offered for free or at least at a major discount.
But when the hotel initially asked the inaugural committee to pay $450,000 a day to rent the ballrooms and other common spaces, it provoked immediate questions from both Wolkoff, who has since broken with the Trump family, and Rick Gates, then the inaugural committee’s deputy chair, who would go on to plead guilty to charges stemming from the special counsel’s investigation.
“First, the cost itself seems quite high compared to other property buyouts for the week,” Gates wrote in an email to Ivanka Trump 38 days before the inauguration. “Second, I am a bit worried about the optics of PIC paying Trump Hotel a high rent fee and the media making a big story out of it,” he added, referring to the presidential inaugural committee.
Trump wrote to Mickael C. Damelincourt, the hotel’s general manager, and asked him to call Gates to negotiate a better deal for the inaugural committee. “It should be a fair market rate,” she said in a follow-up email, which soon led to a new offer of $175,000 per day.
Still, Wolkoff raised concerns.
“In my opinion, the max rental fee should be $85,000 per day,” she responded to Gates and Trump in an email where she also noted that other properties, such as Union Station, had offered their spaces for the inauguration at no charge.
This series of emails — filed in court documents as part of the lawsuit — is at the heart of the case that Racine, a Democrat, is pursuing.
The inaugural committee paid $220,000 for rooms at the hotel, including $75,259 to rent out the so-called Trump Townhouse, marketed as an ultraluxurious suite.
On two of the days that the inaugural committee paid the hotel $175,000 to rent the ballroom, it had no events that used it, the lawsuit said. And on a third day when it actually used the ballroom for a luncheon — again paying $175,000 — another nonprofit group had paid just $5,000 to rent the same presidential ballroom space for an inauguration-related event that morning.
The committee also paid the hotel for costs associated with a “friends and family” event for Eric Trump and Donald Trump Jr. that their father was not expected to attend. The inauguration staff was so uncomfortable sponsoring the gathering that they tried to cancel it, court documents showed. But Damelincourt objected.
“Rick … just heard that the Friday night reception had been canceled. Is it accurate?” Damelincourt wrote. “Tough on us if it is as it was a lot of revenue.” The event was then rescheduled and took place the night Donald Trump was sworn in.
Ivanka Trump was questioned for five hours last week about the matter, in one of a series of depositions that has also included Damelincourt and Thomas J. Barrack Jr., a major donor to Donald Trump who was the chair of the inaugural committee. Wolkoff will be questioned under oath this week and Gates this month.
Documents were also subpoenaed from Melania Trump, the first lady, but she has not been called to testify.
After her deposition, Ivanka Trump condemned the inquiry, as did her brother Eric Trump, who oversees operations at the hotel.
“This is a game stemming from a political vendetta,” Trump said in an interview, echoing his sister, who said on Twitter that the case was “another politically motivated demonstration of vindictiveness & waste of taxpayer dollars.”
So far, Judge José M. López at the Superior Court of the District of Columbia has sided with the attorney general, rejecting a motion by the Trump Organization and the inaugural committee to dismiss the case. López has authorized the parties to move ahead with depositions and other discovery until March to prepare for a possible trial.
The civil suit being pursued by Racine is distinct from two separate cases raising the constitutional issues about the intersection of Donald Trump’s public role and his businesses. The two cases focused on the Constitution’s emoluments clause will be on shakier ground once he leaves office, lawyers involved in the cases said.
A U.S. District Court judge ruled in one of the emoluments suits in March 2018 that Maryland and the District of Columbia had the right to pursue their cases challenging whether Trump’s businesses could take payments from other governments. And for the first time, the court defined what an emolument is, accepting the broader definition advocated by Maryland and the district that it represented just about any payment from a foreign government to the president’s businesses instead of a payment made to the president explicitly in exchange for an official action he would then take, as he had argued.
But one of the remedies their lawsuit sought was an order that the president stop accepting these payments. Once he leaves office, that outcome will effectively have been achieved, perhaps undermining the case.
“We are having high-level discussions around the viability, survivability of the matter,” Racine said about the emoluments case.
Equally unresolved is the future of the Trump hotel in Washington.
The hotel bar is open again after closing in the spring when the virus first peaked. But traffic is slow, in part because the hotel is limiting entry to only those with reservations because of virus restrictions.
Zach Everson, who runs an online newsletter that tracks activities at the hotel, said its fate might be determined in part by how much of a power broker Trump remains.
“Any business that is sustained in some part by people wanting to get in his favor, once you take the official power he had to grant that favor, I am not sure how they can sustain it,” Everson said. “But with Donald Trump, he has been able to pull a rabbit out of the hat before.”
On Friday, White House-related business was still coming in.
Jason Miller, a Trump campaign aide, showed up at lunchtime without his name on the list. He told a security guard at the hotel entrance that he was there for a meeting with lawyers Eric Hershmann and Justin Clark, two other aides to Trump.
For a moment, Miller was prevented from entering.
“I work for the president,” he told the security guard, before finally being let in.
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