Donald Trump’s expanding legal worries stemming from investigations in New York and Scotland have received much attention in recent months. But one Trump case, in which his 2016 inauguration committee and the Trump Organization were accused of a million-dollar grift, has been proceeding for almost two years without drawing much notice, and this week, a judge issued a major ruling indicating the case is likely heading to trial. And that could mean that Ivanka Trump and Donald Trump Jr., who have each been deposed in this civil case, could end up on the stand and questioned about their involvement in an alleged brazen rip-off of nonprofit funds.
In January 2020, Karl Racine, the attorney general of Washington, DC, filed a lawsuit against the Trump Organization and the Presidential Inaugural Committee (Trump’s inauguration committee, a nonprofit known as the PIC). He alleged that the PIC misused charitable funds to enrich the Trump family. As Racine put it, “The Inaugural Committee, a nonprofit corporation, coordinated with the Trump family to grossly overpay for event space in the Trump International Hotel…The Committee also improperly used non-profit funds to throw a private party [at the Trump Hotel] for the Trump family costing several hundred thousand dollars.” In a way, Racine was saying that one of the first post-election actions of the Trump gang was to illegally use the inauguration to make a buck—a lot of bucks.
The case has focused on several of the key players in Trumpworld. Racine has taken depositions from Tom Barrack, the investor and Trump pal who chaired the inauguration committee (and who was arrested and charged this summer with illegally lobbying for the United Arab Emirates); Rick Gates, the committee’s former deputy chair, who subsequently pleaded guilty to two charges stemming from special counsel Robert Mueller’s Trump-Russia investigation; and two of Trump’s adult children: Ivanka and Donald Jr.
According to Racine’s investigation, both Ivanka and Donald Jr. were involved in deliberations related the alleged misuse of funds. The lawsuit alleges that Ivanka knew the PIC was being overcharged by the Trump Hotel in Washington, DC, for event space during the inauguration in January 2017. Filings show that during the organization of the inauguration, Stephanie Winston Wolkoff, a lead producer of the event, raised concerns with the president-elect, Ivanka, and Gates that the Trump Hotel was overcharging the inauguration committee for events to be held there. Gates ignored the warning, the lawsuit notes, and the committee struck a contract with the Trump Hotel for $1.03 million, an amount the lawsuit says that was far above the hotel’s own pricing guidelines.
Racine also alleges that Gates, with Ivanka’s knowledge, “allowed the [PIC’s] nonprofit funds to pay for a private after-hours party for the Trump family at their Hotel, even after [the PIC’s] staff initially canceled this event over concerns of improper use of funds.” In a legal filing in the case, Racine alleged that Donald Jr. also played an instrumental role in the purported misuse of charitable funds for this private Trump bash: “Attendance was by invitation only, and guests were limited to friends and family of the President-elect and guests of the Hotel.” And Racine adds, “Incredibly, the final decision to proceed with the event was not even made by the [inauguration committee], but by Donald Trump, Jr.” The event, according to Racine, cost $288,367. In legal filings, the attorney general has pointed out that Trump, Donald Jr., Ivanka, and Eric Trump each profit from Trump Hotel revenues.
Racine is looking to recover the nearly $1.1 million that he contends was improperly spent by the PIC and benefitted the Trump family. He is asking the DC Superior Court to direct those funds to another reputable nonprofit.
On Monday, DC Superior Court Judge José López issued a ruling that knocked out part of Racine’s case, ordering that the New York City–based Trump Organization be dropped from the lawsuit due to jurisdictional issues. But he permitted the case to proceed toward a trial to determine if the PIC payments to the Trump Hotel violated the law prohibiting tax-exempt organizations from making payments that benefit a private individual not covered by the public interest goals of the nonprofit.
“Racine sued Donald Trump’s Presidential Inaugural Committee for misusing nonprofit funds to enrich the Trump family,” says Marrisa Geller, a spokesperson for Racine. “It’s a big deal that our lawsuit is moving forward and going to trial. The Inaugural Committee misspent more than $1 million in nonprofit funds to unlawfully benefit private interests. We cannot allow those in power to get away with using money to illegally enrich themselves and their families.”
The case has already presented Ivanka Trump and Donald Jr. in a negative light. As Mother Jones previously reported, evidence submitted in the lawsuit indicated that Trump Jr. testified falsely on crucial points during his deposition. Ivanka too, testified inaccurately during her deposition. If either is called as a witness in the trial, prosecutors could highlight these discrepancies.
A filing in the case also tied Allen Weisselberg, the chief financial officer of the Trump Organization, to the Trump inauguration scandal. When the PIC’s spending was questioned in news report in 2017, Barrack brought in Weisselberg to oversee the organization’s own internal audit. That was odd, given that Weisselberg was a senior official at a company that had received a large amount of money from the PIC. Weisselberg is now a key figure in the criminal and civil investigations of the Trump Organization being mounted by the New York attorney general and the Manhattan district attorney. In July, Weisselberg and the Trump Organization were indicted on sweeping tax fraud charges. (A prosecutor in that case alleged that the 15-year-long tax scheme was “orchestrated by the most senior executives” at the Trump business.)
The alleged details of the Trump inauguration scandal fit the established pattern of the Trump family abusing the tax code and foundation funds for its own gain. With López’s ruling, the Trump Organization has slipped out of Racine’s grasp. But now the DC attorney general will presumably get a shot to prove the essence of his case: The Trump clan is a kleptocracy.