DC Sues Over Trump Inaugural Committee Payment to Hotel

The Trump International Hotel in Washington, D.C. (AP Photo/Alex Brandon)

WASHINGTON (CN) — As President Donald Trump’s impeachment trial resumes Wednesday, the nation’s capital added to his legal concerns with a lawsuit claiming his company juiced the price it charged the presidential inaugural committee for event space at the hotel that bears his name.

The 18-page lawsuit filed in Washington, D.C., Superior Court on Wednesday by D.C. Attorney General Karl Racine says the 58th Presidential Inaugural Committee wasted more than $1 million by “grossly overpaying” the Trump Organization and the Trump International Hotel in downtown Washington, in violation of city law that bars nonprofits from spending money to benefit private people or companies.

“District nonprofit law required the [presidential inaugural committee] to seek out and pay reasonable fair market value for services rendered,” the complaint states. “The PIC did not do so, instead choosing to host its events at the Trump hotel and pay far more than market value, ultimately for the private benefit of the Trump entities.”

Inaugural committee executive Rick Gates negotiated back and forth with the hotel, eventually landing on a deal to pay $175,000 per day to reserve space at the hotel for four days around the time of Trump’s inauguration.  An event planner working for the inaugural committee warned the hotel was charging at least twice the going rate for event space, according to the complaint.

Gates pleaded guilty in 2018 to charges of conspiracy and lying to the FBI, though the charges are unrelated to the city’s lawsuit.

With the tab for food and other charges added on to the bill, the inaugural committee spent $1.03 million on space at the president’s hotel. That same week, the nonprofit hosting the inaugural prayer breakfast paid $5,000 for the ballroom the hotel charged the inaugural committee $175,000 to rent, according to the lawsuit.

The price was initially even higher, with the hotel giving the inaugural committee a $3.6 million quote for eight days of event space. An event planner for the inaugural committee met with Trump and his daughter, Ivanka Trump, about the high price and the president-elect deputized Ivanka to deal with the cost, the city claims.

A spokesperson for Trump Hotels denied the allegations on Wednesday, calling the lawsuit “intentionally misleading and riddled with inaccuracies.”

“The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that the hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue,” the spokesperson said in a statement. “The AG’s after the fact attempt to regulate what discounts it believes the hotel should have provided as well as the timing of this complaint reeks of politics and is a clear PR stunt.”

The suit seeks to impose a constructive trust over the funds and an order directing them to be sent to another nonprofit group that focuses on “promoting civic engagement of the citizens of the United States of America.”

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

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