NY AG Labels Trump Foundation a Shell Corporation

MANHATTAN (CN) – Setting the stage for courtroom fireworks, New York Attorney General Barbara Underwood urged a federal judge to advance claims that the Trump Foundation regularly violated state and federal law.

“As the attorney general’s petition alleges, and as the evidence shows, the Trump Foundation was a shell corporation that functioned as a checkbook from which the business entity known as the Trump Organization made payments – using other people’s money, as Mr. Trump did not personally contribute to the foundation after 2008 – to charities and political committees,” Underwood wrote in a Thursday memo. “On multiple occasions, the payments were made for the personal benefit of Mr. Trump or a Trump business.”

Underwood brought the suit against Trump, his children and their charity back in June, demanding that they return the $2.8 million they collected in 2016 through a political fundraiser in Iowa. Both Trump and the attorney general want to dissolve the foundation, but the attorney general wants the court to order dissolution on terms that acknowledge wrongdoing.

“While the foundation reported on its federal and state forms that the individual respondents” – Trump and his children, Eric, Ivanka and Donald Jr. – “served as director, the board existed in name only,” Underwood’s 37-page memo states.

“The individual respondents failed to hold a meeting – ever – to discuss the foundation’s affairs once the second generation of Trumps joined the board in 2006,” it continues. “No meeting minutes exist after 1999, and the foundation did not have required policies governing conflicts of interest, investments, or the issuance of grants.”

The Trump Foundation and family brought a motion to dismiss in August, hinging their strategy on questioning the motives of prosecutors.

“This case involves the unprecedented circumstance of a state agency suing a charitable Foundation that, since its inception in 1987, has raised $17.5 million dollars and, upon dissolution, will have given over $19 million to charitable causes,” Trump’s attorney Alan Futerfas wrote. “The reason the Donald J. Trump Foundation could do this is because – unlike many other charitable foundations – it paid no salaries to board members or employees (even though the law entitles it do so), provided no perks, and, consequently, had virtually no operating costs, save for accountants and professional fees. Practically every dime it received went to charitable causes.” (Parenetheses in original.)

In Futerfas’ words, the case was the state prosecutorial arm of “the resistance” that sought to oppose Trump since his election.

“The NYAG, as an entity, has issued scores of press releases trumpeting its fight against the president as evidence of its reason d’etre and its success as an agency,” he wrote.

Defending her impartiality Thursday, Underwood said that the foundation’s efforts to besmirch her rely upon a misquote.

“She did not state that ‘she considers her battles with the president ‘the most important work [she] has ever done,’ but rather said, upon her appointment by the New York State Legislature, that ‘I’ve served in many roles in government throughout my career,” a footnote to the brief states. “But I believe this job,’ – meaning the job of attorney general – ‘at this moment in history, is the most important job I have ever had.’”

Trump also insisted that the Constitution’s supremacy clause does not allow a sitting president of the United States to fight private court battles.

Underwood noted that this argument in the same Manhattan Supreme Court jurisdiction earlier this year in the case of former “Apprentice” contestant Summer Zervos, who won the right to sue Trump in March.

“Mr. Trump presented these same points to the court in Zervos, and the court addressed them directly,” the attorney general’s memo states.

A hearing on the motion to dismiss has been scheduled for Oct. 25.

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