MANHATTAN (CN) – New York Attorney General Barbara Underwood marked the president’s birthday on Thursday with a $2.8 million lawsuit that seeks to dissolve the Donald J. Trump Foundation for violations of state and federal law.
“As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality,” Underwood said in a statement. “This is not how private foundations should function and my office intends to hold the foundation and its directors accountable for its misuse of charitable assets.”
Lobbing self-dealing allegations against Trump, the foundation and his children sitting on the board of directors, the 41-page petition in Manhattan Supreme Court marks the culmination of an investigation that began in June 2016.
“For more than a decade, the Donald J. Trump Foundation has operated in persistent violation of state and federal law governing New York state charities,” the suit begins.
Months after the start of the attorney general’s probe, Washington Post reporter David Fahrenthold put the Trump Foundation’s transactions under public scrutiny for the first time with a Pulitzer Prize-winning series. The articles alluded to violations of state and federal law that would not be formally alleged until Thursday.
“In sum, the investigation revealed that the foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization,” the petition states.
Underwood’s petition highlights five expenditures made with charity money, including two legal settlements and Trump’s purchase of a painting of himself.
“This pattern of illegal conduct by the foundation and its board members includes improper and extensive political activity, repeated and willful self-dealing transactions, and failure to follow basic fiduciary obligations or to implement even elementary corporate formalities required by law,” the petition states.
Pushback from the Trump Foundation was swift, attributed to an anonymous spokesperson and originating from a Trump Organization email address.
“This is politics at its very worst,” the statement says. “The foundation has donated over $19 million to worthy charitable causes – more than it even received. The president himself – or through his companies – has contributed more than $8 million. The reason the foundation was able to donate more than it took in is because it had little to no expenses.”
A dogged chronicler of the foundation, Fahrenthold noted that the Trump Organization sent the statement because the charity has no staff.
Attorney General Underwood skewered the foundation for lacking oversight and internal controls.
“In the absence of a functioning board, Mr. Trump ran the foundation according to his whim, rather than the law,” the petition says. “Mr. Trump, who was the sole signatory on the foundation’s bank accounts, approved all grants and other disbursements from the foundation. Accounting staff for the Trump Organization had responsibility for issuing checks from the Foundation, and issued the checks based solely on Mr. Trump’s approval before presenting the checks to Mr. Trump for signature.”
The first charity-funded settlement described by Underwood involved 2006 zoning issues with his private club Mar-A-Lago.
A receipt for the $100,000 that Trump had to pay to the Fisher House Foundation as part of that settlement is included in the petition. It shows a handwritten notation that the money came from the “DJT Foundation.”
The attorney general also quotes several emails in which former Trump campaign manager Corey Lewandowsk appears to dictate where to funnel donations.
“We should start thinking about how you want to distribute the funds collected for the Vets,” Lewandowski wrote on Jan. 29, 2016, referring to the Donald J. Trump Special Event for Veterans.
Of the $5.6 million that event raised, Attorney General Underwood says more than $2.8 was contributed to the foundation. Private donors donated the rest to veterans’ charity groups without going through the foundation.
Underwood says that an email Lewandowski sent some days later, on the eve of the Iowa caucuses, exposed the electioneering purposes of the foundation.
“Is there any way we can make some disbursements [from the proceeds of the fundraiser] this week while in Iowa?” Lewandowski asked in a message. “Specifically on Saturday.”
In one of the petition’s more ironic passages, Trump railed against the rules that would prevent him from using his charity for electoral purposes – rules that Underwood accuses Trump of breaking during his rant.
“They’re willing to take your tax exemption and tax status away from you if you talk,” Trump said in South Carolina in 2016, according to a footnote.
“That happened during Lyndon Johnson’s reign and I would put that back so fast,” then-candidate Trump added.
True to Trump’s prediction, Underwood seeks to unravel the president’s charity.
“The attorney general therefore brings this special proceeding to dissolve the foundation for its persistently illegal conduct, enjoin its board members from future service as a director of any not-for-profit authorized by New York law, to obtain restitution and penalties, and to direct the foundation to cooperate with the attorney general in the lawful distribution of its remaining assets to qualified charitable entities.”
The six causes of action include multiple counts seeking to shut down the foundation.
The Trump Foundation’s statement suggests a bitter fight ahead.
Filled with mudslinging against the top state prosecutor, it makes the irrelevant note that Underwood’s predecessor, Eric Schneiderman, “was recently forced to resign his office in disgrace” over physical abuse allegations.
“The acting NYAG’s recent statement that battling the White House is ‘the most important work [she has] ever done’ shows that such political attacks will continue unabated,” the statement concludes.
Underwood made the above remark last month in her interview by the New York state Legislature, but was describing how her office’s efforts spanned two presidential administrations.
“During the Obama administration, we fought to defend the Clean Power Plan, to preserve the Voting Rights Act and other civil rights laws, and to resist other states’ efforts to impose draconian restrictions on undocumented immigrants,” she said.
Such efforts, she added, have “become even more important” during the Trump era.
Trump meanwhile reacted to the lawsuit on Twitter this morning by recasting New York’s two-year investigation as a sign of desperation, and by misstating history.
“Schneiderman, who ran the Clinton campaign in New York, never had the guts to bring this ridiculous case, which lingered in their office for almost 2 years,” he tweeted. “Now he resigned his office in disgrace, and his disciples brought it when we would not settle.”
Though the former New York attorney general did not in fact run Hillary Clinton’s campaign, Clinton did appoint Schneiderman along with more than 100 other people to a leadership council in 2015 while she was running in the New York presidential primary. Scripps News chided Schneiderman in an exclusive report the following year for not holding the Clinton Foundation to donor-reporting requirements.