WASHINGTON (CN) — The committee set up for former President Donald Trump’s inauguration agreed Tuesday to pay $750,000 to resolve allegations that the activities it booked at a Trump-owned property in 2017 amounted to a misuse of nonprofit funds.
The settlement agreement contains no admission of wrongdoing but does require the 58th Presidential Inaugural Committee and the Trump Organization to put the funds into a constructive trust that will be paid to two local nonprofits dedicated to promoting civic engagement.
It stems from a lawsuit filed in January 2020 by District of Columbia Attorney General Karl Racine, who accused the organizations of violating local laws by using nonprofit funds to overpay for events held at Trump International Hotel, thus enriching the Trump family to the tune of approximately $1.03 million.
“Because the amounts that the Trump Hotel charged the PIC for the event space caused the PIC to violate the prohibitions on waste and private inurement in its articles of incorporation, those payments caused the PIC to exceed or abuse its lawful authority to operate in the District of Columbia and to act contrary to its nonprofit purpose in the District of Columbia,” the complaint alleged.
Investigators fingered Rick Gates, the former deputy chair of the committee who went to prison for lying to the FBI, as the mastermind of the deal. Despite warnings from committee staff “that the charges were unreasonable” and that it “would not be a proper use of PIC funds,” according to a press release, Gates green-lit the agreement about a month before the inauguration.
The $1.03 million contract to rent Trump Hotel event space from Jan. 16-20 in 2017 included $300,000 for a private party for Ivanka Trump and two of her brothers, Donald Jr. and Eric. Assistant attorneys general under Racine called that amount “far above even the hotel’s own internal pricing guidelines."
One provision of the contract required the inaugural committee to pay for “event space on days when it held no events,” and it also “failed to provide any recognition that the PIC had arranged a sizable block of the hotel’s rooms,” according to the complaint.
Come the morning of the inauguration on Jan. 20, the complaint continues, the hotel had double-booked its largest event space, the Presidential Ballroom. Ultimately the National Prayer Breakfast held its event in the morning for $5,000, while the committee paid $175,000 to rent the same space just a few hours later.
“The PIC thus paid 35 times more for rental of event space on Inauguration Day at the Trump Hotel than a comparable nonprofit organization paid for renting a substantial portion of the same event space earlier that day,” the complaint states.
Racine questioned the motives for the committee booking at the hotel run by its namesake, Trump, when it had previously received complimentary event space “and much better terms at other hotels or venues."
“There were a number of other hotels in the District of Columbia with event space capable of holding the events the PIC held at the Trump Hotel,” according to the complaint.
The attorney general celebrated the settlement agreement on Tuesday. "No one is above the law — not even the president," he said in a press release.
“After he was elected, one of the first actions Donald Trump took was illegally using his own inauguration to enrich his family,” Racine continued. “We refused to let that corruption stand. With our lawsuit, we are now clawing back money that Trump’s own inaugural committee misused."
As Racine sees it, the settlement with the Trump outfit puts future presidential inaugural committees “on notice” that they cannot “get away with such egregious actions.”
The $750,000 in settlement agreement funds will be evenly split between DC Action for Children Today and Mikva Challenge Grant Fund.
Robyn Lingo, executive director of Mikva Challenge DC, said the nonprofit is honored to be picked as a fund recipient.
“We know that investing in our democracy starts by supporting and empowering young people to be active changemakers,” Lingo said in the press release.
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