New York v. Trump

[Editor’s Note: This brief combines information from the 2018 petition that opened the case and the court’s 2019 decision that ended the case.] The Donald J. Trump Foundation (foundation) (defendant) was incorporated in New York as a private nonprofit, charitable, tax-exempt corporation. The foundation had no employees. The foundation’s operations were delegated entirely to employees of the for-profit Trump Corporation, Inc., which also managed a large number of for-profit entities. The foundation had a board of directors that included Donald Trump and several family members (the individuals) (defendants). However, the directors had not met or provided any oversight for the foundation for 19 years. Without any board meetings, the foundation did not have any stated policies or procedures, not even protective ones required by state law. Instead, the foundation operated at the whim of the Trump Corporation. In this environment, the foundation used its tax-exempt funds for unlawful purposes, including paying the debts owed by other for-profit entities operated by the Trump Corporation, paying for personal expenses incurred by Donald Trump and his family members, promoting Donald Trump’s 2016 presidential campaign, and promoting Pamela Bondi’s 2013 campaign to be Florida’s attorney general. The New York state attorney general (the state) (plaintiff) filed a petition alleging that the foundation’s directors had committed numerous breaches of their fiduciary duties of care and loyalty. The state sought to have the foundation judicially dissolved and to have the directors pay back the waste caused by the foundation’s mismanagement. The foundation and the individuals stipulated that the factual allegations were accurate. At the court’s request, the parties worked out a settlement. This settlement required that (1) the foundation be judicially dissolved, (2) the foundation’s assets be distributed to eight specified charities, (3) the individuals attend in-person training on fiduciary duties, (4) Donald Trump repay $11,545 that he had misused to the foundation, and (5) Donald Trump pay an amount to be determined by the court for misusing $2.8 million of donations raised in the foundation’s name for veterans’ charities. For this final item, instead of the foundation giving the donated money directly to veterans’ charities as promised, Donald Trump’s 2016 presidential campaign took the $2.8 million and used it to make grants to veterans’ charities in ways intended to further the political campaign, such as by claiming that the funds were being donated by Donald Trump or his campaign when they had actually been donated by the public. The court considered the proposed settlement.