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Fact-checking what Donald Trump’s lawyer said about the president-elect’s finances

Trump lawyer Sherri Dillon says that those who believe that Trump's ownership of hotels constitutes a violation of the emoluments clause are 'wrong'. (Video: The Washington Post)

Sheri Dillon, an attorney for President-elect Donald Trump, spoke at length during the Jan. 11 news conference — his first one in six months — to explain the incoming administration’s plans to detach itself from the Trump family business. Two of Dillon’s claims were suspect — one regarding a complex and unsettled legal matter, and the other, an easily debunked claim.

As is our custom for fact checks of live events, we did not issue a Pinocchio rating. Dillon, through her law firm, declined to comment, and the Trump transition team did not respond to our inquiry. Let’s take a look at the two claims.

“The so-called Emoluments Clause has never been interpreted, however, to apply to fair value exchanges that have absolutely nothing to do with an office holder. No one would have thought when the Constitution was written that paying your hotel bill was an emolument. Instead, it would have been thought of as a value-for-value exchange; not a gift, not a title, and not an emolument.”

We will stipulate that the extent to which the emoluments clause applies — or whether it applies at all — to the incoming administration is still a matter of a debate and legal opinion. But her claim is misleading, at best.

Since Trump’s election, ethics experts have raised concerns that Trump’s business holdings around the world could test the boundaries of the letter or spirit of the Foreign Emoluments Clause in the U.S. Constitution. The fear of potential influence from foreign governments through economic benefits to federal officials led to this clause, which was relatively obscure until Trump’s election.

The clause reads: “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

Dillon said the clause “has never been interpreted” to apply to fair value exchanges, such as foreign government leaders purchasing hotel rooms at Trump’s properties. That is technically accurate, but the clause has never been interpreted not to apply to such exchanges, either. That’s because the clause has never actually been interpreted by the courts. This is by no means a clear or settled matter.

“This whole thing is uncertain and unprecedented because past presidents have been so careful to avoid even an appearance of violating the clause, and because no past president had anywhere near the extensive international holdings that Trump does. So we are really sailing in uncharted waters,” said Randall Eliason, George Washington University Law School lecturer.

“Emoluments” means, per the Oxford English Dictionary: “profit or gain arising from station, office, or employment: reward, remuneration, salary.” The Department of Justice Office of Legal Counsel has taken the position that the clause “prohibits government employees from accepting any sort of payment from a foreign government, except with the consent of Congress,” according to Citizens for Responsibility and Ethics in Washington (CREW).

Previous readings of the clause did not decide on cases based on whether the employee was being compensated at fair market value, but rather on whether the payment was received from a foreign government, according to CREW.

Norman Eisen and Richard Painter, chief White House ethics counsel under President Obama and former president George W. Bush, respectively, recently weighed in on this matter in a brief they penned with Harvard Law School constitutional law scholar Laurence Tribe. They wrote that although there is not a firm consensus, “the best reading of the Clause covers even ordinary, fair market value transactions that result in any economic profit or benefit to the federal officeholder.”

The clause’s reference to “offices” indicates that the Framers “sought to prohibit even reasonable money-for-services arrangements between officeholders and foreign states, which would result in profit to the officeholder,” they wrote. “Indeed, it would be absurd to imagine that an otherwise forbidden emolument in the form of a foreign government’s payment to the American President could be cured if the President were to give that foreign government its money’s worth (or more) in services advancing that government’s interests, which might well be contrary to our own.”

Even if transactions between the foreign states and Trump’s businesses do not involve impropriety, it is virtually certain many transactions would “create the risk of divided or blurred loyalties that the Clause was enacted to prohibit. And while in some instances the threat might be readily apparent, the majority of potential conflicts would be cloaked in secrecy, buried in technicalities, or impossible to prove definitively,” wrote Eisen, Painter and Tribe.

Who would have grounds to challenge the law’s applicability? It’s not entirely clear, again, because this is new legal territory. According to Tribe, competing hotels and other businesses would have standing to seek judicial relief, claiming unfair competition due to unconstitutional benefits that Trump’s businesses would get from foreign powers. Other nonprofit associations and groups injured by Trump’s constitutional violations also would have standing, he said.

Not all legal experts agree that Trump would violate the emoluments clause. (Here’s an informative summary on the Volokh Conspiracy blog, written by University of Chicago Law School assistant professor Will Baude, of his misgivings about Emoluments Clause arguments.)

Seth Barrett Tillman, National University of Ireland, Maynooth, professor who has studied this clause, said Dillon may be on safe ground: “The word ‘emoluments’ is not infinitely elastic. … When someone does business with you, it’s an exchange — a fair exchange. I don’t see how the Emoluments Clause applies to that.”

“As you know, the business empire built by President-elect Trump over the years is massive, not dissimilar to the fortunes of Nelson Rockefeller when he became vice president. But at that time, no one was so concerned.”

This is a curious, inaccurate claim.

Rockefeller was sworn in as vice president in December 1974, appointed by Gerald Ford after Ford was elevated to the presidency in the wake of Richard M. Nixon’s resignation over the Watergate scandal.

First, unlike Trump, Rockefeller tried to play down his family’s fortunes. From the Senate archives:

Nelson Aldrich Rockefeller inherited both a vast family fortune and a family image that he had to live down in order to achieve his political ambitions — because even as a little boy he wanted to be president of the United States. “After all,” he reasoned, “when you think of what I had, what else was there to aspire to?”

And there was concern. Rockefeller’s wealth and financial ties were the central focus of his four-month confirmation process to become vice president.

Rockefeller pledged to put all of his stocks in a blind trust, revealed his income and offered to release his income tax information, news reports show. Congress scrutinized nearly two decades’ worth of his political gifts and taxes, and whether his finances posed a conflict of interest.

Rockefeller provided the committees with a list of personal loans and charitable contributions from 1957 to 1974. His charitable contributions totaled nearly $25 million. In contrast, Trump has not yet released his tax returns — citing an ongoing audit of some of his tax records, though an audit does not bar him from releasing them.

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"The so-called Emoluments Clause has never been interpreted, however, to apply to fair value exchanges that have absolutely nothing to do with an office holder."
in a news conference
Wednesday, January 11, 2017