A D.C. judge on Monday threw out part of a lawsuit that the District’s attorney general filed against former president Donald Trump’s 2017 Inaugural Committee, ruling that the committee had not wasted its money when it rented ballrooms at Trump’s own hotel.
López allowed that part of the lawsuit to proceed, meaning the case could eventually go to trial.
“It’s a big deal that our lawsuit is moving forward and going to trial,” said Marrisa Geller, a spokeswoman for Racine. “We cannot allow those in power to get away with using money to illegally enrich themselves and their families.”
A spokesman for the 2017 inaugural committee did not respond to a request for comment.
Racine filed his lawsuit in early 2020, alleging that the inaugural committee — legally, a nonprofit — had misused its money by spending about $1 million on ballrooms and meeting spaces at Trump’s D.C. hotel.
Racine said that the inaugural committee was offered rented spaces at other venues at lower costs, or even free. But instead, Racine said, the hotel spent money at a property owned by Trump and managed by his adult children — over the objections of its own event planner, a friend of Melania Trump’s named Stephanie Winston Wolkoff.
Racine asked the judge to make Trump’s company return the $1 million so it could be given to charity.
The Trump Organization and the Inaugural Committee have responded that the Trump hotel charged “market rate” for its spaces, in line with its status as a luxury hotel near the White House.
López’s ruling on Monday rejected one of Racine’s two main lines of argument: that the inaugural committee had “wasted” its funds by spending them at Trump’s hotel.
Under the law, Lopez wrote, a charge of “waste” requires a very high burden of proof.
It would not be enough to show the committee paid too much for ballrooms.
Instead, he wrote, Racine needed to show the committee had intentionally thrown its money away. To be “waste,” in a legal sense, López said the spending needed to be “so far beyond the bounds of reasonable business judgment that its only explanation was bad faith.”
But the evidence did not show that, López ruled.
After all, he wrote, there was some logic to the committee’s decision to rent from Trump’s hotel. It was big, luxurious and popular with Trump’s supporters — the very people that the committee was there to serve.
Because of that, López wrote, Racine had not met “the extreme burden [required] to carry a waste claim to its fruition.”
But López said he needed to hear more witnesses to make a decision on Racine’s other charge, called “private inurement.”
Nonprofits like the committee cannot use the money to give private benefits to their leaders. While Trump was not formally an officer of the inaugural committee, Racine has alleged that Trump and his family should still be treated as its leaders, for the purposes of the suit, because they exercised off-the-books control.
To make a judgment about that, López wrote, he needed to learn more details: “Did higher ranking Trump family officials have the ability to control the workings of the [committee]? Did members of the [committee] ignore internal recommendations to pay the Trump Hotel for services that could have been offered free?”
On those questions, López wrote, “a genuine dispute of material fact exists,” so the suit should proceed.