On Monday, Racine added an allegation to that suit. He said the president’s inaugural committee — a tax-exempt charity — had improperly paid a bill it did not owe, using nonprofit funds to pay a bill owed by a for-profit business.
“The Trump Organization was liable for the invoiced charges,” Racine’s office said in the filing. “The [Inaugural Committee’s] payment of the invoice was unfair, unreasonable and unjustified and ultimately conferred improper private benefit to the Trump Organization.”
That allegation echoed a prior legal case from 2018 in which Trump was accused of using another tax-exempt charity — the Donald J. Trump Foundation — to pay $258,000 in legal settlements for his for profit businesses. That case, brought by the New York attorney general, ended with a judge ordering Trump to pay $2 million in damages.
In this case, Racine has asked a D.C. Superior Court judge to direct that all of this money — the $1 million paid to Trump’s hotel, and the $49,000 used to pay off the Trump Organization’s debts — be given to charity.
The Trump Organization did not respond to a request for comment Monday. Neither did a spokesman for the Trump Inaugural Committee.
Racine’s filing said the rooms at the Loews Madison Hotel — located a few blocks from the White House — were reserved by a Trump Organization employee, who was an assistant to Donald Trump Jr. Racine said the contract was executed “on behalf of the Trump Organization” by Gentry Beach, a friend of Donald Trump Jr., who was not a Trump Organization employee.
In late January 2017, Racine said, the Madison hotel sent the Trump Organization an invoice for the rooms: $49,358.92. But the bill went unpaid until July, Racine’s office said, when a collections agency in Arizona called the Trump inaugural committee to see if they would pay.
The inaugural committee had not known about these rooms or this bill until then, Racine’s office said. But Rick Gates — a Trump political ally and official on the inaugural committee — directed the committee to pay it anyway, Racine’s filing said.
Beach — the friend of Trump Jr. who allegedly executed the contract — said he knew nothing about the rooms or the bill.
“I know nothing of the rooms, did not use the rooms, have no idea who would have,” Beach said in an email to The Washington Post on Monday. When asked why his name was on the contract, Beach said: “I have no idea. I can only guess someone put it there as a placeholder.”
Trump still owns his businesses while in office but says he has given day-to-day control to Trump Jr. and his other adult son, Eric.
That is important in this case because, under nonprofit law, charity money can’t be used for the private benefit of the charity’s leaders — or their families or businesses.
Racine is alleging the inaugural committee broke that law by paying Trump’s private business and also by paying off a bill it owed.
“The [inaugural committee] knew, and continues to know, that the amounts it paid under the Loews Madison invoice for legal obligations incurred by the Trump Organization were for charges the [inaugural committee] had not approved or authorized, and for prohibited private purposes,” Racine’s filing said.
Late last year, Racine’s investigators questioned Trump’s daughter Ivanka for more than five hours, asking why the inaugural committee spent more than $1 million on a ballroom at the Trump International Hotel near the White House.
At the time of that booking, Ivanka Trump was still an executive at the Trump Organization. She has said she told the hotel to charge a “fair market price.” On Twitter, Ivanka Trump criticized Racine’s investigation as “a politically motivated demonstration of vindictiveness & waste of taxpayer dollars.”
Racine’s suit, filed last January, said the Trump inaugural committee — controlled and advised by Trump’s family and political allies — was bound as a nonprofit to spend its money wisely and for the public good. Instead, Racine alleged, the inaugural committee paid excessive rates to the president’s own company, even for rooms it did not use.
Racine wrote in his suit that Trump’s company “unconscionably benefited from nonprofit funds.”