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As Donald Trump gave his 2019 “State of the (Dis)Union” speech, an unasked question haunted the event – will he be forced to resign before the 2020 election? Much media attention is focused on “Russia Gate” and the Mueller investigation as well as the dozen or so investigations getting underway by the new Democrat-controlled Congress. However, Trump’s real threat may come from the investigations of his – and his family’s – business practices being separately undertaken by the governments of New York, New Jersey, Washington, DC, and Maryland.
Trump’s leading biographer, David Cay Johnston, pulls no punches in his assessment of Trump’s questionable business practices. “He comes from a family of criminals,” Johnston explains. “His grandfather made his fortune running whorehouses in Seattle and in the Yukon Territory. His father, Fred, had a business partner named Willie Tomasello, who was an associate of the Gambino crime family. Trump’s father was also investigated by the U.S. Senate for ripping off the government for what would be the equivalent of $36 million in today’s money.” Following the family line, Johnston notes, “Donald got his showmanship from his dad, as well as his comfort with organized criminals.”
Since the 2016 presidential campaign and election, a growing number of business scandals have undercut Trump’s self-promoted image of a successful real-estate tycoon. The dubious practices of Trump University (TU) shadowed him during the primary and, shortly after he took office, the case was settled with Trump agreeing to pay a $25 million settlement to resolve outstanding suits.
The “university” – which was never formally chartered in New York State, thus falsely representing itself as an institution of higher education – opened in 2005. Trump promoted it, claiming, “I can turn anyone into a successful real estate investor, including you.” As the New Yorker reported, “The closest that the attendees at the seminars got to Trump was when they were encouraged to have their picture taken with a life-size photo of him.”
New York’s former Attorney General Eric Schneiderman brought a civil suit against TU in2013. In February 2018, a settlement was agreed to under which about 4,000 former TU students, rebranded, “participants” would receive – as Politico reported – “as much as 90 percent of what they paid, usually between about $1,500 for a seminar up to $35,000 for the top tier mentorship.”
A number of additional lawsuits were brought against Trump, his family and several of his business operations in 2018 that are further eroding the myth he so artfully cultivated as a TV personality. One of the most revealing involves the questionable named “Donald J. Trump Foundation.”
In June, former NY AG Barbara Underwood sued the foundation and the Trump clan – Donald, Sr., Donald, Jr., Ivanka and Eric Trump – for engaging in a “pattern of persistent illegal conduct, occurring over more than a decade, that includes extensive unlawful political coordination with the Trump presidential campaign, repeated and willful self-dealing transactions to benefit Mr. Trump’s personal and business interests, and violations of basic legal obligations for non-profit foundations.” In December, Underwood announced that the foundation would dissolve and disperse its’ remaining assets to approved charities.
As the foundation drama was playing out, in October 2018, the New York Times released an exhaustive, 10,000-word exposé further debunking Trump’s mythic self-promoted image as a successful real-estate magnate. The investigative report opens with a simple finding: “Mr. Trump won the presidency proclaiming himself a self-made billionaire, and he has long insisted that his father, the legendary New York City builder Fred C. Trump, provided almost no financial help.” It adds: “But The Times’s investigation, based on a vast trove of confidential tax returns and financial records, reveals that Mr. Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day.”
However, the article cuts to the chase in the next paragraph revealing in no uncertain terms the thievery at the heart of Trump’s business practices over the last half-century:
Much of this money came to Mr. Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Mr. Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings.
Digging deeper, it reports, “The president’s parents, Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances.” It concludes, “The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.”
Following the exposé, Trump’s attorney Charles Harder, lambasted the report. “The New York Times’ allegations of fraud and tax evasion are 100 percent false,” he said. “There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate.”
Nevertheless, the exhaustive Times report led the New York State Department of Taxation and Finance to launch an investigation into the Trump family for possible tax evasion. While the statute of limitations for filing a criminal case over possible tax cheating passed, the state can still file a civil case that could result in large penalties.
Trump – and the Trump organization – challenged the investigation but, in November, NY Justice Saliann Scarpulla ruled that the case can proceed. She found that a sitting president can face a civil lawsuit in state court for actions not taken in his official capacity. She noted, “Allowing this action to proceed is entirely consistent with the Supreme Court’s holding in Clinton v. Jones that the President of the United States is ‘subject to the laws for his purely private acts.'” The Clintons may get their revenge after all.
The Scarpulla decision followed a September ruling requiring Trump to answer questions in a defamation lawsuit brought by Summer Zervos. She is one of the dozen-plus women who claimed Trump sexually abused them. Zervos sued Trump in January 2017 alleging that he defamed her in the wake of her accusations that he sexually assaulted her in 2007 while a contestant on his reality TV show, The Apprentice.
Parallel to the New York law suits, investigations are proceeding in New Jersey, Washington, DC, and Maryland. New Jersey’s AG, Gurbir Grewal, is investigating claims that supervisors at the Trump National Golf Club in Bedminster may have committed federal immigration crimes. While 18 undocumented women who worked at the club have been fired, five claim they were subject to mistreatment at work and received threats and racially-charged insults regularly. An attorney who represents several of the undocumented women provided state investigators with fraudulent green cards and Social Security numbers that club management allegedly procured the women.
A recent ruling by a U.S. District Court judge allowed the AGs of Washington, DC, and Maryland to proceed with discovery in their emolument cases against Trump. The suits were launched in 2017 and accuse Trump of illegallygaining financiallyfrom income generated from the Trump International Hotel in the District. Since Trump took office, the hotel has welcomedmany foreign governments, dignitaries and other well-to-do customers. The AG’s claim that the money he earned through the hotel violates the Constitution’s emoluments clause. Firing of non-documented workers at four other Trump golf courses in New Jersey and New York.
In the year-and-a-half lead-up to the 2020 election, the new Democratically-controlled Congress will have a field-day investigating the misdeeds of the president, his family members and administrative officials. The Mueller report when it comes out – and if it’s made public – could lead to the further prosecutions – and conviction — of people involved in Trump’s presidential campaign. A number of Democratic office-holders and others (e.g., the billionaire Tom Steyer) are pushing for his impeachment.
However, a graver threat many come from state actions, especially from NY’s recently sworn in AG, Letitia James. In her campaign, she promised to investigate Trump’s business dealing and to seek special legislation permitting her to pursue state charges for anyone Trump pardons on federal charges. “President Trump was almost on the verge of bankruptcy and then all of a sudden he was flush with money and we all know that domestic banks were not offering him,” she declared during the campaign. She then asked the all-important question: “… where did he get all of that money from.”
One could well imagine Trump easily pardoning his former associates Paul Manafort and Michael Cohen, among others, convicted of federal crimes. As president, he has the power to grant such pardons. However, the president has no power to pardon someone convicted of state charges.
If members of the Trump clam – notably Donald, Jr., Ivanka and Eric Trump as well as his son-in-law Jared Kushner – are convicted for violating state criminal charges, the president will not have the authority to pardon them. In such a situation, Trump might just make the deal of the century and resign to prevent his family members from going to jail.
The 2020 election is not that far away.