Last week, Justice Saliann Scarpulla of the New York Supreme Court ordered President Donald Trump to pay $2 million in restitution to charity after admitting to New York Attorney General Letitia James that he and his children had violated their fiduciary duties as officers and directors of the now-shuttered Donald J. Trump Foundation. As a result of that failure, charitable dollars — consistently and over many years — often benefited Trump rather than the causes the president has repeatedly claimed he supports.

The Trump Foundation has done great work and given away lots of money, both mine and others, to great charities over the years - with me taking NO fees, rent, salaries etc. Now, as usual, I am getting slammed by Cuomo and the Dems in a long running civil lawsuit started by..... — Donald J. Trump (@realDonaldTrump) December 19, 2018

Scarpulla’s Nov. 7 order, along with the stipulations obtained by the attorney general, are a great start to holding a wealthy family to account. Notably, such enforcement is rare. This is likely because of a serious lack of enforcement resources both at the state and federal levels.

But I do not believe the judge’s order should be the end of this matter. Charities must be publicly transparent; without transparency money dedicated to the public is subject to abuse. That abuse in turn undermines our confidence in a sector that provides services to some of our most vulnerable communities. But lost in the narrative about this decision — and indeed in this hectic news cycle — is the role of the IRS, the major regulator of nonprofits on a national scale. We still do not know whether the Trump Foundation and its officers and directors paid all the taxes it owed to the government, meaning the New York attorney general's investigation should be the beginning, not the end, of this process.

Charities must be publicly transparent; without transparency money dedicated to the public is subject to abuse.

In the public stipulations entered into with the attorney general, Trump, the Trump Foundation and his children made significant admissions of charitable waste. For instance, Trump directed the foundation to use money for charity to buy a Tim Tebow helmet for himself, a portrait of himself and to settle a couple lawsuits for himself.

One of the hard things to grasp about the problematic nature of these transactions is that in each case, the foundation gave money to real charities. How could it be bad for a foundation to give money to charity? But the key is that the money in each instance bought something for Trump in return. In other words, Trump took money from the Trump Foundation, but the end result of the transaction often benefitted him.

BREAKING: We’ve secured a court order forcing President Trump to pay $2M in damages after admitting to illegally using the Trump Foundation to help him intervene in the 2016 presidential election and further his own political interests.



No one is above the law. — NY AG James (@NewYorkStateAG) November 7, 2019

Trump and his family face a variety of consequences, including a requirement that the president may not participate in running a charity in New York without substantial adult supervision. The attorney general also insisted that Trump’s children must go through educational training.

Even still, the order did not go far enough.

The most glaring problem that remains is related to how Trump and his family used the charity for political gain. Federal law prohibits a charity from involving itself in a political campaign. Yet, the court found that Trump allowed his presidential campaign to infect the foundation like a parasite taking over its host.

At the center of this controversy is a 2016 nationally televised Iowa fundraiser, ostensibly organized by the foundation to raise money for veterans. Instead, Trump's presidential campaign used the foundation to promote Trump and to draw attention away from a Fox News debate taking place at the same time. The foundation did in fact raise money during the event, $2.8 million, which it publicly donated out to at least five different Iowa charities, ceremonially handing over a large check emblazoned with Trump's campaign slogan, "Make America Great Again."

In effect, the New York judge found that Trump's fundraiser was just as much a way to help his presidential campaign as it was to help former members of the armed services. The attorney general had asked the court to order Trump to return the entire amount that was raised that day, or $2.8 million. But Scarpulla believed the monetary harm was somewhat lessened since the foundation did ultimately give money to charity, ordering $2 million in restitution.

But that is not the end of the matter. If the Trump Foundation was participating in political campaigns, which New York State says it was, it and Trump would then owe back taxes to the IRS.

The foundation is a special type of charity called a private foundation. Private foundations are typically formed and generally controlled by wealthy families, and Congress imposes significant, strict rules upon them. Lawmakers are clearly concerned that this type of situation, which today is illustrated by the Bill & Melinda Gates Foundation, the Ford Foundation and the Walton Family Foundation, is ripe for abuse. And the Trump Foundation's actions suggest Congress is right to be worried.

The rules imposed are particularly relevant to the Trump situation. One tax prohibits what is known as self-dealing. It is an excise tax of 10 percent of the amount taken from charity. And as Trump admits in the stipulations with the attorney general, he repeatedly violated the self-dealing rule.

Congress also imposes an excise tax on foundations that spend money on political campaigns. The foundation and Trump are already familiar with this rule as well.

Congress also imposes an excise tax on foundations that spend money on political campaigns. The foundation and Trump are already familiar with this rule as well, because Trump paid $2,500 to the IRS in a 2016 filing on behalf of the foundation after admitting to improperly sending $25,000 to the Pam Bondi campaign for attorney general in Florida in 2013.

I believe that Trump and the Trump Foundation owe taxes at least pursuant to both categories above: Trump should owe a 10 percent self-dealing excise tax on that $2 million amount from the Iowa event, and a second 10 percent tax because of the event's political implications. Given that the foundation is shutting down and all other assets are supposedly being directed to charity, I believe Trump ought to pay both amounts personally, a total of $400,000.

Now, it’s likely that the Trump Foundation has actually violated other laws. For instance, until at least May of this year, Trump still had not paid the foundation for seemingly personal purchases totaling in the tens of thousands of dollars. The foundation now claims that those amounts have been repaid or will soon be repaid. But can we trust an organization with such a shady track record to hold itself accountable?

I would argue no, and I remain concerned about the president’s operation of the foundation. Year after year, he signed the foundation’s tax information returns. And now we know those returns contained false information. There has also been significant reporting about potentially improper estate and gift tax positions he and his family have taken advantage over many years.

The culmination of this information suggests there is a real need for the IRS to make sure the Trump Foundation is held fully responsible for its fraud. And to do that, the IRS should really also do an independent audit of the president’s own tax returns. The president's personal and charitable endeavors are so enmeshed, it would seem impossible to entangle one without full knowledge of the other.

Scarpulla and James' efforts here are to be commended, but much work remains in holding Trump to account — at least in his charitable financial dealings.

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