Emoluments: Trump's profits from private businesses to get hard look from federal appeals courts

Richard Wolf | USA TODAY

Show Caption Hide Caption Artist projects 'Pay Trump bribes here' onto Trump hotel An artist got his political message out by projecting it onto the Trump International Hotel in Washington. The projection was in response to accusations that foreign officials can have access to the president just by staying in his D.C. hotel.

WASHINGTON – An obscure provision of the Constitution that Donald Trump ridiculed as "this phony Emoluments Clause" will be debated in two federal appeals courts this week, representing yet another legal threat to the embattled president.

Even as impeachment dominates the agenda in Congress and President Trump's personal lawyers ask the Supreme Court to shield his tax returns and financial records from investigators, courts in the District of Columbia and Richmond, Va., will hear arguments that the president routinely receives gifts from foreign and U.S. government officials.

Those two challenges and a third working its way through federal courts in New York focus on the Trump Organization's financial stake in hotels and restaurants, which cater to customers both foreign and domestic with interests before the government Trump heads.

The question: Does that violate the Constitution?

Article II: Trump's 'right to do whatever I want?' Or a road map for impeachment?

Democrats in Congress, the attorneys general of Maryland and the District of Columbia, and some of Trump's competitors in New York City say the answer is yes. When a foreign official stays at the Trump International Hotel in Washington, D.C., or U.S. officials stay at a Trump resort in Scotland, they say, the presidential profits are unconstitutional.

The Justice Department says the answer is no. Its lawyers are telling all three courts that a violation must involve Trump profiting directly from his employment as president, not from "the proceeds of ordinary commercial transactions between foreign governments and businesses."

On Monday, that debate will come before a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit. The challengers won the first round in federal district court, forcing Trump's appeal.

On Thursday, the debate will shift to the full U.S. Court of Appeals for the 4th Circuit, based in Richmond, following earlier decisions that gave each side a victory and a defeat.

For Deepak Gupta, an appellate lawyer who represents challengers in two of the three disputes, increased public understanding of the issue constitutes a victory in itself.

“When we started this, nobody knew what emoluments were,” Gupta says. Nearly three years later, "it’s entered the lexicon, and it’s part of the debate about impeachment."

'Obsessed with the possibility of corruption'

During the infamous July phone conversation that ignited the House impeachment proceedings, Ukrainian President Volodymyr Zelensky went out of his way to note his recent stay at a Trump hotel in New York.

That, challengers say, is a prime example of what Article I, Section 9, Clause 8 of the Constitution bans. The clause is derived from the Latin word "emolumentum," meaning "profit" or "gain." Another prohibition in Article II prohibits the president from receiving domestic emoluments.

"The Framers were obsessed with the possibility of corruption," Gupta says. "They erected a very high wall between the president and entanglements with foreign governments."

It doesn't matter, challengers say, what the intent of the business arrangement is or whether any quid pro quo results. The ban is simply prophylactic.

That doesn't pass the smell test for constitutional scholars who take Trump's side in the debate. Andy Grewal, a University of Iowa College of Law professor who has written on the subject, says such a broad interpretation "would mean that likely every president and thousands of federal officials have violated the Constitution."

When Trump became president, he turned over day-to-day control of the Trump Organization to his eldest sons, Donald Trump Jr. and Eric Trump. But he did not divest himself from the business, which operates worldwide.

Red flags went up in October when the president offered to host an international economic summit at Trump National Doral, his Florida resort, as well as when Vice President Mike Pence stayed at a Trump resort in Ireland.

After a public uproar, Trump announced he wouldn't hold the summit at his resort after all, but he rejected suggestions it would have run afoul of the Constitution.

“You people with this phony Emoluments Clause,” Trump grumbled.

More: Trump to hold G-7 summit at Camp David after reversal on his Doral golf resort

'Vexatious litigation'

Democratic lawmakers and government watchdogs say the most flagrant violations happen when government officials – including some from Saudi Arabia, Kuwait and Malaysia – spend lavishly at the Trump International Hotel a few blocks from the White House. Trump's real estate company now is considering selling its lease there.

“The hotel is sort of the epicenter. It’s an emoluments magnet," Gupta says. "They are deliberately attracting foreign government business.”

But Grewal says an emolument that violates the Constitution must be in the form of compensation for services – such as a foreign government hiring Trump to host a new version of The Apprentice, not renting out a few hotel rooms.

Most of the legal fireworks in the three cases have centered on whether challengers have the right to be in court at all. Members of Congress cite the domestic clause's inclusion of the phrase "without the consent of the Congress." Maryland and D.C. officials say Trump's hotel reduces the tax revenue they get from competitors. New York hotels cite unfair competition.

Their courtroom victories have been mixed with defeats, most recently in the 4th Circuit, where a three-judge panel unanimously cited the “paramount necessity of protecting the executive branch from vexatious litigation that might distract it from the energetic performance of its constitutional duties.”

The full appeals court will reconsider that ruling during oral arguments Thursday.