WASHINGTON — President Donald Trump’s Inaugural Committee illegally channeled approximately $1 million in charitable funds to the Trump International Hotel in January 2017, according to a lawsuit filed Wednesday by D.C. Attorney General Karl Racine.
The lawsuit alleges that the Inaugural Committee agreed to pay “exorbitant” rates – rates about the Trump Hotel’s own pricing guidelines and, in some cases, more than twice market rate – at the Trump Hotel for event space, including for days during which no events were planned or held. The charges paid for by the Inaugural Committee also included a private event “benefitting only the children of the President,” according to the lawsuit.
According to the lawsuit, the Inaugural Committee agreed to pay the Trump Hotel $175,000 per day to reserve event space for four days from January 17-20, 2017. The suit claims that another nonprofit, the Presidential Inaugural Prayer Breakfast, using the same during inauguration week paid just $5,000 for the space – 35 times less than what the Inaugural Committee paid.
In total, including food and other charges, the Attorney General’s Office alleges the Inaugural Committee paid almost $1.03 million to the Trump Hotel for the four days.
The arrangement caused multiple Inaugural Committee staffers, including Deputy Chairman Rick Gates and event planner Stephanie Winston Wolkoff, to raise concerns, both about the price and the “optics” of the committee holding events at the D.C. hotel owned by President Trump.
“First, the cost itself seems quite high compared to other property,” Gates wrote in an email to Ivanka Trump, according to the lawsuit. “Second, I am a bit worried about the optics of [the Inaugural Committee] paying Trump Hotel a high fee and the media making a big story about it. Let me know if you have any thoughts and if we can discuss the best path forward.”
According to the lawsuit, Gates and Wolkoff subsequently met with the then-President-elect and his daughter, Ivanka, who was allegedly assigned to “handle” the situation. The Inaugural Committee was subsequently offered lower, but still above-market, rates.
Despite that, the Attorney General’s Office alleges that Inaugural Committee staffers still raised concerns – including about the private reception for Trump’s family and close friends that was to be paid for with nonprofit funds.
According to the lawsuit, Gates, despite being an officer of the Inaugural Committee, communicated to the Trump Hotel’s managing director that he would “work to protect the Trump Hotel’s financial interests” with regards to the event. Ultimately, the event was held at an estimated cost of more than $300,000 in nonprofit funds, according to the lawsuit.
The Attorney General’s Office contends that the deal violated District law and the Inaugural Committee’s articles of incorporation by “causing the [Inaugural Committee] to pay amounts to the Trump Hotel that were unfair, unreasonable and unjustified and that acted ultimately to confer improper private benefit on the Trump Entities.”
In an emailed statement, a Trump Hotel spokesperson called the lawsuit a “PR stunt.”
“The AG’s claims are false, intentionally misleading and riddled with inaccuracies,” the statement reads. “The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue. The AG’s after the fact attempt to regulate what discounts it believes the hotel should have provided as well as the timing of this complaint reeks of politics and is a clear PR stunt.”
The lawsuit seeks for the $1.03 million spent at the Trump Hotel to be “restored to a proper public purpose” by being redirected to another nonprofit entity dedicated to promoting civic engagement of the citizens of the United States of America.
