Election 2016

Washington Watchdog Sues Trump for Blatantly Breaking Constitution Anti-Corruption Clause

A lawsuit argues that foreigners hold sway because they control Trump's loans, licenses, income and more.

Photo Credit: Image by Shutterstock, Copyright (c) Hunter Bliss

Before Donald Trump took the oath of office, he was facing more active lawsuits than any prior president. But the suit that was filed at 9am on Monday, January 23, in federal district court in New York City by some of the nation’s top ethics lawyers and constitutional scholars could affect all Americans.

The lawsuit filed by CREW—Citizens for Responsibility and Ethics in Washington—and being led by former White House ethics chiefs for Barack Obama and George W. Bush, as well as legal luminaries like Harvard Law School’s Laurence Tribe, seeks to force Trump to place his entire investment portfolio in an independent manager’s hands so that his properties, loans, debts, income streams, and licensing deals aren’t turned into blackmail against him at the nation's expense.
   
“Never before have the people of the United States elected a president with business interests as vast, complicated and secret as those of Donald Trump,” the lawsuit begins. “Now that he has been sworn into office as the 45th president of the United States, those business interests are creating countless conflicts of interest, as well as unprecedented influence by foreign government, and have resulted and will further result in numerous violations of Article I, Section 9, Clause 8 of the U.S. Constitution, the ‘Foreign Emoluments Clause.’”

That clunky clause, Emoluments, was put in the U.S. Constitution to prevent forefathers like Thomas Jefferson and Benjamin Franklin from coming back from Europe with too many gifts from foreign royalty, which the country’s founders felt could undermine their loyalty. Though it’s never been tested in federal court, the issues raised by CREW’s lawsuit are likely to become a giant and unending headache, not just for Trump, but for taxpayers. That’s because Trump’s holdings offer innumerable ways for foreigners to squeeze him when they don’t get what they want from the U.S. government, CREW said, for example private banks and governments that loaned Trump millions, political officials who control the water and electricity to Trump's hotels and private companies buying advertising on Trump's TV shows.

And it doesn’t stop there. Just as Trump Tower in New York City has held midtown Manhattan hostage by locking down access to nearby businesses—and footing local taxpayers with enormous police bills—Trump’s name-branded properties around the world in countries where he has denigrated the religion or insulted leaders or threatened trade wars are easy terror targets, meaning that the U.S. military is going to have to expend money and manpower policing them.

“When he makes his decision on domestic and economic policy, how will we know that he is not using the White House to do deals for himself at the expense of the people who voted for him?” CREW Chair, Norman Eisen, told NPR’s Fresh Air. “When he makes his decisions to use America’s military force and send it abroad, how will we know that he is not putting ordinary Americans' lives at risk in order to protect his properties and his pocket and his wallet, rather than in the best interests of our country?”

Eisen, who was Obama’s ethics czar and a European ambassador, said Trump’s refusal to sign a one-page form to turn over his assets to an independent trustee means he was violating the Constitution’s Emoluments Clause as soon as he was sworn in. Trump has declared that there is no such thing as a presidential conflict of interest, and instead spent the first part of his sole pre-inaugural press conference insisting that giving his business dealings to his sons and accountant was sufficient.

Richard Painter, who was the ethics chief under George W. Bush and is now CREW’s vice chair, said that assertion was not just ridiculous, but is an open invitation for foreign governments that loaned Trump money or have regulatory power over his properties to pressure Trump’s family members for policies they want from Washington.

“The dealings with foreign governments are very, very problematic,” he said on Fresh Air. “The Bank of China, I believe, has loaned a significant amount of money to the Trump Organization. And various other government-owned banks. If those loans aren’t renegotiated, refinanced with private banks, that’s an enormous amount of money that the Trump Organization is dependent upon foreign, government-owned banks for. That’s a violation of the Emoluments Clause.”

“We have to find out where the financing comes for all these properties all over the world,” Painter said. “When a public official is in debt to other persons, and other entities, and perhaps even to foreign governments, and perhaps foreign government-owned banks, the public official is dependent upon those persons who can pull that line of credit and perhaps could even cause their business to collapse. Debt is a dependency relationship.”

CREW’s lawsuit, which will seek copies of Trump’s tax returns as part of the discovery process, is asking federal court to make a basic ruling that Trump is subject to the Emoluments Clause and then decide what to do next based on Trump’s response. The suit notes that the financial disclosure forms he has filled out do not give details about the many corporate structures he uses. However, the suit’s “relevant facts” section cites dozens of instances of foreigners in the Mideast, Russia and China supporting his businesses by patronizing, underwriting, licensing or regulating them. 

“His business empire is made up of hundreds of different corporations, limited liability companies, limited partnerships, and other entities that he owns or controls, in whole and part, operating in the United States and 20 or more foreign countries,” the lawsuit says, adding that some of these are owned under the umbrella “Trump Organization” and “other entities.”

Here are some examples of the foreign investments and conflicts listed in the CREW suit:

  • "Among the largest tenants of Trump Tower is the Industrial and Commercial Bank of China (ICBC), which is owned by a foreign nation, China. The ICBC’s lease is set to expire during Defendant’s term as President. In addition, the Abu Dhabi Tourism & Culture Authority, an entity owned by the foreign nation of the United Arab Emirates, leases office space in Trump Tower. Defendant regularly receives money—and, without judicial intervention, will continue to receive money during his presidency—through the leases that the ICBC and the Abu Dhabi Tourism & Culture Authority hold.”   
  • "The Trump International Hotel Washington, D.C… Since the November 8, 2016 election, foreign diplomats have been flocking to Defendant’s D.C. hotel, eager to curry favor with Defendant and afraid of what Defendant may think or do if they send their business elsewhere in Washington. One week after the election, the hotel held a special event for the diplomatic community. About 100 foreign diplomats attended; they were greeted with champagne, food, a tour, a raffle for overnight stays at properties belonging to Defendant around the world, and a sales pitch about the new D.C. hotel. The hotel also hired a 'director of diplomatic sales' to facilitate business with foreign  states and their diplomats and agents, luring the director away from a competitor hotel in  Washington. One 'Middle Eastern diplomat' told the Washington Post about the hotel: 'Believe  me, all the delegations will go there.'"
  • "China: Defendant’s company has plans to build 20 to 30 luxury hotels in China, which will require obtaining benefits from the Chinese government, such as permits and approvals. Defendant also is part owner of an office building located at 1290 Avenue of the Americas in New York, New York, which carries a $950 million loan, part of which is held by the Chinese-government-owned Bank of China."
  • "United Arab Emirates: Defendant’s company is engaged in several real estate projects in the United Arab Emirates (UAE), including Dubai’s Trump International Golf Club, which is set to open in February 2017. All services for the golf club, including electricity, water, and roads, 'come at the discretion of the government,' and the 'club’s bar will need government approvals to serve alcohol, not to mention other regulatory issues.'"
  • "Russia: According to media reports, '[t]here is strong evidence that Trump’s businesses have  received significant funding from Russian investors. As Defendant’s son Donald Trump Jr. stated in 2008: “Russians make up a pretty disproportionate cross-section of a lot of our assets…We see a lot of money pouring in from Russia.” Defendant has been seeking business and development opportunities in Russia for at least three decades, including in 2013, when he wrote on Twitter: 'TRUMP TOWER-MOSCOW is next.'"

There are similar examples from India, Indonesia, Turkey, Scotland, Philippines, Saudi Arabia, and Taiwan. Eisen predicted that many of Trump’s competitors in the U.S. will be tempted to sue if they see him cashing in on the presidency.    

“I believe that you will see complaints filed pretty briskly following Mr. Trump’s swearing in, in which various plaintiffs allege that they have been injured by Mr. Trump’s violation of the Constitution,” he said. “I’d love to see the first person in the Rust Belt who thought his job was going to be saved, who loses his job because Trump is getting a large cash payment from China or what have you, against the Constitution, and that individual says, ‘Hey, he’s doing deals to line his own pockets, not to benefit me’ and takes him to court. You’re going to see a lot of litigation about this.”

And it may not just be litigation from the travel industry. Eisen said the federal judiciary, U.S. Congress, federal prosecutors and state attorney generals could all legally probe Trump’s businesses under a variety of guises because they all had legal jurisdiction. Meanwhile, Painter said Trump’s overseas properties are now national security targets and will have to be protected at taxpayer expense—because he won’t place them in an independent trust run apart from his family.

“Where would we have been in 1941 if President Roosevelt had a Roosevelt Towers in Frankfurt, Germany, or in Berlin, and a couple of hundred thousand dollar loan outstanding from Deutche Bank?” Painter asked. “That would have been a very difficult situation, to say the least.”

Even Trump’s ongoing role as executive producer of "Celebrity Apprentice" is problematic, he said, because of domestic corporate advertisers and overseas governments buying their country’s syndication rights, all to potentially curry favor.

“You have one of the networks, with whom he regularly deals, that’s going to be making payments to him,” Painter said. “You have sponsorship arrangements with many of the largest companies in the United States and the world who run advertisements or have placed promotions in the show. That creates an issue about whether Mr. Trump is going to shade his decision-making to benefit the advertisers whose money is flowing through to his pocket. You have 'The Apprentice' being sold around the world, including, perhaps, in some countries to state-owned broadcasters. So, here’s our old friend Mr. Emoluments again.”

Painter concluded, “He has to make a choice. Does he want to be the president or does he want to be a businessperson? By running, and winning, he’s made that choice. Now he needs to jettison the business part of the equation.”

Steven Rosenfeld covers national political issues for AlterNet, including America's democracy and voting rights. He is the author of several books on elections and the co-author of Who Controls Our Schools: How Billionaire-Sponsored Privatization Is Destroying Democracy and the Charter School Industry (AlterNet eBook, 2016).

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