The New York judge overseeing a lawsuit alleging that the Donald J. Trump Foundation served as a “personal piggybank” for the President issued no ruling at a Thursday hearing on the Trump team’s motion to dismiss the suit. But Judge Saliann Scarpulla seemed to suggest that the allegations laid out in the New York Attorney General’s lawsuit were legally sufficient for the case to move forward.
“The allegations are what they are. Until you deny them, I accept them,” Scarpulla told Trump Foundation attorney Alan Futerfas.
Towards the end of the more than hour-long hearing, the judge signaled that she may delay her decision on the motion to dismiss until a decision is reached in a separate defamation lawsuit against Trump. Arguments were heard last week before a New York appeals court in the case of Summer Zervos, who claims Trump disparaged her after she went public with allegations that he made unwanted sexual advances towards her while she was a contestant on his reality TV show “The Apprentice.”
Scarpulla said that the Zervos case, which hinges on whether a lawsuit can be brought against a sitting president, may affect parts of the Trump Foundation case.
So, she said, “We’ll see what happens in Trump versus Zervos.”
“If the [appeals court] says that Clinton versus Jones is still good law, then this case will continue,” Scarpulla added. The Supreme Court’s 1997 decision in Jones allowed a federal civil lawsuit to proceed against President Clinton while he was in office.
The bulk of the hearing, held in a crowded, overheated second-story courtroom in lower Manhattan, focused on the Trump Foundation lawsuit itself, with a good deal of back and forth between Scarpulla and Futerfas on whether it was premature to consider the merits of the case.
As the judge repeatedly told Trump’s attorney, at this point in the proceedings, she has to “accept the allegations” presented by the attorney general as fact.
State Attorney General Barbara Underwood’s office has alleged that the Trump Foundation engaged in unlawful self-dealing, funneling charitable funds to pay off Trump’s business expenses and benefit his 2016 presidential campaign.
In his lengthy opening remarks, Futerfas countered that the attorney general’s office had not proved that the foundation violated New York State charity law. He said it was perfectly acceptable for political candidates to raise funds for charities, as Trump did just before the Iowa caucuses. In lieu of attending a debate for GOP candidates, Trump held a televised campaign event, urging donors to give money to the Trump Foundation, that in turn the foundation would give to veterans’ organizations.
“There were no transactions between the campaign and the foundation,” Futerfas said adamantly.
Scarpulla replied that she’s required to accept the allegations laid out in the attorney general’s suit: that senior Trump campaign staffers directed the disbursement of the donations, and that the fundraiser was orchestrated to benefit Trump’s 2016 campaign.
“Isn’t that the allegation?” Scarpulla asked. “Corey Lewandowski or other campaign people were directing the payment of the funds collected at the fundraiser to curry favor with voters who would then vote for the president?”
“I must accept that allegation,” she added. “We’re not at that stage.”
Similarly, Scarpulla said she had to accept the attorney general’s claims that the foundation held no regular board meetings, took no notes, and did not fulfill “fiduciary duties to the charity.”
“Even if they are doing spectacularly good work, they are still required to follow the law,” Scarpulla said.
“I hear you,” Futerfas replied. “There’s never been a case like this.”
Scarpulla also flatly said that she would not entertain allegations that the lawsuit was brought because of political bias against the president.
“I know you all argued about political bias and stuff,” Scarpulla said. “I don’t want to get into that.”
“The color is whatever you put on it or the AG puts on it, but not something that’s interesting to me,” she added.
Trump’s team had argued in court filings and public statements that the suit was the result of “pervasive” bias against the President by former state Attorney General Eric Schneiderman. Underwood’s office had said that she brought the case three weeks after Schneiderman left office amid a physical abuse scandal.
Futerfas made little mention of political bias during Thursday’s proceedings.
The suit seeks to dissolve the foundation and recoup the $2.8 million raised at the Iowa event. The attorney general also wants to temporarily bar Trump and his children Donald Jr. Eric, and Ivanka, who sat on the board, from holding leadership roles in New York charities.