D.C. Attorney General Karl Racine sued President Trump’s 2017 inauguration committee on Wednesday, accusing it of failing to comply with non-profit regulations by booking a $1 million ballroom at the President’s D.C. hotel.
Inaugural committee staff knew that the booking was overpriced, and the ballroom was barely used, the lawsuit alleges.
Trump’s inaugural committee brought in a record-setting haul of $106 million, while holding far fewer events than previous inaugurals which raised and spent half as much money.
Racine accused the inaugural committee of abandoning its “public purpose” by “wast[ing] approximately $1 million of charitable funds in overpayment for the use of event space at the Trump Hotel, owned and controlled by the Trump Entities.”
Racine said in a press call that he filed the suit because he found evidence that the committee was “blatantly and unlawfully using nonprofit finds to enrich the Trump family.” The inaugural committee, he said, rented the event space for four days, but only used it for two. One day of usage, Racine said, “amounted to a private party for the Trump children.”
The committee indicted in a statement to TPM that it would contest the allegations.
“The facts will show that the PIC operated in compliance with the law and this suit is without merit. In fact, it reads more like a partisan press release than a legal filing,” the statement reads. “The PIC has also received no outreach from the DC AG since last summer which, when coupled with the obviously suspect timing of the complaint, confirms the completely baseless nature of the allegations.”
He alleged that Trump deputy campaign manager Rick Gates played a key role in “coordination” with Trump International Hotel management and members of the Trump family.
The lawsuit accuses Gates of conspiring with the Trump hotel’s managing director and with “members of the Trump family” to pay a total of $1.03 million in committee funds for the event space.
That occurred, the lawsuit says, in spite of the inaugural committee’s “own event planner” telling both committee management and “the Trump family that the charges were at least twice the market rate.”
Racine told reporters that his investigators “did not directly speak” with Gates.
He added that his office contacted other law enforcement bodies conducting investigations where Gates was a witness, but that the D.C. probe “respected the request that we frankly not otherwise interfere with ongoing, very important investigations.”
Manhattan and Brooklyn federal prosecutors are investigating the committee, as well as the New Jersey state attorney general.
The lawsuit alleges that Trump hotel staff initially quoted a price of $450,000 per day to the inaugural committee, allegedly far higher than the hotel’s own “internal pricing guidelines.” In one December 2016 email to Ivanka Trump, Gates wrote “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 out of it.”
Stephanie Winston Wolkoff, an inaugural vendor and longtime friend of Melania Trump, allegedly told then-President-elect Trump and his daughter Ivanka that she was uneasy with the arrangements during an “in-person meeting.”
After the price was dropped to the still-above-market-rate quote of $175,000, Winston Wolkoff wrote in an email to Gates and Ivanka that “when this is audited it will become public knowledge…I understand that compared to the original pricing this is great but we should look at the whole context.”
Racine also alleged that the Trump hotel doublebooked its largest ballroom with a different nonprofit. The doublebooked event was the “Presidential Inaugural prayer breakfast,” Racine said.
For comparison, the double-booked inaugural prayer breakfast paid $5,000 for use of the same space over the course of one morning. The same afternoon, the inaugural committee allegedly paid out $175,000 for the same space.
At one point, non-senior inaugural committee staff attempted to cancel a “private reception for the Trump family” that was being put up with funds from the non-profit. But the attempt to cancel was allegedly halted after the Trump hotel’s managing director wrote to Gates, saying that it would be “tough on us … as it was a lot of revenue.”
Gates replied that “we are trying to make something work.” The lawsuit accuses him of acting “to protect the Trump Hotel’s financial interests.”
The event — held on the evening of Trump’s Jan. 20 inauguration — allegedly cost more than $300,000.
Racine seeks an injunction that would direct the Trump hotel to return the money and give it to a charity “promoting civil engagement.”
Read the lawsuit here: