Presidential inaugurations can seem like a parody of D.C. influence-peddling. Corporate lobbyists, foreign dignitaries and political mega-donors converge on the capitol for days of glitzy events, waltzing alongside incoming administration officials at inaugural balls and networking with members of the U.S. Congress over plates of lobster.
As reports proliferate about New York prosecutors’ investigation into President Trump’s 2017 inaugural committee, it can be difficult to tease out the standard swamp sleaze from activities that cross a line—or possibly break the law.
Former high-level inauguration staffers and ethics experts told TPM that Trump’s team stretched the boundaries of acceptability, potentially opening the door to the kind of self-dealing and illegal foreign donations that prosecutors are reportedly probing.
“It’s become fairly common for these events to be an influence-buying free-for-all, but it seems like Trump took this to another level,” Brendan Fischer, director for federal reform at the Campaign Legal Center, told TPM.
A 2017 inaugural inaugural spokeswoman did not respond to TPM’s requests for comment by press time.
Some degree of fly-by-night sketchiness is baked into the nature of the inauguration, a multi-part event that has to be pulled together in a matter of weeks. As Rufus Gifford, finance chair for Barack Obama’s 2013 inauguration told TPM: “It all happens very, very quickly. You win an election and then you have to raise ‘x’ number of millions of dollars in just a couple of months to ensure that you can pull off these enormous festivities.”
Inaugural committees also exist in a bizarre legal void in campaign finance law. They are formed as non-profits, and, unlike campaigns, are not required to adhere to contribution limits or certain reporting requirements.
The few congressional regulations in place ban foreign donations to inaugural committees, and force the organization to disclose every donor to the FEC while also filing a non-profit tax form in line with Internal Revenue Service guidelines.
“If you’re not willing to be transparent, then don’t contribute,” Stephen Kerrigan, executive director of Obama’s 2013 inaugural, told TPM. “The inaugural is supposed to be part of the country coming together, and not enriching a few people.”
This week’s reporting on the subpoena prosecutors served to the committee sheds light on both how routinely the inauguration is used as an avenue to buy access, and where Trump’s inaugural committee may have legal exposure.
Earlier inaugural staffers and ethics experts mostly shrugged off as business-as-usual a confidential memo prepared by inaugural deputy chair Rick Gates and obtained by WNYC. The memo showed inaugural committee chairman Tom Barrack’s investment firm gaming out a consulting plan involving a $500 billion-$1 trillion infrastructure project that was then in the works while “avoiding any appearance of lobbying,” a hair-fine but common D.C. distinction.
Imaad Zuberi, the only donor mentioned by name in the subpoena, may have captured the prevailing mores of presidential inaugurals when he openly admitted to the New York Times that the $900,000 he donated to the inauguration was intended “to open doors.” The fact that his donation bought access to meetings with Michael Cohen and inaugural chairman Elliott Broidy was “just fortunately or unfortunately how it works,” Zuberi said.
Prior president-elects have set self-imposed limits on contributions to try to reduce the appearance—if not the practice—of influence-peddling. George W. Bush capped individual donations at $100,000 for his 2001 inauguration and $250,000 for the 2005 event. Obama imposed rigid restrictions for his 2009 event, capping individual donations at $50,000 and banning donations from corporations, super PACs and lobbyists. For his 2013 inauguration, Obama nixed the donation limit and chose to accept corporate funds.
Trump’s inaugural committee took no such steps.
Inaugural committees face fewer regulations than other forms of political spending. But a few restrictions — like bans on foreign financing or using a third party to act as a “straw donor” — remain in force. While the FEC places the obligation on the donor not to misrepresent itself to the committee, inaugurals have, in the past, informed donors of the relevant regulations and maintained internal vetting processes to prevent fraud.
Gifford, Obama’s 2013 finance chair, told TPM that rooting out possible improper donations to the campaign and inauguration required special vigilance.
“I can’t tell you how many people who weren’t allowed to give us money because they were foreign nationals or didn’t fit the bill somehow tried to give us money,” Gifford said. “This is not hard, and that’s the issue. Vetting and compliance is a process and you need to have those procedures in place. But it’s not a fundraiser’s job to necessarily know whether someone is an American citizen, or a foreign corporate entity is trying to illegally give you money.”
Holtzman Vogel Josefiak Torchinsky PLLC, the staunchly Republican law firm who worked with Trump’s inaugural committee, did not respond to TPM’s request for comment on any guidance they provided on rejecting foreign funds.
Prosecutors are reportedly investigating the use of so-called “straw donors,” or U.S. citizens who purchase inauguration tickets to disguise money that’s coming from foreign individuals or governments. D.C. lobbyist and admitted foreign agent W. Sam Patten acknowledged last year as part of his guilty plea that he helped a Ukrainian oligarch attend Trump’s inauguration by using a straw donor to front the $50,000 ticket price.
Then there’s the matter of potential self-dealing. During Paul Manafort’s August 2018 trial, his onetime protégé Rick Gates admitted it’s “possible” that he stole money from the inaugural committee while serving as its deputy director. Accounts from the time of the inauguration indicate that Gates was managing the affair on a day-to-day basis.
Gates reportedly told multiple donors that they could circumvent committee reporting requirements by paying vendors directly for inaugural events and services—another potential violation of the few laws that govern inaugural committees.
That detail also goes to an enduring mystery of the committee: How did it spend so much money? Previous inaugurals with more events than those held at Trump’s maxed out at around $60 million total in expenditures. Of the record $104 million that Trump’s inaugural committee spent, the committee spent $60 million on its top five vendors alone, which, under non-profit law, it has to disclose. The remaining $40-something million to lower-tier vendors was not subject to disclosure requirements.
Greg Jenkins, the executive director of Bush’s 2005 inaugural, told TPM last month that Trump could have “raised less than we did” — around $40 million — and pulled off his inauguration.
Questions abound about how costs were allocated within the committee, and about possible self-dealing on the part of Trump’s family and friends.
The New York Times detailed how the $26 million that went to WIS Media Partners— a firm set up 40 days before the inaugural by Melania Trump associate Stephanie Winston Wolkoff — was spent, which included $10,000 in makeup purchases.
ProPublica and WNYC obtained emails which appear to show inaugural officials charging above-market rates to stay at the Trump D.C. hotel.
As Jim Bendat, an expert on presidential inaugurations told TPM, “There was no Obama hotel. There was no Bush hotel. There was no Abraham Lincoln hotel. This is all new territory that’s being investigated because of the nature of this particular president.”
Even the pre-inaugural concert emerged as a miniature scandal-within-a-scandal: at $25 million, it remains a mystery what the money was spent on, particularly given that previous pre-inaugural concerts boasted far more performers.
Jo Howard, the booker for pre-inaugural concert singer Sam Moore and a producer at the Lee Atwater Celebration For Young Americans event at George H. W. Bush’s 1989 inaugural, told TPM that Moore was booked at the last minute.
“Jennifer Holliday was supposed to sing at the pre-inaugural the night before, out at the Lincoln Memorial, but she got intimidated and terrorized so badly that she backed out,” Howard recalled.
The inaugural committee’s shoddy reporting practices make it harder to track where the money went, and who was behind it. Tracing the real identities of dozens of donors remains nearly impossible, even after reporting from journalist Christina Wilkie forced the committee to file an amended report to the FEC last year.
As Wilkie documented, the committee made novel use of special online access codes to access tickets, which were then resold on Ebay and forwarded to recipients’ friends. But the code was only tied to the original recipients’ address, creating errors in the FEC report and leaving the true donors’ identities unclear.
Wilkie said no legitimate listed addresses existed for, for example, a Singapore resident named Frank A. Rodriguez who is recorded as having given $25,000 to the inaugural fund, or Anaheim, California donor David Durrant, who reportedly gave $100,000.
The code system “creates an obvious opportunity for foreign nationals to give,” said Fischer of the Campaign Legal Center, whose organization filed a complaint with the FEC over these apparent violations of reporting requirements.
The federal investigation remains in its early stages. It’s not clear how far liability extends in any direction, or if the committee could be a victim itself as a legal entity.
While the White House has stated that the subpoena “has nothing to do with” the President, Barrack himself had a different perspective in remarks to the New York Post, five days before Trump took office.
“He’s into every detail of everything,” the tabloid quoted Barrack as saying. “I beg him all the time to go back to running the free world and let me focus on setting the tables.”