New York could be just the start. Donald Trump’s charity may soon be in hot water in states across the country—part of a long and painful process that could tie up the Republican nominee to the election and beyond.
The trouble began on Monday, when New York’s Attorney General ordered the Trump Foundation to immediately stop fundraising in the state because they had not properly registered to do so. As part of the order, the Trump Foundation will be required to provide detailed financial records about its charitable activities—just three weeks before Election Day. At least four apparent Trump Foundation donors, all New York businessmen, will also be under the microscope.
The Trump Foundation drew the eye of the AG’s office in large part due to a January fundraiser he held which was meant to help veterans. The money collected for the event, which Trump attended in lieu of a Fox News debate, in fact went into his foundation. Only later—and under pressure—was it distributed to veterans’ organizations.
Following that event, a series of investigative stories lifted the lid on the foundation and how it functioned as a kind of piggy bank for its founder’s political interests. In years past, Trump used foundation cash to settle personal legal disputes costing hundreds of thousands of dollars, bought paintings of himself and in one high-profile case gave money to a PAC supporting Florida Attorney General Pam Bondi—an illegal act for which Trump had to pay a $2,500 fine.
So push has finally come to shove.
To make matters worse for the Trump Foundation, the probe may not be limited to New York: Charity experts and lawyers tell The Daily Beast that the attorneys general of other states may soon get involved in a long, drawn-out process.
All major charities are required to register with 41 different states across the nation in order to individually request permission to fundraise. When Trump raised money for veterans, he may have broken the rules in dozens of states.
This means that the New York attorney general’s cease and desist letter may be just the first such order in a cascade of other states opening investigations and ordering a halt to fundraising.
“The Trump Foundation would be required to file similar paperwork with the attorneys generals of nearly every other state, and they could all take similar action,” said Aaron Dorfman, the president of the National Committee for Responsible Philanthropy. “It is likely that other states will follow suit and they will be issued cease and desist orders denying them fundraising privileges in other states. That is the most likely next step.”
The states most likely to do so are those who have historically been robust in their enforcement of charity rules, such as Illinois, California, and Pennsylvania, said Marc Owens, who formerly headed up the section of the IRS which dealt with charities.
“They might get such notification from other states,” said Daniel Borochoff, the president of Charity Watch, referring to the Trump Foundation. “It’s a teachable moment for people to understand the charity registration rules, so other AGs may ask for registration.”
A spokeswoman for the Pennsylvania Department of State, which handles charitable registrations there, confirmed that the Trump Foundation was not registered there. But the spokeswoman would not confirm or deny whether any investigation of the charity was being undertaken.
The requirement to register in New York and other states cannot be a mystery to the Trump Foundation’s directors. Unlike his father’s charity, the Eric Trump Foundation is properly registered to fundraise in New York state and has plans to register in other states, a source with direct knowledge of the registration told The Daily Beast. Eric Trump also serves as a director at the Trump Foundation, and it appears that both organizations use the same accountant.
“A large, sophisticated organization like the Trump Foundation, with millions of dollars flowing through, ought to have known better and should have complied with the law,” Dorfman said.
But the fundraising requirements are just the start. Following a series of investigative reports this year, the Trump Foundation has been alleged to have been used in a way that personally benefited Donald Trump and that charitable money was used for political purposes.
The immediate focus for the New York Attorney General’s investigation are the activities of the foundation in 2016, a person familiar with the process told The Daily Beast. Earlier this year, Donald Trump held a veterans fundraiser in Iowa, prompting nationwide media coverage and millions in donations without proper certification to do so.
The AG’s office has identified at least four New Yorkers named personally as donors by Trump at that event including investor Carl Icahn, Marvel Entertainment CEO Ike Perlmutter and real estate tycoon Richard LeFrak. The Fisher family was also mentioned, but a spokesperson for a similarly named real estate firm said Trump was not referring to them.
The New York Attorney General’s demands, made public for the first time on Monday, are designed to force the foundation to reveal more information about its financial workings through an audit. This audit would show, for example, whether the charity operated in a way that benefitted Donald Trump.
“If they conduct audits, there may be some additional situations or problems to chew on because there would then be disclosure of… transactions which could involve self-dealing,” said Borochoff.
The critical date for Trump’s foundation is October 15, the deadline the New York Attorney General’s office has set for receiving proper documentation from Trump’s charity. The office can also subpoena the foundation and go to court to enforce the law if Trump doesn’t play ball.
The New York probe has already gone past New York state lines. Last week a lawyer in Palm Beach provided documents to the AG’s office pertaining to questions about the Trump Foundation using money to settle a personal legal dispute in 2007. The attorney, John C. Randolph, told The Daily Beast that he received a phone call asking for documents pertaining to the incident and he sent them along.
Ultimately, even as it wrestles to control the scandals surrounding the Trump Foundation, those in Trump’s orbit are still struggling to follow the rules. One problem throughout Trump’s presidential campaign has been improper coordination between the campaign and his charity, which is not allowed to be engaged in political activities and cannot be used to the benefit of the campaign.
When the news broke Monday that the New York attorney general was requiring the charity to cease fundraising, the campaign issued a brief response on the Foundation’s behalf.
“Because this is an ongoing legal matter,” campaign spokeswoman Hope Hicks said in a statement, “the Trump Foundation will not comment further at this time.”